Crypto Crypto News 2021

chylld · 20th Feb, 2021

This paves the way for the big one: official Bitcoin ETFs. The first North American one "Purpose Bitcoin ETF" (BTCC) just debuted with $165m of volume

Bitcoin ETF Roars in Debut With $165 Million of Trading Volume

Ouga · 20th Feb, 2021

chylld said: ↑

This paves the way for the big one: official Bitcoin ETFs. The first North American one "Purpose Bitcoin ETF" (BTCC) just debuted with $165m of volume

Bitcoin ETF Roars in Debut With $165 Million of Trading Volume
Click to expand...

And the great thing is that it actually invests in physical BTC.

Ouga · 20th Feb, 2021

Next, a US based Bitcoin ETF, probably within a year or so I would think.
Next, an ETH ETF?
Grayscale has been gabbling up heaps of ETH since they have re-opened the fund.
BNB has been pumping hard, I don't know how long it'll last but would not be surprised to see bags getting moved to ETH.
Gas fees are really killing ETH at the moment though, but once a layer 2 solution comes out, rockets under ether will be coming.

Not advice in any way.

Ouga · 20th Feb, 2021

The latest ETH dev call details plans for the Berlin hardfork with a target date of 14th April.
The propositions include solutions with reduction in gas fees.
Not a be all solution, but hopefully a significant improvement towards reducing gas costs.
Ethereum 2.0 can't come soon enough.

Perky29 · 21st Feb, 2021

Yes, bring on ETH 2.
Haven't worked out what is the safest / best option to stake my 32 ETH yet. Bought most of our ETH mid last year in preparation for staking.
Who knows where ETH will be in 5 years, it might just be a nice little source of retirement income on top of our properties.

Ouga · 21st Feb, 2021

Perky29 said: ↑

Yes, bring on ETH 2.
Haven't worked out what is the safest / best option to stake my 32 ETH yet. Bought most of our ETH mid last year in preparation for staking.
Who knows where ETH will be in 5 years, it might just be a nice little source of retirement income on top of our properties.
Click to expand...

It’s good you have the 32 ETH, gives you options for when staking is deployed on 2.0.
Hopefully this happens sometime soonish, but the miners aren’t too happy with this obviously and are festing on tx fees right now.

Onyx_OCAU · 21st Feb, 2021

Hope everyone's had good crypto growth in their portfolios this weekend. BTC went on a meteoric rise. It touched $74k today. All the altcoins got dragged along for a ride with it.

I rented an AirBNB place on the waterfront to chill and trade crypto this weekend. Was kept awake throughout the night making money. The end of my weekend I ended up consuming copious amounts of alcohol, good food; and with more money in the bank than when I had started the weekend with - even after paying for the accomodation, food, booze and all.

chylld · 22nd Feb, 2021

that's one way to do it!
personally i prefer to earn money while I sleep. my Uniswap position grew by 43% on the back of the imminent V3 release and maybe people realising Binance Smart Chain (BSC) isn't all that great after all

chylld · 22nd Feb, 2021

Ouga said: ↑

It’s good you have the 32 ETH, gives you options for when staking is deployed on 2.0
Click to expand...

One of my friends has staked 288 eth... I thought he just chose an auspicious number, but turns out you have to stake in multiples of 32.

Perky29 · 22nd Feb, 2021

Wow, imagine having 288. Good luck to them!
Speaking of Uniswap. I spent days trying to figure out why I was having issues swapping from one crypto to another recently - I have used it many times before.
Worked out you need to have a small amount of ETH in your wallet (MEW) so it uses the ETH to transact ( I recently sold out of some ETH to buy BNT). A "der" moment I thought I might share...

chylld · 22nd Feb, 2021

Perky29 said: ↑

Worked out you need to have a small amount of ETH in your wallet (MEW) so it uses the ETH to transact ( I recently sold out of some ETH to buy BNT). A "der" moment I thought I might share...
Click to expand...

Likewise! I first tested Uniswap with my empty MEW wallet, deposited some token and tried to swap and it failed. Later used Uniswap with my Ledger and did a few transactions but started worrying about why my ETH total wasn't matching up with my records... a-ha

Ouga · 23rd Feb, 2021

A very interesting & insightful take on how the upcoming EIP-1559 Ethereum proposition might play out:

Miners will accept EIP-1559, here is why - Deribit Insights

Miners will accept EIP-1559, here is why
February 22nd, 2021|Market Research

EIP-1559 is one of the most highly-anticipated Ethereum upgrades of all time, radically changing how users bid for transactions, among other major benefits.

EIP-1559 has overwhelming community support and is technically ready to be included in the hard fork after Berlin, pending the usual core developer evaluation process. Lately, miners have started to rally against the proposal. This is not too surprising, since the mechanism would burn some of the transaction fees miners would have previously received.

Although it may seem counterintuitive, our hypothesis is that the best strategy for miners is to support the deployment of EIP-1559.

We test this hypothesis by examining the two most effective ways for miners to protest the proposal: (1) fork Ethereum to create an altcoin without EIP-15559; and (2) block EIP-1559 on Ethereum by driving the basefee to zero.

After considering their feasibility & opportunity cost, we find that any form of aggressive protesting would damage long-term miner revenue more than cooperating with users.

Miners are structurally long ETH and the Ethereum economy
The revenue miners receive, and that EIP-1559 stands to affect, currently consists of three sources:

First, a block subsidy of 2 ETH per block as well as an extra reward for uncle blocks.

Second, fees from users who bid for inclusion in the blockspace market (irrespective of their final position in the block).

And third, the difficult-to-quantify but very high value miners can extract by inserting (or not inserting) transactions at specific points in the block. This is called miner-extractable value, or MEV, and most miners currently “outsource” it to frontrunning and arbitrage bots, who run bidding auctions with each other in the mempool.

After activation of EIP-1559, miners will continue to receive the same revenue from the block subsidy and MEV. The value from inclusion fees would be burned as long as the system isn’t congested (demand below the maximum gas limit). When demand exceeds the maximum gas limit, there would be an additional first-price auction between transactors, with the proceeds going to miners.

To earn these rewards, miners have to invest in mining hardware, power purchasing agreements, and other capital expenditures. This investment makes them structurally long ETH and the Ethereum economy because they have to mine for the investment to pay off.

While we don’t deny that EIP-1559 has the potential to reduce one of those three sources of revenue, miners will still have enough future revenue “at stake” to protect Ethereum and its users. Even with the entire basefee being burned, MEV and the block subsidy will still be a significant source of revenue for miners. Finally, the deployment of this upgrade could also mark a turning point in user demand for Ethereum, ultimately growing the Ethereum economy as a whole.

Users are the Ethereum economy
To understand the power dynamic in Ethereum, it is important to understand that all three sources of revenue stem from users and the applications and businesses that serve them.

Users create the demand for ETH, which miners then sell to them in exchange for fiat, as well as for other tokens in the Ethereum ecosystem. Their demand to transact, exchange, borrow, lend etc. these tokens creates congestion fees. And finally, their usage of Defi applications, e.g. decentralized exchanges, creates MEV in the form of constant price arbitrage and other opportunities for miners.

Users are the Ethereum economy. Miners provide a service to them in the form of network security. It is a transactional relationship – miners don’t provide this service out of the good of their heart, but in response to the financial incentive that users create for them.

Users have no moral (or other) obligation to pay miners more than is needed for Ethereum to be secure anymore than miners have a moral (or other) obligation to keep mining when it’s not profitable for them.

Ultimately, the power dynamic between users and miners can be explained with replaceability. It is near impossible for miners to replace the current Ethereum users as their main source of revenue. But it is very possible for users to replace some or even most of the current Ethereum miners.

Having established this basic relationship between miners and users, we will apply the framework to various scenarios of how the EIP-1559 activation could play out.

Scenario 1: Miners maintain the old chain without EIP-1559
We mention this only for the sake of completeness because in many other blockchains, upgrades face an inherent uphill battle. That is because it’s generally cheaper for users to do nothing and stay on the existing chain, and hence it becomes easier to block new proposals from going through.

This cannot happen in Ethereum due to the difficulty bomb. In short, if there is no hard fork to reset the difficulty bomb, mining difficulty will increase until Ethereum itself grinds to a halt. That makes it impossible to stay on the old chain ‒ any EIP-1559 opponents would need to incur the same cost of going through a hard fork that at least defuses the difficulty bomb.

Scenario 2: Miners create an altcoin with Ethereum’s state
A more viable proposal would be for miners to simply fork Ethereum and create their own altcoin, similar to how ETC once forked from ETH or how BCH forked from Bitcoin. Whether it can make sense to fork would depend on the opportunity cost of doing so(1). In the case of EIP-1559, miners would have to decide between mining their new altcoin chain and the existing Ethereum chain.

This opportunity cost is no joke, since—as we previously established—in order to pay miners any revenue, a blockchain first needs to create value for users for there to be a valuable block subsidy, congestion fees and MEV. Both Bitcoin and Ethereum have been forked dozens (or even hundreds) of times, but most of these forks never got any traction with users.

Building that traction is a lot easier when you can also fork a blockchain’s state, and all successful forks of the past have done just that. In Bitcoin, the state is simply a list of coin ownership. BCH forked this list to leverage Bitcoin’s existing supply distribution and airdrop new coins to all BTC holders.

But Ethereum’s state is more complex, containing not just the distribution of Ether, but also thousands of different tokens, smart contracts, applications, and so on. These would also be copied in a fork, but they would be mere skeletons on another chain.

For example, many of the largest tokens on Ethereum such as stablecoins or WBTC are claims on an asset in the real world. Duplicating the claim wouldn’t duplicate the asset. These claim tokens would continue to operate on the EIP-1559 Ethereum chain, but be worthless on the fork chain.

As a consequence, remaining Defi apps on the fork chain that rely on collateral would also unwind, for example the collateral-backed stablecoin DAI or any form of AMM pool. In short, everything other than ETH, including important off-chain infrastructure like oracles, liquidation bots, etc. would blow up and it would create a huge mess on the fork chain.

While ETC was able to fork from Ethereum in 2016, a similar event is no longer possible today. The emergence of tokenized assets and Defi has made Ethereum’s state unforkable(2).

Scenario 3: Miners create an altcoin with a fresh state
If Ethereum’s state cannot be forked, what about an altcoin that copies only the safe elements of Ethereum’s state (e.g. the distribution of ETH) or even starts from a completely fresh state?

This is more viable than scenario 2), as is proven by other “stateless” forks of Ethereum such as Tron and most recently Binance Smart Chain (BSC). Especially the success of the latter proves that there is tremendous value in leveraging Ethereum’s Virtual Machine (EVM), the existing wallet infrastructure (like Metamask), and developer tooling. Further, while dapps wouldn’t be copied automatically, they would be trivially deployed and could later be populated with new assets.

Given the rapid success of BSC, wouldn’t there possibly be market demand for a “permissionless” version of it, with PoW mining instead of a centralized operator? The new chain could even increase the gas limit, to target the same demographic of users who are currently priced out of using Ethereum due to the high gas prices.

But on further reflection, this approach is also loaded with problems, and the issue is around supply distribution.

If the new chain decided to reset the supply distribution of ETH and start from 0, it would lose the existing supply distribution. Bootstrapping a new supply distribution would require years of high inflation, making the asset unattractive to hold. BSC, in comparison, doesn’t have this issue, since Binance is the only block producer and needs no additional mining incentive.

But if the new chain, alternatively, copied the distribution of ETH, then a lot of the new ETH would be in the hands of potentially hostile users who could use it to depress the price for a long time. This would render any block reward for miners on the new chain worthless and shows that even “stateless” forks require some amount of support from existing users.

Scenario 4: Miners join the new chain but block EIP-1559 there
As we have laid out, any attempts to create an altcoin are basically doomed to fail. This leaves one more possibility, which is also the most discussed by miners. In this scenario, miners would join users on the new Ethereum blockchain, but then suppress the EIP-1559 mechanism from burning any ETH by manipulating the basefee to zero.

The method would work as follows: The EIP-1559 controller determines the next block’s basefee by observing the size of the previous block. If the previous block exceeded the target gas limit (50% of the maximum), the basefee would increase to throttle transactor demand. If it was smaller than the target gas limit, the basefee would decrease to encourage demand.

Miners can technically control how many transactions they include, and hence can control the blocksize, and hence can control the basefee. If they only ever mined blocks that are less than half-full, the basefee would never increase above zero and hence none of the fees would be burned. However, competition between different miners makes this strategy impossible in practice.

First, imagine that a single mining pool with 5% of hashpower tried to implement this strategy. They would only mine blocks that are half-full or smaller, even if demand far exceeds that level. Meanwhile, the other 95% of hashpower would mine larger blocks, make more revenue from fees, and the basefee would increase anyway. The 5% mining pool quickly would realize it is bleeding money and give up or lose all of its hashpower. This shows that self-interested miners want to include as many transactions as possible, as long as there is competition between them.

So what if there was less competition? Imagine that instead of 5%, 60% of miners would agree to implement this strategy. The outcome would be the same, since for every half-full block the 60% cartel mines, the other 40% would get to mine full blocks, and get all that extra revenue from congestion fees and MEV, and basefee would still increase over time. We call this an unstable coalition.

The strategy only works if the hostile miners could find a way to eliminate that competition, so that no one else can mine large blocks either. With 60% of hashpower they could do that by implementing a so-called miner-activated soft fork (or MASF). This MASF would dictate that blocks over half-full are now invalid, and hence the 60% of miners should simply ignore them. Now the 40% could still technically mine larger blocks, but the 60% would refuse to build on them, and so all the transactions and block rewards distributed by the minority cartel would evaporate.

Now you have to understand that MASFs are nothing new. Miners can already form such a cartel today to e.g. drive up fees by restricting the gas limit, charge higher fees from larger transactions, or set a price floor. All of these strategies seem more profitable at first, but there is good reason miners don’t attempt to implement them.

First, they require cooperation from many mutually distrusting parties, which is very difficult to achieve. But more importantly, a MASF would be an unprecedented attack on the Ethereum network and its users. It would both destabilize the network at the consensus level and disrupt the trust of users into Ethereum. This already threatens future miner revenue, but users can also oppose the censor in more active ways. For example, we would expect users would start broadcasting their transactions directly to a friendly mining pool to withhold fees and MEV from the censoring pool.

In summary, basefee manipulation is not a stable equilibrium for miners without a MASF. But if miners did implement a MASF, it would be an unprecedented and self-destructive attack on Ethereum and hence their own investment(3).

Scenario 5: Miners join the new chain and smoothly implement EIP-1559
In light of the unsatisfying outcomes for miners in scenarios 1 to 4, we are convinced their dominant option is to simply cooperate with users.

Even if miners made less money on the new chain—which is not a given—that would still be far more than they could by trying to create an altcoin. Any such altcoin would have near-zero value in relation to ETH, no transaction fees from congestion, and no MEV from Defi arbitrage opportunities.

Further, implementing a MASF to suppress the basefee would be an unprecedented and transparent attack on Ethereum and its users. We have never seen such an attack in the wild, and for good reason. It would likely disrupt user confidence and the value of ETH as well as the economic activity happening in the system, and hence goes directly against miners’ interests.

Possible concessions
On top of the five scenarios discussed above, there has also been discussion of different concessions users could make to appease miners. The main ones mentioned were:

Raising the block subsidy on the new chain to compensate miners for the burning of basefee.

EIP-969: Changing Ethereum’s PoW algorithm to remove ASIC miners from the network.

Instead of burning the basefee, distribute it to the miners of the next N blocks.

We however re-emphasize that it is already in the best interests of miners to cooperate with users on the upgrade. Hence users don’t need to meet the miners’ demands and make any further concessions to them.

Conclusion
This is how we expect the upcoming EIP1559 transition to play out, and we are confident in our analysis. We look forward to discussing these arguments with the community at the upcoming EIP-1559 roundtable (Friday, February 26, 2021, at 14:00 UTC).
Click to expand...

really hoping this gets implemented

DanW · 23rd Feb, 2021

Ouga said: ↑

A very interesting & insightful take on how the upcoming EIP-1559 Ethereum proposition might play out:

Miners will accept EIP-1559, here is why - Deribit Insights

really hoping this gets implemented
Click to expand...

Saw that, and the replies.
This year Eth miners have made more money than the last 3 years combined. They've never had it so good, DEFI created mega demand to use the blockchain.

Yesterday metamask quoted me $200usd gas just to deposit USDC into a vault, had to reject it.. Can't wait for April. Just hope projects don't switch over to scammy BSC instead

Ouga · 23rd Feb, 2021

DanW said: ↑

Saw that, and the replies.
This year Eth miners have made more money than the last 3 years combined. They've never had it so good, DEFI created mega demand to use the blockchain.

Yesterday metamask quoted me $200usd gas just to deposit USDC into a vault, had to reject it.. Can't wait for April. Just hope projects don't switch over to scammy BSC instead
Click to expand...

Agree.
There are more and more layer 2 solutions being deployed at the app level, so hopefully that helps, but still this needs to be implemented ASAP and hopefully the miners can see that it is in their best interest to keep users on the network.

BSC is entirely centralised, it’s a joke! 21 nodes are you kidding me?!
Could actually be subject to SEC scrutiny in the US I reckon.

Ouga · 23rd Feb, 2021

DanW said: ↑

Saw that, and the replies.
Click to expand...

do you have a link for the replies? Have not read any, would be interesting to hear what the miners have to say

DanW · 23rd Feb, 2021

Ouga said: ↑

do you have a link for the replies? Have not read any, would be interesting to hear what the miners have to say
Click to expand...

Deribit quoted this one on https://mobile.twitter.com/hasufl/status/1363843029568733189

One of the replies had a GIF with a shaking fist lol. Miners so greedy, $1bn in revenue for Feb Ethereum mining’s monthly revenue reaches all time high over $1 billion in February

So you're not tempted to farm BSC Goose/Egg for 3000% APY? Surely that's a safe and sustainable yield and can't be a ponzi scheme

chylld · 23rd Feb, 2021

Big bombshell for Ripple/XRP in the pretrial hearing last night: a large exchange asked the SEC in 2019 if they were allowed to continue to sell XRP (they can't if it's a security)... and the SEC didn't tell them to stop. Apparently from a legal standpoint, this is a big problem for the SEC's case (skip to 6:15) :

Vertigo · 23rd Feb, 2021

there will be longs looking to take profit at 60k, so look like the liquidation is going to start now

DanW · 23rd Feb, 2021

Vertigo said: ↑

there will be longs looking to take profit at 60k, so look like the liquidation is going to start now
Click to expand...

There's no way it's pumping up to 60k today, its still trending down for the short term, still below 50k.

Vertigo · 23rd Feb, 2021

DanW said: ↑

There's no way it's pumping up to 60k today, its still trending down for the short term, still below 50k.
Click to expand...

that was my point

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