The Verge hype, New layer 2 newsletter and more - The Daily Gwei Refuel #451 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Deadly gray refuel where he kept the latest news in ethereum ecosystem I'm your host Anthony and has the 20th of September 2022. right everyone let's get into it so the SEC has charged or the SEC has charged Ian bellina for promoting unregistered icos now for those of you who are around during 2017 and 2018 Ian bellina was pretty popular had a pretty big following and had this kind of spreadsheet with all these icos listed in them that he would promote on his YouTube channel on his Twitter and everything like that uh and he wouldn't I mean I don't think most of the time he would disclose that he was getting Kickbacks for promoting this he was getting tokens paid out to him and things like that so all round just a bit

of a grifter uh probably you know pretty much as like a scam life I had to if I had to go that far but uh the SEC has finally gone after him in a chart is charging him with promoting unregistered icos here so you know I put out a tweet where I said you know finally this happened and then this is what the SEC should be doing go going after actual Bad actors in crypto and not going after the honest Builders but then James Hancock here replied and said there is uh kind of a point in the filing that says that I guess kind of um makes a weird argument I'll write it out so it says the us-based investors in Molina's pool are irrevocably committed to the transaction when from within the United States they sent their aid contributions to bellina's pool at that point their

eighth contributions were validated by a network of nodes on the ethereum blockchain which are clustered more densely in the United States than any other country as a result those transactions took place in the United States so this is really weird and bizarre and doesn't make any sense because essentially what the SEC is saying here is that uh the SEC has complete dominion over the ethereum network right and all ethereum Network transactions happen in the US now obviously that's not true obviously that's not how this network works and also less than 50 of the nodes are actually based in the US so he's not even right about that all the SEC isn't even right about that but this is a very dangerous thing like if this actually

becomes precedent and this actually is part of the filing and actually goes forward and become and goes into the records uh they can use this in the future if they wanted to this is a massive power grab right here with just just this statement and they've buried it as number like 69 here on on the points that they have in the filing which is obviously very far down the list but uh yeah it basically States if I'm reading it correctly which I think I am that the SEC believes that it as long as you may you're making a transaction on the ethereum network uh you are basically transacting using United infrastructure that's um located in the United States and in all ethereum transactions happen within the United States which obviously isn't correct uh I as I said I think this is insane I

really hate this because the fact of the matter is as I said I like that the fact that the SEC is actually going after the people that they should be going after but then they're trying to show horn this crap into it which just is kind of like I said you know like rugged but again by the SEC which is just ridiculous um I think just generally and I've talked about it a lot Gary genslar and the SEC they're trying to power grab wherever they can they're a lot of bark with very little bite though and I was talking about this in the Discord Channel today but it seems like from my reading that Ripple and the SEC are not Ripple Labs I should say and the SEC are not actually going to go to court they're going to settle out of court and it's probably going to happen relatively

soon now if I had to give my own Assumption of what would happen here I think that Ripple is Labs it might uh or is probably going to admit that at the time that they sold and created xrp it was a security uh but it is no longer a security and they're going to pay a fine for that initial unregistered Securities offering and they're not going to admit any wrongdoing right basically the EOS treatment because this is what happened with EOS now if the SEC can't even get Ripple right can't even get xrp which in my mind is one of the most obvious Securities in crypto if you were to make an argument that a crypto is a security I would say xrps is pretty obviously one uh then how is the SSC going to get anything else especially eight like

people are always talking about oh you know there's a risk that it's going to be labeled as security because of comments from Gary Gensler and the SEC generally and as I said they just seem to have a lot of bark and very little buy they seem to be trying to power grab but they seem to be failing it actually uh using any of the power that they seemingly think they have so it's just bizarre when when I kind of look at that and look at people's arguments and and it really is just disappointing that the SEC has become such a clown show because as much as I don't really think that Financial regulations I mean I'm against a lot of different Financial regulations I still think that there should be a body that holds people responsible if they're literally scamming people or committing fraud like obviously I want

criminals to be punished right but I don't want the the bodies that are responsible for punishing criminals making everyone feel like a criminal and making everyone feel like they have to over comply like we saw with the ofak sanctions for tornado cash right like everyone felt like they had to over comply on things that's not good regulation that's basically I mean maybe the us or the Nations they would consider that to be good regulation because they basically get uh uh I guess like control over certain aspects of an industry for free they don't have to legislate for it or anything like that um and actually on the Ripple note as well I did want to make a note here the reason why I think that it's not going to go to court is because if the SEC was to lose that case in court it's even

worse for them it basically sets a precedent which means that if they lose there is probably zero percent chance that they'd ever be able to classify anything as a security within crypto which is obviously not what they want so now I'm not a legal expert uh so don't take my what I'm saying is Gospel but from my understanding from my reading like you only go to court if you think you're going to win like in the legal system and the SSC obviously doesn't want to risk edit all Ripple obviously has a lot of money to spend on lawyers and those lawyers are probably doing their job right and as as much as it pains me to say it this is good for all of crypto like I honestly think Ripple and xrp are pretty much a scam and you know people flame me for that opinion

whatever maybe I'll get some reply guys on on YouTube here um but but generally them winning against the SEC will just defang uh the SSC a lot and make it a lot harder for them to go after other things not that I think that there was any risk that they'd be able to label ether security but just in general I think that as it currently stands the SEC is the biggest joke of an institution uh in the I guess like regulatory environment in the US that Gary gainsland needs to be fired essentially he's not doing a good job at all I don't know how anyone could argue that he's doing a good job unless your definition of a good job is uh is doing things that appease certain people over others that's I guess venturing into a different discussion um but uh yeah this this latest filing

is just ridiculous like there's no way in how you can argue that every transaction happens on the ethereum network uh you know is jurisdiction of the SEC that doesn't work like that and then the fact that they're trying to push this just shows that they are really trying to grab as much power as they can and I don't think they're going to succeed with that uh but yeah that's that's all I wanted to talk about on that front onto some more I guess positive news from the last 24 hours so there's been a lot of discussion about validated withdrawals or Beacon chain withdrawals or staking withdrawals since the merge happened and for good reason I mean even before the merch happened there was a lot of discussion around this for good reason we want to close that Loop we want people to be able to

exit from staking not just by selling off St eth or Ari for example or any other LSD but also withdraw their eth from the beacon chain and also withdraw their rewards right they can only get the fees right now they can't withdraw their block rewards we also want that too and there's been a bit of discussion um about like whether this is going to be included in the next Network upgrade which is code name Shanghai and people have been doubting that it's going to be included well I don't think so I mean as Preston Van Loon says here validator withdrawals are considered for inclusion in the Shanghai upgrade I believe this is an important feature that ought to be in the soonest practical upgrade and there has been been a social contract in place for for a long time now that withdrawals would come in this Shanghai

upgrade or at least be highly considered to be included in that upgrade which is obviously the first one after the merge and you can see here that the specification for withdrawals is pretty much nearing completion and it's actually relatively simple to implement this it's not a difficult thing to do so once the spec is is actually completed and finalized then the client developers can start implementing it and then from there obviously we do the coordination dance uh we see what else we want to yeah we want to we want to do and what other eips we want to include in the Shanghai update and then it goes live as I've said before I think that we could expect this in late q1 probably Q2 ish i i don't imagine it happening in early q1 because if you think about timelines

here the next I guess like few weeks the core devs are going to be uh I guess they're still gonna be working on stuff in the background but not as much and then we've got Devcon which is obviously going to take up a bunch of time in October then we're nearing the holiday period and things like that so uh and it takes a while to get these things done like it's not something that can happen overnight so if I had to be generous I would say late q1 but I'm more expecting a Q2 kind of release here which is still fine I mean that's in that six to 12 month window that people have been quoting and as I said withdrawals themselves are relatively simple and the decision could be made that we just ship withdrawals as its own hard Fork we don't have to put anything else into it

we just do withdrawals and then if the other stuff isn't ready yet we just do it in another hard Fork later on um which I think would actually be the better way of doing things because as I've said plenty of times withdrawals are critical I believe that they should happen as soon as possible we shouldn't be delaying it which I haven't seen any indication of any delays or anything like that uh but I think that the core researchers developers and people part of that environment completely understand this and want it just as bad as everyone else wants it and I I I mean personally like I don't care like people say oh you know it's going to lead to a dump in price because all this either is unlocking I mean that shouldn't determine what we put or don't put into the network it shouldn't have anything

to do with markets as I've mentioned before and I honestly don't think it will lead to much of a sell-off I think what's going to happen is that great reshuffling I've been talking about multiple people have uh signaled either publicly on Twitter or messaged me saying that they originally staked with a centralized provider because it was much easier uh rocketpool wasn't live right a Lido wasn't even live uh and now they're like well I want to actually exit that position but you know maybe they're sticking with coinbase they don't want to take the massive haircut on their ether they'd rather just wait but they really want to exit and there's also people who have stacked enough to become a solo Staker that want to exit uh whoever they've staked with uh previously and stake as a solo uh kind of Staker there so when you look at it

like that you can see uh that it's not just going to be people are going to withdraw their stake which obviously goes into a queue it's not going to all be withdrawn at once and just Market dump the wreath there's obviously going to be some of that and people probably going to sell some rewards especially for tax purposes but generally I don't think that should dictate anything around withdrawals so yeah I'm very much looking forward to them going live and we can still expect them uh in the next upgrade uh next to hard Fork such Network upgrade that goes live on ethereum all right so speaking of staking Marcio here from the rocketball community put out a great thread today uh started off by saying did you know that running an ethereum validator has a total of five revenue streams or seven if running with

rocker pool so he breaks them all down here by saying category one you have Beacon chain rewards would you get rewarded for attestations for proposals and for sync committees that's just the normal rewards that you will see popping up if you're a solo validator if you're running your own validator you'll see those popping up uh category two uh which is execution rewards so this is new with the merge obviously uh tips which is the unburned fair revenue and Mev uh which is the minor extractable value or maximal extractable value that you can get from running things like Mev boost and Category 3 is rocketpool rewards so there is commission and RPL rewards as part of Rocket pool staking so you get even more rewards on top of solo staking I know people have talked about this a lot in the Discord Channel and I've talked about it on YouTube

before but those are the kind of rewards that you get for uh staking on the beacon chain and it's very tempting to go with rocker pull right when you get those extra Awards there and as I've said previously I'm still in the process of spinning up my rocker pull uh mini pool and and getting all that out there and I think that those extra awards are very juicy for people and I think that they've done that obviously on purpose and and in a very targeted way in order to get people onboarded to to rockapool because at the end of the day for me it goes like um ethereum solo staking in terms of uh I guess uh where I'd first stake my eighth then it would be rocket pool and then after that I mean it'd be kind of hard for me to choose I would

have to say right now it'd probably be Lido uh because after that it just gets like pretty much every other solution from there is centralized right there's just like dollar staking then rocket pool then centralized Solutions so right now I'd pick Lido just because they've been around for so long uh and they're the you know probably one of the the best centralized Solutions out there and then after that it'd just be centralized exchanges be coinbase or Kraken really so you can see we obviously need a lot more of these things coming online a lot more all these decentralized staking pools coming online but we still have a very robust one with rocker pool and a very great one which has a great Community you know if you have any troubles you can go in the Discord Channel ask in there they'll help you out uh and they're also still a very

small part of the network so there's no risk of you uh I guess like increasing uh their share of the network so much that it becomes toxic none of that right they're still a very small percentage and we obviously want to get them uh as high as we can but still under that threshold that I I kind of mentioned yesterday of 10 now that was just a random threshold that I came up with you know in an ideal Ideal World it would probably be less than that but like there is kind of like those uh I guess uh points that we don't want to see things out like 33 for example we don't want to see anything above 33 like at all like that is one of the key pivotal zones and obviously the worst case scenario would be any one entity or even a group of entities above 66 because

that's the finalization threshold but if you think about it uh you know 10 or or even like or even maybe 15 on on the higher end of things isn't extremely bad but it's still not great so under 10 is fine in terms of uh I think single entities uh on the network but we wouldn't need to work as hard as we can to get that even lower and not all entities are created equal either I think you can actually apply different percentages to different entities for example if 30 of the network was uh solo staking I would have no issue with that right because solos taking is not just one monolithic entity it is uh I mean thousands tens of thousands hundreds of thousands of different entities of different people in in individuals and and things like that doing their own

solo staking now obviously it's very hard to know how much of the network is an actual solo Staker because you don't want like the people who don't want to be found won't be found and fingerprinting them is quite difficult even if they haven't hidden themselves um but then things like centralized taking we don't want that anywhere near 30 right we don't want it anywhere near 20 we want it like 10 or less ideally and in an ideal Ideal World would be 5 percent but then decentralized staking pools you can probably have that higher than five percent and so pretty safely 10 15 might be fine right so I'm not meaning to imply that all of them are created equal there are different definitely different thresholds but uh and obviously solid staking is the the gold standard in terms of thresholds but generally uh I think you know you just

got to look at it as we don't want any one party having anywhere close to 20 or 30 percent besides solar stakers but as I said solo stickers are hard to fingerprint that's why you see them listed as other in uh in I guess like those um Beacon chain charts that you see for stake distribution but even other doesn't necessarily mean solo sticker it could mean anything really but it's just it's assumed that it's solo Staker right but uh but yeah anyway enough on that topic I got a bunch of other things to get through before I run out of time today um so Julio here posted another tweet thread or a tweet about vertical trees or The Verge so Julio says I just prototyped The Verge transition at Heath Berlin on Aragon will fuzz it but I could not manage to break it manually so

far you won't be able to be sinking from scratch for now but the switch happened flawlessly so The Verge is one of those next I guess road map items that are going to be executed on over the coming years along with the Surge and all those other ones that you've heard of and if you want to know all about The Verge actually this is a perfect segue into a blog post or I guess like a newsletter that hamesh put out today which is part two of his after the merge sub stack series which is all about The Verge so this post explains what Merkle trees and proofs are how vertical trees and proofs to prove upon them and the statelessness implications are for full node so I obviously highly recommend giving this uh uh thing a read here but there's also a little teaser from Julian you know who

works as a core developer on Geth at the ethereum foundation about the smell of new vocal test net coming up soon so the work is continuing on these uh I guess things these roadmap items after the merge not just on the surge related stuff like Proto dang sharding but also on vertical trees which are very important but as I said I reckon meant you read this blog post newsletter to get the full Lowdown of that and dive deeper into the Verge because I think the Verge is probably in terms of like near term ish roadmap items The Verge is definitely there and it's probably the one of the most least understood more widely obviously when it comes to sharding and things like that and proto-dang Shining I think that's that's better understood because it's been talked about longer but I'm going to try

my best to talk about The Verge more and point you towards ways to get yourself educated because it is definitely just as important uh for for the ethereum romance that's why it's a major item on the roadmap right uh so go give these a read I'll link it in the YouTube description below but good to see both a go ethereum developer or guest developer and an Aragon developer working on uh vocal trees here all right so Varun from Stanford uh yeah uh actually he works on Research at uh at chapter one which is a crypto fund but he went to Stanford if there's Stanford University here uh put out a thread saying a zero knowledge proofs will revolutionize how we think about privacy and scaling computation and they're just starting to take off don't want to get left behind here's a quick

primer just for you so just another thread to check out to uh I guess like get the lowdown on zero knowledge proofs when it comes to privacy and scaling highly recommend the thread I mean even if you understand zero knowledge proofs it's probably still worth the read just to see if you're missing anything so I'll link that in the issue description below for you to check out and speaking of threads to check out there's another one here from Haim who is a recommended follower at this point I think he is doing he or she I don't know who who they are are doing a lot of really great threads around ethereum generally over the past few weeks and I've highlighted some of them on the refill already well today's thread is all about eigen layer or Eagan layout I don't know how to pronounce that exactly and about how it will

extend e to provide generic extendable trust uh and I think paulina's talked a lot about these guys before as well so you can definitely check out this thread for a Lowdown on them it's a 24 tweet thread so a bit longer than your usual thread but not too long and obviously if you've been reading Haynes uh previous threads you'll know that this one's a goodie as well so I'll link that in the YouTube description for YouTube checkouts all right so Muse out of Galion today so following the passing of gathering one Improvement proposal 7 the Carpenters have blistered their hands deploying upgrades so arbitrim cannons are on deck and optimism cannons are on deck and their set protocol Fork is now deployed and the product roadmap is unlocked so a lot of updates here on the Galleon side of things as you can check out in this

blog post so arbitrim and optimism deployments are done I believe yeah and there's also a little what's next section around uh what's coming up on the road map so you can check this out I'll link in the YouTube description below but good to see another team just building through the bear market like that's what it's all about right now and you guys know I'm an angel investor in Galleon as well so I should just disclose that disclose that there um but I'm an angel investor in them because uh Andrew Wilkinson here the founder of Galion he uh was it set and I have been friends with him for quite a while and he just knows what he's doing when it comes to Structured Products when it comes to what people want within D5 and I think what he's building with Galleon is really awesome so you should

definitely go check that out I'll link it in the YouTube description below alright so speaking of new deployments xerox's API is now live on arbitrim so if you're a developer you can now tap into Xerox API for aggregated liquidity and Smart Auto routing with best executed prices deep liquidity 99.9 uptime and Uber fast response time so you can check out this blog post for full details on this but obviously this is one for the developers out there but cool to see this is live on arbitrim because developers will tap into this and then users will get uh I guess a value out of this Xerox integration on arbitrim so I'll link the neutral description for the developers out there to check out so an announcement out of ens today so ens and coinbase have teamed up so

aligned with the anes's mission to make web 3 more accessible we partnered with coinbase to create CB ID usernames a free to claim web3 username existing.eth addresses can connect existing names to seamlessly transact and build out your web3 digital identity so I think if white might have seen these before the CB ID I uh kind of identities that you can get through coinbase which is running on ens so it's not a dot eth but it's like a DOT ID I believe uh so you can basically have like sasol.id instead of sasol.e for example which I think is really cool like obviously I would have preferred it to be dot eath on the front end but it's still tied to the same address uh because you can have like many of the of these things tied to the same address but uh dot ID I guess just makes sense

from coinbase a side of things because coinbase wants to be relatively neutral probably towards these networks even though I think that coinbase is doing a lot of great work for ethereum and it's a layer to ecosystem as well and they're doing a lot of really cool stuff in their coinbase wallet with the default Integrations uh I guess like it makes sense for them to do a DOT ID rather than a DOT Ethan on their front end for their users so they can basically not confuse their users so to speak and then anyone wants to dive a bit deep I can just see okay well it's not Ethan under the hood you know go get their eighth name and things like that as well and play around on chain with d52 so very cool to see this partnership uh just ANS kicking more goals here and coinbase uh

doing uh some more great things within in the ethereum community alright so a fresh blog post out of lead.5i today so this one is called a navigating arbitrary messaging Bridges a comparison framework so Bridges I haven't talked about them in a little while but they're still as important as ever and I just saw before and I forgot to include it that there was a critical bug I believe in the arbitrim bridge after and it got introduced after Nitro was deployed from L1 to L2 and as I've said you guys before the just because a bridge is like an L2 Bridge doesn't mean it's any more inherently secure than a cross Chain Bridge right like from a from a bug perspective from like a smart contract

perspective there are a crypto economic designs and architectures that are more exploitable for cross-chain Bridges than they are for the L2 stuff but this was a bug in the actual contract now as I've also said before the contracts are the l2s at the end of the day the bridge contract is basically the owl too because that's where all the assets are stored they're still stored on ethereum layer one you basically get this IOU on lay on on Layer Two right so and and this thing that kind of represents what's on in that layer one Bridge so I think with this exploit it was found in patch and everything Thing by a white hack but I think with this exploit what could have happened is that funds could have been drained out of the L1 Bridge contract which would have left the funds on L2 without anything backing them and

it would have led to a bit of chaos there or maybe a lot of chaos so it's still very important to keep in mind that just because something is an L2 and you're bridging to an L2 doesn't inherently make it more secure against bugs in the contract than if you were to bridge to a side chain or another L1 because at the end of the day you're putting money into a smart contract it's the same thing with like D5 and other smart contracts out there you need to be aware that there's risks with that so that's why I think that I wanted to highlight this this blog post as well which is actually quite a lengthy read it's a 44 minute read but it's got a massive comparison framework over these arbitrary messaging Bridges which are I think one of the more popular bridges out there uh there's things like axillar

layer zero Nomad Wormhole so no both Nomad and Wormhole have been hacked previously right with massive hacks I believe Nomads was 190 million Wormhole was like 300 million or something thing and then there's other ones as well that I don't believe have been hacked uh yet maybe they will in the future but uh you should definitely give this post a read to understand how all these things work how they differ uh you know what uh what kind of security assumptions there are and all those sorts of things as I said it is a long beefy read I haven't read it yet uh it's just too long for me to to fit in over the past couple of days or since it was published but I do plan to get to it uh hopefully maybe over the weekend when I've got some more time uh but I I think it's definitely well worth

the read because I've read the blog post that they've put out before that Levi has been have been putting out before and they're they're usually very good so holding this in the YouTube description for you to check out all right so a Liam here has a new newsletter called the layer 2 weekly Roundup so this is going to be a Weekly Newsletter covering uh which covers the latest and most important updates from within ethereum's layer 2 ecosystem so if you're interested in keeping up to date with layer twos well this is what you should be subscribed to uh it's just a bunch of I guess a collection of resources here with a bunch of dot points and updates all around uh l2s across the entire ecosystem and I think it's very very useful I think you know I used to do this uh uh for

um I think like what I was set when I was doing like these weekly D5 newsletters and it was basically just like a a Roundup right where people could go in to find some resources go get go get educated on things keep up to date with things I think these are very valuable so I'll link Liam's new newsletter in the YouTube description below and you can go give it a subscribe and also give Liam a follow he does a lot of great threads around layer twos and just ethereum in general uh definitely worthy follow so I'll link uh that in the YouTube description as well for you all right last stop just a quick shout out that there's only a few days left in the current get coin Grant round so you should definitely go donate to your favorite Bitcoin grants and one of those

should be the protocol Guild which a refresher for you guys is a collective of 119 ethereum core protocol contributors and they're getting paid with oil donations so you'll be directly contributing to the future of the ethereum core protocol by uh donating to the protocol Guild but as I said don't just donate to the protocol Guild you can also donate to any of your favorite projects on uh a Bitcoin for the last few days of this grants round which actually finishes in a couple of days yeah the 22nd I believe it finishes so it's a couple days from now so go do it I I don't think I've done it yet actually yeah well I just remember reminding myself I've got to go do mine so I'm gonna go do that um but yeah definitely go uh go do that but I think that's going to be it for today I just

wanted to make a quick comment hopefully the audio issues are better I know in the past I've had a lot of issues around uh popping so whenever I said peas it would like really pop and it would get annoying and there was different like volume issues and things like that I changed use my mic and like filled with the whole setup and it seems to be a lot better now so if there are still issues please let me know but I think I finally like ironed it all out so hopefully it's all good there but 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 that video a thumbs up subscribe to the newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone