Uniswap vs the SEC, Immutable Nexus and more - The Daily Gwei Refuel #763 - Ethereum Updates

Transcript

hello everyone welcome to another episode of delu refuel where C the latest news in etherum ecosystem I'm your host s Sano and today the 11th of April 2024 right everyone let's get into it so as we're all well aware of uh the news from today Unis swap has received a Wells notice from the SEC which means that the SEC is about to uh I guess like Sue Unis swop more specifically Unis swop Labs obviously the protocol can't be sued because the protocol is decentralized but this isn't really a surprise I think to anyone given that the SEC has been incredibly hostile towards crypto for a long time now I think what is a surprise uh is the fact that they're still doing this I think a little bit because they've lost so many cases against crypto companies at this

point they've lost cases recently uh you know and they've had stuff thrown out recently with regards to like defi like the coinbase wallet stuff and and all that onchain stuff going on there and now they're going after what is probably the biggest fish at the app layer I would say uh when it comes to crypto and blockchains generally I can't think of any other app that is bigger or more used or more widely kind of known than Unis swap like I was thinking about this today actually and I was like in my head I'm like hm can I think of anything else that would have more brand awareness than Unis swap uh as an app like obviously you know Bitcoin ethereum probably have more brand awareness as the infrastructure as the the the layer ones but I'm talking about you know from a pure app perspective I really can't

think of anything else it's really just Unis swap so the SEC has decided to just go scorched Earth on Unis swap we don't know the the exact details of the lawsuit yet but of course we can uh we can imagine what the lawsuit is going to be about it's going to be about the uni token how that's an unregistered security they could throw in some other stuff in there around uh you know the uniso protocol allowing for uh trading of other unregistered Securities not just uni but all the other kind of tokens that they think are securities so on and so forth but that's just you know speculation right now but I feel like that's exactly what's going to be in it so obviously I'll cover it when the the suit is actually made public but it's not yet it's just a Wells notice which

is a notice that a company will get uh from the SEC with basically says hey we're about to sue you you know get ready which is just so ah I hate that right I mean I hate the SEC just altogether at this point because of the way that they're acting here but there's a lot to unpack here so from where I wanted to start was basically defining a few things for people because it seems people are still confused about Unis Swap and about exactly what it is so as I said at the top the SEC is going after Unis swap Labs uh the parent company of uh that that's been developing Unis swap since basically day one and I think that their actual kind of name isn't Unis swap Labs like their actual legal kind of entity name they have a bunch of different entities set up I mean it's

that classic kind of um corporate structure that a lot of these companies uh tend to use so yeah I I will be referring to the development team as Unis swap Labs uh and then there is unis swop the protocol obviously the decentralized protocol set of smart contracts that exist on ethereum there are different versions of this there is V1 V2 V3 and in the near future there is going to be uh V4 that that will go live I think in like August or something like that so that is the the protocol when I so when I talk about the protocol I'm talking about the smart contracts on ethereum then you have a few other things like unisoft governance and the unop foundation so they're separate but really we're going to be focusing on unisoft labs and unisoft the protocol uh so right now unisoft Labs runs the unop

front end so the front end is not decentralized the front end is run on you know classical web to infrastructure it's run by the unop labs team and they have complete control over what is displayed on that front end so they can censor tokens if they um choose to do so which I believe they have in the past and they can also shut that down or be forced to shut that down but does that mean that your access to Unis swop is shut down no it's not because the set of unisoft smart contracts that exist on ethereum are decentralized even if uh let's just say ofac was to sanction the unisoft contracts and even if 90% of the network was censoring those contracts uh you would still be able to interact with them because there'd be 10% non- censoring it you can't shut down the

uniso contracts because they're actually decentralized and they're actually on ethereum they're immutable uh you would BAS basally have to take control of the entire ethereum network in order to shut down Unis swap because you'd basically doing a regular State transition and essentially remove Unis swap uh contracts from the chain now to overtake the entire ethereum chain obviously is pretty I wouldn't say impossible but like basically impossible at this point um and you know even for nation states to do that I think that they're not even bothering with that I think they're trying to choke other points off which are easier to choke like the feat on and off on on and off ramps and also the um the the front and interfaces because I did put out a tweet before about this where I said that you know the wonderful thing about unop is that it is truly

decentralized you know not even ofac can stop it and then I had a lot of people uh replying to me saying that you know the website can be stopped the we can be taken down people can uh be prevented from withdrawing from centralized exchange to their own wallet and then they wouldn't be able to use Unis swap so on and so forth but I guess I think people missed the point of my tweet my tweet was basically just saying that the unop contracts themselves will always exist on ethereum for as long as ethereum exists unop contracts will Ex exist on there uh because it's immutable it's decentralized and there is no admin keys or anything like that so that was the point of my my kind of tweet here so moving past that into basically uh you know moving past the protocol side of things moving on to unisoft Labs

themselves they are the you know original core development team and still are the core development team behind unop but what do they actually develop what what do they actually do well they're not working on unop V1 and V2 anymore that was already shipped it has no upgrade key so they can't upgrade it V3 was shipped quite a while ago now they're not really working on that from what I can tell what they're working on right now is unop V4 and unop X so version one 2 and three all immutable there are some parts of V3 that are controlled by governance such as the fee switch which is I I'm going to get back to because that is obviously going to be a key point in the sec's case um but with with V4 and uniso X which they're currently developing and is slated for release later in the year that's what

unop labs is working on right now among a bunch of other things I'm sure they're researching a bunch of different things there but that's that's kind of what they f and they're not the only I guess people working on Unis swap you know Paradigm was the first investor into Unis Swap and they have a bunch of people as part of their research arm that work closely with Unis swap on developing the you know the next versions there there are also people in the ecosystem building similar things to unisoft whether they be competitors or complimentary things that are obviously still part of the unisoft ecosystem and then there are all the people building interfaces that plug into the unisoft smart contracts that have nothing to do with unisoft Labs so to say that unisoft Labs has un natural kind of control over anything over Unis swap or would be

completely wrong and it it would be very easy to prove that they don't because there's no admin keys they cannot control unisoft V1 or V2 and the governance for V3 is controlled by uni token holders now of course there are arguments to be made around who holds those tokens you know what positions do they hold in the community like what's their sway here so on and so forth which maybe the SEC will argue on that or not we we don't know right now um but that's that part of it and I think the the final part I wanted to focus on was the actual kind of speculation around what the is going to go after unop labs for so unop Labs issued the original uni token they air dropped it back in I think it it was 2020 like late 2020 during defi summer they air dropped it

they created it they allocated themselves a bunch of it obviously and and and and allocated a bunch of their investors and then the rest was put into this kind of Treasury that uniso governance controls there now I think that uh when you look at it from kind of that perspective then you look at things like the fee switch CU there was obviously a lot of discussion recently about the fee switch like are they going to turn the fee switch on or not and they being unop governance not unop Labs team uh and then there was a post recently that said yeah okay well it's time to turn the fee switch on or essentially the people advocating to turn the fee switch on and then the SEC does this lawsuit the timing is kind of you know suspect right so the reason why the S will go after them for the fee

switch in in my opinion uh and I think it's a pretty obvious reason is because it in in their eyes it makes uni look like a security because if there is a fee switch where essentially people can stake their uni and get a share in the revenues generated by the unisoft protocol then the SEC would argue that hey this is riing on the efforts of others uh this means that uni is a security but in saying that uh uni needs to or any token or any asset needs to meet the four prongs of the hoe test to be considered a security it cannot just meet one prong or two prongs or three prongs it has to meet all four prongs and off the top of my head hopefully I can remember all four of them all four of them right now the first one is that

there needs to be an investment of money and then there needs to be an expectation of profit there needs to be a argument made that it's part of a common Enterprise and there needs to be that uh I think I I always forget the fourth one but those are like the three there but even those three when you when you kind of think through it if you're if you're a lawyer if you're unops lawyer or unops legal team the arguments that I imagine they're going to use to argue against this is that there is no expectation of profits from the uniso labs team because if you're staking your uni tokens in V3 and the fee switch is turned on and you're getting Fair revenue from V3 that is not reliant on the efforts of unisoft labs because V3 is already live like there is no changes

being made to V3 unisoft Labs is working on V4 as I just explained so the lawyers would basically say well how can you say that people are expecting unisoft labs to drive uh you know value to the uni token when it's Stak you're earning Fe Revenue when unisoft Labs has nothing to do with V3 anymore they deployed it and that's it they you know they built and deployed it of course but now it's immutable it's immutable code on the ethereum blockchain unop governance has control over it and yes some people or or a lot of people as part of unisoft labs owns tokens in that but they do not have unilateral control here they don't have uh you know they're not expected to do the work to drive the U Drive the um the profits here the profits would essentially just come from people trading on unisoft V3 and they do that

for any number of reasons that's not reliant on the unistop labs team so to me that's a pretty strong argument and like as I said they have to meet all four a token or an asset has to meet all four prongs of the haway test to be considered a security so if it fails that prong that's it it only needs to fa one of the prongs if it gets if they can if they can prove they being the SEC can prove that uni meets the other three uh then that's not enough it has to meet all four prongs here uh in the eyes of a judge in the eyes of the law uh it's not you know obviously the SEC has said you know these things are securities or unregistered Securities but they can say whatever they want it's not legally binding um at all and the funny thing is

is that even when they settle with teams over the the the tokens being Securities most of the times the settlement is just to find that the team will pay and then the token is still not deemed a security right so the SEC as we all know acts like a mafia it goes around it bullies teams it bullies kind of projects it bullies businesses and it says Hey pay up you know give give me the money here right now pay up and uh you know we'll leave you alone sort of thing obviously unop is not going to do that like they've got enough money they're big enough to defend themselves and they know that there's a lot more at stake than just for themselves within Unis swap so they're not going to lie down and take it so this is where it becomes a little bit bizarre about what the SEC

strategy is here like why are they going after the biggest projects when it's highly likely that they're going to lose and it's not just Unis swap it's coinbase it's Kraken it's binance like binance was done based on um you know breaking things like uh AML and kyc and and sanctions and stuff like that um and they were and they were fined for that it was nothing to do with Securities but the SEC regulates uh you know Securities right and and and and tries to I mean it's its mandate is supposed to be to protect investors from unregistered securities from Securities fraud or from scams in general but the thing is is that they're are trying to I guess like extend their power beyond that with these sorts of things you know they're using the this is an unregistered security thing as like a as like a a

kind of subtle thing where they basically put that forward and then their real kind of agenda is in the background here so from that perspective I really don't know what their strategy is like people are speculating on what their strategy is and there's a lot of tinfoil hat stuff going on but the more and more the SEC does this the less tinf fall hat it sounds like so one of the I think big uh I struggle to call it a conspiracy theory but one of the big kind of like tinfoil heart things that people think is that the SEC is just being weaponized by the banking arm in the US to essentially slow down the adoption of crypto or uh you know pause the adoption of crypto so that the banks can get on board and get their infrastructure in place so then that they can actually

jump on board with this and they can actually uh you know uh be in control of this and they can actually make the money from it honestly I don't think that's too conspirator I don't think that's too tinf fall heart like we know that the Trad fight ecosystem definitely would feel threatened by a lot of this and there are certain players that are embracing it like Black Rock and then there are other players that are not embracing it and then they're using their political influence to to kind of like stifle adoption here they're basically going to Elizabeth Warren who seems to be completely in the pockets of banks these days uh they're basically going to her and saying hey you need to do something about this you know this is not good you know for such and such reason it's terrorism funding whatever they can come up with whatever reason

they want to um and then they use that and they weaponize these Regulatory Agencies against these companies and they know that within this they're trying to do something of what's called like a chilling effect where essentially by suing Unis swap they're hoping that they scare other defi companies uh away from actually continuing to build Defi and they're hoping that these other teams will just close up shop on their own and consider the risk to be too large but I think they've miscalculated there because at this point no one's doing that like everyone's like well the SEC like uh you know we've got enough money now within cry the crypto ecosystem there's enough people willing to fight here I'm not going to stop building what I'm building just because of some Rogue agency that's trying to exert this this this influence over the industry and I feel like we really are

kind of standing up now and fighting for ourselves because it's not just unisoft right it's coinbase that's fighting against it um it's it's it's Kraken it's binance they're all fighting it's going to take years to resolve but they're fighting that's the main point here so the chilling effect doesn't seem to be playing out um here as well and then the other big tinf hat theory that I've seen thrown around a little bit which I mentioned in the daily way Discord Channel today is a little bit of a joke but you know who knows at this point um and and people ask me you know does this have anything to do with the eth ETF like can this have any bearing on the eth ETF honestly it shouldn't but given that the SEC is a subjective regulator and doesn't actually do anything based on facts and circumstances it seems

these days they like to do things based on uh politics and and how their subjective feelings are um I think based on that you could say that there's a there is a link here now there are two possible links one link is that they're using this lawsuit as a way to strengthen their next lawsuit which will be against someone maybe the ethereum foundation over being a security like that's one thing that I've seen floating around I I don't know I still get that give that a low chance of kind of happening there but that's one thing I've I've seen thrown around there and the second thing is I I guess like a bit more positive for for the eth ETF is that some people have been saying from what I've seen which is it's kind of insane to say this but I figured I'd cover it anyway some people have been

saying well uh the SEC wants to get a kind of win or wants to look good um because they're going to approve the eth ETFs and that's going to make them look bad so by suing Unis swap or going after Unis swap they they can show their overlords hey we're actually doing something uh to I guess like combat what's happening in the crypto ecosystem or to basically own the crypto Bros or to stop them from doing fraud or whatever excuse they come up with and then when they approve the E ETF it's more palatable for their overlords basically for their superiors and as I said before I don't consider these things to be like too tinf fall hty like I can see that actually being a thing because if you look at the politics of it that that would actually make sense where it's basically like yeah we're

still combating the crypto stuff even though we approved the eth ETFs we're still going after crypto we're you know we're not we're not going weak on crypto we're still tough on crypto and I think that that might be something as well but again that that's farfetched maybe it's not who knows like I don't know where I stand on that it's just something that I figured that I I kind of spell out for you guys um but yeah I just realized I've gone for 15 minutes on this topic but obviously it's a pretty important topic so I hope I've done a good job of explaining it for you guys um but Paul Grell had a great tweet here as well he's coinbase's Chief legal officer just for a reminder there where he tweeted out about this and he said sometimes you have to laugh or else you'll cry you

know he posed question how can you square the sec's claim that unisoft acts as a broker with the Court's uh ruling against the SEC just a handful of days ago answer you can't so that was that ruling that I talked about where essentially the Court ruled in a you know a kind of different favor against the SEC um and then you basically had the SEC taking a different position today so this is just them continuing to contradict themselves there seems to be no recourse for this there seems to be no one kind of getting in trouble for this gendler hasn't lost his job and other SEC lawyers have been dis sparred for literally breaking the law that I talked about the other week right so as long as there's no consequences for these actions ironically like the SEC is doing exactly what they're supposed to

be protecting investors from is is basically lying you know uh doing illegal things uh you I'm not going to say that they're not committing fraud or anything like that but they're basically acting outside of the law which is what they're supposed to be protecting people from so really in the grand irony of this is that we need protection from the SEC because they're not doing their job here at all like I don't know anyone who would who would say that they've been hurt by Unis swap or they've been hurt by the uni token like if they bought the uni token then they've lost money on it that's on them that's that's part of any investment it doesn't matter what it is it doesn't even matter if it's a security or not that's part of literally anything that you invest your money into you know you buy some trading cards uh

because they're rare trading cards and they go down in value does that make them a security no no it doesn't you just lost money on an investment right so and I don't think people feel grieved by that and suddenly going to the government and being like hey you know the government needs to do something about this because I bought some Charizard that you know for 100 bucks and now it's worth like $80 and I've lost money on it or something like that and that no that just doesn't happen so I think that you know there's a lot of uh I guess uh fake protection going on here and as we know the SEC is just not protecting people at all and they're trying to fake as if they are but yeah anyway I think I'm done ranting about that for today that's a long ass rant on

that as I said it was going to be in the daily way Discord Channel um but I'll keep you guys updated on how that it kind of goes along and what the actual kind of lawsuit entails once it's been published uh and once we see the kind of documents out there all right so moving on to some ethereum core updates so nixo here shared out an FYI around Max EB so she said the max EB spec is being decided on right now and they're looking for people to speak up on custom ceilings and a custom ceiling allows you to set whatever number you you want to compound up to for your validator for example 37 uh and she said in my opinion not including this would remove a lot of the benefits for solo stakers and I completely agree with this I think that this needs to be put into the ARP 7251

or Max EB spec here so that essentially all the solo stakers can say okay well we want to uh you know compound our stake up to whatever number you want it to be you know 64 e 100 e maybe all the way to the max of 2048 eth uh so that you can get the benefits of uh Max EB within solo stakers because as I've mentioned before one of the main benefits or the main benefit for solo stakers is that you get to compound your eth Stak without having to wait to build up another 32 e cuz right now if you've got a validator you have to bring 32 e and then any rewards that you get on top of that you have to wait until you get another 32 e in order to spin up another validator in order to start earning staking rewards on that whereas in a Max

EB world you don't have to do that the the max effective balance is now 2048 eth so you can go from you know put your initial 32 eth in and then you can compound that stake all the way up to 2048 eth per validator which is going to cover the vast majority of of solo stakers obviously right and then it obviously applies to each validator so even if you have more e than that you can do it again with another validator so there's no need to wait for an extra uh 32 eth I mean I guess like if you got to 2048 eth you would have to wait for another 32 e in order to spin up another validator and then compound that to 2048 eth but I feel like if you have enough money to have 2048 eth you're probably going to be able to Source 32 e right

and and and getting those rewards isn't going to take very long to begin with because obviously it's percentage based on the 2048 eth I mean I'm actually curious like if you making 3% on 2048 eth um that's 61 eth a year so yeah I mean you're going to make that in like uh in in like half a year or something like that without you going out and buying more eth but I'm sure if you've got a lot of a lot of eth already you probably got the money to go buy it anyway so yeah I mean it's a non-issue for the Wales of course um but for like the smaller stakers and smaller solar stakers you know our precious Sol stakers this is a big thing so yeah make your voice heard that you think should be part of the spec here I'll link this

tweet in the YouTube description uh for you to do so all right so I remember I mentioned a couple of weeks ago that we had a uptick in reorgs on the beacon chain after Denon went live a lot of this was due to clients not being optimized for blobs too well uh and and I think as well on top of that it was got to do with me boost and some of the Rel layers and just not being set up correctly or being some bugs in there well you can see here that Terren casted out today saying the beacon chain reog rate for the last two weeks has decreased dramatically so we're basically back to you know normal levels essentially here so there's not really anything uh you know adverse Happening Here I haven't seen people complaining in the daily way Discord channel uh on their rocker pool mini

pools or solo nodes that they're missing out test stations like they were in the past and the Network Health and Effectiveness seems to have gone back up overall due to you know improvements on the client side of things and also just the network digesting uh you know blobs because I remember I mentioned before blobs went live that it is a huge uh strain on the network initially uh and we need to basically be able to kind of process that and deal with that and we have and this is really positive because it has a lot of positive effects long term you know we can have more confidence in increasing the size of blobs and the cter blobs without increasing uh Beacon chain re rates due to there being too much traffic on the P2P layer which basically means that all the people with lower powered devices

will have a hard time processing the extra sized blobs and the extra count of the blobs potentially in the future but we're also dealing with this with Max EB as well where essentially we're taking a huge load off the network when all the validators consolidate down from a million validators to even like half of what it is now that's a 50% reduction in load on the network I think I think it's a like I I I think it's that that makes sense but even if it's not exactly 50% it's still a huge huge reduction in network overhead there and as I said not to mention all of the other things like the client optimizations and just optimizations generally within the um within the network itself uh Beyond Max CB you know other things that could be coming like increasing the the cost of call data so that we don't have to do

with with that uh side of things when it comes to State growth so there's a lot of different things going on here uh but yeah great to see that this has uh this real grate has come down dramatically all right so we getting to the point where the final list of eips that are going to be included within Petra is being decided on by the C devia and I believe the cevs are still aiming for Petra to go live or Petra to go live by the end of this year I am like on the fence about that we'll see I remember last year you know they wanted Denon to go live by the end of the year and it didn't happen so we'll see but regardless of that you know I would say that we're either going to get Denon in Q4 or or q1 no not Denon sorry Petra in

Q4 or q1 you know I I I don't see it going any later than that I don't I definitely don't see it coming any earlier than that but as I said they're in the process of deciding the final list of eips that will be going into the a Petra uh the overall Petra upgrade here now Paradigm has put together or georgeos from Paradigm has put together a little blog post here uh coming at this from paradigm's um uh kind of uh I guess uh view on this and this was published back in January uh January 17th of 2024 but it's just a refresher about what they wanted to see within uh Petra and and they given their reasoning for this and why they think that these EIP should go in and why they think that certain EIP shouldn't go in and they also talked about the L1 gas limit and

and all those kind of things there so you can go give this a r Link in the YouTube description below but really as it stands today the headline Erp seems to be the max EB 7251 there's also the inclusion list EIP and pias I think we're only to get one of those if we get those in um so we're going to decide between pias and and um inclusion lists I think if I was to bet on which one we'd get it would probably be inclusion list instead of pias um but we'll have to see how that kind of shakes out as as time goes on there but yeah I'll have more updates on this I think over the next uh week or so so I'll keep you guys updated on that one there all right so we have a new reaking protocol that has been announced it's

called nectar Network and I believe it is from the same people who uh doing the diva staking protocol so obviously you guys know about Diva I've mentioned D.A a bunch of times on the before they're a liquid uh staking protocol and now with nectar uh you know new reaking protocol on ethereum to I guess compete with igen layer and some other projects out there right now um but yeah I mean you can find all the information about this I'll link it in the YouTube description below uh but I think what they're trying to do is go a more kind of like modular route here with how they're building nectar so you can see here they say nectar network is modular with opin modules allowing acting as an ABS reaker operator or distributor so basically creating every kind of part of a reaking network as a

separate module so it's not tightly coupled you can basically CH chop and choose which which kind of a module you want which ones you want to use which ones you want to pick from essentially so you know say you're an ABS where you can pick which uh distributor you want which operator you want which restak you want so on and so forth which is which is pretty cool I think um and then they're going to be using distributed validator technology out of the box it's all going to be customizable so on and so forth I mean there are a lot of kind of features here that are you know that are all explained in the twiter thread I'll link it in the YouTube description below there for you to check out uh but yeah this is interesting because obviously Diva has been around for a

little while I don't think diva is live on mainnet just yet uh but the fact that they're coming out with a reaking protocol here seems to signal to me that they're going Beyond kind of liquid staking and they want to kind of own the whole uh I guess like integration stack here where you can see that they basically have their clients which that runs on top of ethereum uh and then the diva staking protocol and the nectar reaking protocol on top of that so it seems like they want to own or like have I guess like um visibility or have Integrations across the entire pipeline here uh which I think makes sense definitely and I'm all for seeing more competition in the reaking space because I don't want it to just be IG layer and I also just want more legit competition too I know that there are other comp

competitors out there right now for IG I think one of them is called kak or cor I don't know how to say it it's K A R A but as I said in the daily grade Discord Channel I feel like that project is um was spun up uh and then it's trying to BAS basically copy what igen layer is doing and a lot of the people kind of talking about and Shilling it seem to be the VCS who missed out on IG layer uh so yeah I don't know like when I see stuff like that I'm just like okay uh I mean obviously you guys know I'm an investor in Igan layer but I'm not just saying this because uh I think that you know KRA is going to be bad for my bags or anything like that like no not not at all I just think that when it comes to

competition not every not all competition is created equal like I think that when you have competition within the reaking space you would want the competition to be as good if not better better than the existing raking protocols right like right now obviously Igan lir is the gold standard so you would expect nectar and kak and others to be either at that level or beyond that level in order to properly compete and encourage a healthy competition in the in the kind of I guess like Marketplace of um of uh of what we experience uh within the ethereum network so we'll see we'll see how that all shakes out there but I just wanted to put this new one on your radar you can go check out the full tweet thread for yourself I'll link it in the YouTube description below for you to do so all right and mutable has introduced

something called IM mutable Nexus which is an ecosystem of gaming chains so they say here many AAA game studios require their own chain due to their size and need for complex capabilities as always immutable is here to deliver so they're building something called the dedicated immutable zkm chains powered by polygon's zkm technology for some of the biggest game studios in the world IM mutable Nexus is a system of interconnected blockchains consisting of the public immutable zkm chain plus all of the dedicated zkm chains on uh Contin as a tweet here uh all the dedicate on on a mutable of course there and then they describe basically what this is going to look like now because this is built using polygon technology I believe that this will probably be opted into the AG gler eventually so essentially you'll have like all these immutable

kind of um chains or these immutable Z kvms all these gaming chains kind of on the same uh liquidity layer the a layer and all being able to interoperate with each other because they're sharing the same proving architecture here which is really cool uh I think it's really good I think immutable is still the leader on the gaming side of things definitely when it comes to cryp gaming they're really one of the only teams pushing the frontier here not just in terms of like building the games themselves but also on the infrastructure side because there are a lot of crypto gaming projects out there but immutable is obviously more focused on infrastructure rather than building the games themselves even though they have built games in the past and they continue to support them uh they're definitely interested in building up the infrastructure and getting uh all of these traditional

gaming gaming companies on board and if these companies want to launch their own chains then they're doing it within the immutable kind of ecosystem here but yeah you can go check out the full tweet thread I'll link it in the YouTube description below for you to do so all right a very interesting tweet that I came across today from DCF God that I wanted to rant a little bit about uh on here because this is something that I've been talking about a lot for years now and I get push back on this sometimes and I think people don't realize this because it's a it's a more of a long-term thing that plays out but I'll just explain what I mean here so DCF God tweeted out saying in June of 2021 Li's token was $2 60 a $60 million market cap but today lto is also $260

but has a $2 billion market cap the token doesn't rebase there is no staking and holders never got revenue share despite growing from nothing to over $30 billion of staked eth buyers made no money the fully diluted value matters so what this illustrates basically is that the market cap of a token can be very low so let's just say the market Cap's like 100 million or something or or 50 million and let's just say that 5% of the tokens are circulating that's why the market cap is 50 million so that means the fully diluted value is a billion right so what do you think happens over time as more and more of those tokens come to Market and get released into the market well of course they're sold right like

not all of them not all at the same time but over time they're sold so you have basically 95% of the supply that is or that is coming out that you've already that the Market's already priced in at a $1 billion F fully diluted valuation here and it's coming out over over multiple years so essentially you have this constant sell pressure or this constant kind of supply side with very little demand side because it's already worth so much and because it's already worth so much the early investors the ones who get into like the seed rounds you know the angel investors like myself and the VCS and everything they're already up many many multiples if these things have a a very big FID looted valuation for example you know uh a lot of these uh uh projects that launched today they launch at like 1020 billion

fully diluted valuation the seed investors the series a investors and maybe not the series B investors but like the seed preed series a investors they're all up 100 X Plus at that valuation now of course they have vesting what that means is that if the token price maintains at the you know the price that it's at like Lio has has done here the market cap is going to keep growing as the tokens are released into the market because they're no longer vesting they're actually unlocked and able to be sold right so the market cap goes up the flid looted value stays the same uh and the price stays the same so essenti on net the price will be flat right and the fided value may stay the same but no one's making money and it's because there is a potentially like an

equilibrium of of supply and demand where essentially people are buying Lio just as in this example because they're like oh my God Lio is so big you know it's like 30% of the ethereum staking Network I'm going to buy it because it's a good buy so on and so forth but the problem was is that Lio opened up or was originally a very high fluid looted value so all you're doing by buying into it and I'm not trying to pick on lier here it's just the example that DCF go um are used um what you're doing by buying into these tokens as they release a huge amount of Supply onto the market is essentially you're just acting as exit liquidity uh for the people selling which are the Insiders right which are the investors and the team to an extent uh and that is the sad reality of what

happens given that this entire ecosystem is now dominated by the fact that it's all private deals right and I'm one of the benefactors of this guys I'm fighting my own bags here because I want to make it clear to you guys that buying this stuff is almost never a good long term investment uh for the period that it is vesting out like for example if in if everyone gets vested out in like 3 years from when the project launches and then uh the the you know the project is still going really strong it's growing it has it's it has product Market fit then maybe at that point it's a good idea to buy the token or maybe at that point you could make money buying it but the problem is is that during that kind of vesting period during that period when things are unlocking more and more

people don't want to buy so there's no the demand is is is kind of down and there's more and more kind of Supply coming onto the market that was already priced at a really really high fully AED valuation so you may not kind of lose money right but uh you know if it works out the way it did with Lio depending on when you buy and sell but you're not really making anything here and the only ones making money are the early uh kind of investors that were done privately right it wasn't done publicly here so and then this is against USD measure this against Ethan it's even worse so when you look at it from that perspective FID luded value absolutely matters it may not matter in like a shortterm period like let's just say in a bull market for like 3 to 6 months of

the heart of the bull market it will not matter because everyone's just piling in with new money no one cares what they're buying you know everyone's locked up there's no kind of tokens coming to the market so these things are flying but that's the thing like they're flying because of the bull market effect they're flying because of Traders but then once a bare Market hits what do you think is going to get absolutely crushed the most it's going to be these things because investors are going to want to sell people who invested out are going to want to sell right especially if these things are at just astronomically High valuation and they know it's a bare market so they're not going to be like I'm just going to sit on this till the next bull market comes around they're most likely going to sell because they're like oh I

better sell because I want to I want to lock in the profits now I'm already up so much why would I not sell this is the same logic I use as well like not even just with kind of Angel Investments and stuff like that but I Ed the logic with uh you know the my djen tokens that I talked to you guys about that I had in an airdrop I made like a 40x on that because I just got it in an air drop I just let it sit there and then it went up a lot in value and I was like well I just made a 40x on this and I sold it cuz I'm like why I mean I sold half and then I sold most of it the other day uh again um and and I sold it cuz I was like why would I hold this more yeah

okay maybe I can go up from here but I just made a 40x like come on that's a crazy amount of money in a short period of time like why wouldn't I actually realize those profits so the same is true for all of these you know Insider investors all these VCS U that that that that kind of do this here but they definitely want to be selling into like a demand driven environment a hot environment so typically what you'll see is that they'll wait until like the bull market if they've already got their tokens they may wait until you know the heart of the bull market until there's lots of demand coming in in order to kind of offload but it just depends depends on the project depends on the token depends on the VCS right some are more predatory than others uh and so on

and so forth so at the end of the day guys like you really do need to be keeping in mind fuled value not just because of against USD but because of against eth eth technically has a fully DED value of of infinity because there's no Supply cap on eth but all we we we all know that eth is that deflationary year on year thanks to the burn and we all know that eth has an incredibly stupid amount of demand it has no unlocks coming because all of uh the investors were unlocked from day one from the Ico the eth foundation has all of their eth there's no VCS or insiders or anything like that um and the same is true obviously for Bitcoin as well so that's why you typically see or one of the main reasons why you typically see BTC and eth just outperforming so

strongly is they don't have that overhang right they don't have that worry it's not like you're going to uh have to worry about someone like unlocking and dumping and all those sorts of things there so yeah hopefully that was a nice little rant for you guys on that because I do want you to be aware of this I do want you to realize that yes these things with high FID luted values can go to astronomical Heights in a bull market um but in a bare Market they will get absolutely crushed for sure they will get crushed they will go down more than you could even hope to think that they could go down honestly and I've experienced this many times as this is this is like my fourth cycle now it's it's been it's been a crazy ride but anyway I think on that note that's going to be it for

today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone