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<details>
<summary>Week #61: April 5, 2024</summary>

[Listen Live](https://discord.gg/b67BUR8uuN) | [POAP Checkout](https://checkout.poap.xyz/171987)

*Special guest Don Gossen joins us from [Nevermined](https://nevermined.io/), a decentralized AI payments protocol.*

**Upcoming Guests**

- April 12th - Paul Brody of [EY](https://www.ey.com/) and president of [EEA](https://entethalliance.org/)
- April 19 - SwagtimusPrime of [Scroll](https://scroll.io/)

<details>
<summary>The morning roundup</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bw9oqm/comment/ky4o1oy/)

[u/nothingnotnever](https://reddit.com/u/nothingnotnever)

> Ethereum

[u/Equal-Jellyfish1](https://reddit.com/u/Equal-Jellyfish1)

> 0.04895

[u/Zeebrasurfer](https://reddit.com/u/Zeebrasurfer)

> $3275

[u/usesbinkvideo](https://reddit.com/u/usesbinkvideo)

> 89,835 hodlers subscribed (+13)

</details>
<details>
<summary>Weekly Haiku: u/Jey_s_TeArS</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bveuv9/comment/ky0i2l8/)

*The meme franchises,*

*Stupid games with stupid prizes,*

*Down turn surprises.*

</details>
<details>
<summary>Shitpost of the week: u/hblask</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bsv48f/daily_general_discussion_april_1_2024/kxj55i3/)

You know the old saying: "Buy ETH on April Fool's Day, $8000 by end of May".

Don't ignore it this time.

</details>
<details>
<summary>u/benido2030 investigates the risk of restaking to the Ethereum network</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bpobg6/daily_general_discussion_march_28_2024/kwxed0y/)

So a couple of days I asked [if the EF wants to kill or at least tame restaking](https://reddit.com/r/ethfinance/comments/1bn6io6/comment/kwgas0b/). I relistened to the UCC episode and here's my understanding.

Restaking is not restaking. At least in the case of Eigenlayer (and I think for now its fair to assume Eigen will be 80%+ of the restaking market) technically any asset could be used as collateral. Just because right now it's validators via eigenpods or staked ETH via LSTs doesn't mean that's the endgame. Actually pure ETH, USD or even other tokens could be used to secure the AVS. This seems to play an important:

If the AVS really requires the restaker to be a validator then the plan is to "smoothen" rewards, which likely (!) means that MEV spikes will be captured and burned/ redistributed. Even though they didn't mention this I guess something like based sequencing where the validator sequences the L2 could be one of these cases. The goal is to make sure big entities aren't in a better position to capture value than solo stakers.

If the AVS is just secured by capital provided, but the security is not connected to a validator and could be done by someone with USD and a computer, then that's a different story.

I still have many questions...

- How does the protocol even know restaking happens?
- Apparently rewards are streamed directly, how can it be captured?
- What is captured/ how is "MEV" defined?

</details>
<details>
<summary>u/superphiz is brainstorming a beacon chain incident severity scale</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bqhysw/daily_general_discussion_march_29_2024/kx3y1k9/)

I'm a big fan of the work that /u/hanniabu and EthStaker (/u/nixorokish) have done with https://ethstaker.cc/incidents to document Beacon Chain incidents in a publicly aggregated way. I think this is awesome for transparency and accountability.

I was brainstorming ways that it might be improved, and I think it could be helpful to convert this page to a table and include a severity scale. Here's an idea what that might look like, and I think it would be awesome for other people to take that apart.

I'm never good with these scales, I wonder if the most severe incidents should have higher or lower incidents. This example is ranked with lower severity = ~~lower~~ higher number. I also think it's good to leave room for a 10 point scale and realize that there may be shuffling over time.

ALSO, I think it may be useful to indicate that different events can trigger the same level of severity, as I've tried to illustrate below.

Note that this is a very first draft and it would need a ton of editing by others to be useful.

**Beacon chain incident severity scale:**

----

**Minor**

Severity 10 - Minority client issue that caused that client to miss attestations, participation above 95%, no missed slot.

Severity 9 - A client or multi-client issue causes participation to drop between 85% and 95%, no more than 1 consecutive missed slot.

Severity 8 - A client or multi-client issue that causes participation to drop between 66% and 85%, no more than 1 consecutive missed slot.

----

**Medium**

Severity 7 - A beacon chain consensus or execution client becomes a majority client (greater than 66% use)

Severity 6 - more than 1 consecutive missed slot; or any entity exceeds 33% of validators

Severity 5 -

----

**Major**

Severity 4 - Any entity exceeds 50% of validators

Severity 3 -

Severity 2 - No transactions were processed on the beacon chain for < 1 hour

----

**Extreme**

Severity 1 - No transactions were processed on the beacon chain for > 1 hour; An entity exceeds 66% of validators

</details>
<details>
<summary>u/KuDeTa explains why many block relays are closed source</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1braopv/daily_general_discussion_march_30_2024/kx9llpt/)

To monetise their infrastructure, relays need a performance edge - which they can't possibly maintain if everything is open source. So to some extent, competing at all necessitates competing in private. At the moment, ultrasound are running a fee delta / bid adjustment [experiment](https://github.com/ultrasoundmoney/docs/blob/main/bid_adjustment.md) in which they try to capture the difference between the highest and second highest bids - effectively depriving the validator of it. By doing so, they can take a fee - but also break some of the natural resilience of the mev-boost system - as bids are now unique to their relay. As i understand things, they also have a closed source rust implementation of the relay codebase, and have done some work with reth to try and improve bid simulation performance (vs geth). Those are the broad strokes, and you'll see that they do open source some of their core thinking.


Frankly, it's very difficult to work out exactly who is running what code, and what is clear is that none of the relays (including Aestus - though all our code is opensource) are vanilla MEV-Boost anymore, except Flashbots. /u/benido asked me elsewhere if this can't also be seen as a "good" thing. Judge for yourselves based on the recent incidents. I would much rather find a way to incentivise relays (until we can get rid of them entirely) such that they want and need to work together. An upfront fee is probably more healthy. However, we should also face facts: the validator set is pretty mercenary and convincing Coinbase, LIDO and others to e.g. only use open source relays seems unlikely to happen.


To make matters even more interesting, we seem to be entering the early stages of a race to compete on timing. Bloxroute proudly boast they are making validators who sign up to their gateway an additional 6.4% of MEV income. Where does that come from? The next proposing validator (not using their service). I haven't managed to get to the bottom of whether other relays (including US) are yet doing this, but i wouldn't be surprised if they are.


I've spent time with people from across the MEV (relay/builder/searcher) ecosystem at various events, and i want to underline that while it's somewhat tempting and human to try and reduce this to a question of individual/entity behaviour or ethics, threatening everyone with the ethereum police really misses the point entirely. The incentives are broken and the competition increases fragility. Don't hate the player - hate the game.

</details>
<details>
<summary>u/mango_sake updates their exit strategy app</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bs2c90/daily_general_discussion_march_31_2024/kxd67b6/)

**Another update!**

After y'all crushed [my app for planning your exit strategy](https://reddit.com/r/ethfinance/comments/1bmss6b/i_made_a_tool_to_help_you_plan_your_exit_strategy/), I used the weekend to get it on a proper hosting plan.

It's live on [kollit.ai](http://kollit.ai) now!

Thousands of people entered in a matter of a day, i utterly speechless and so greatful you guys found my app useful!

For the folks who missed it:

I made an exit strategy planner using game theory. It's called Kollit - you call the prices, enter your risk tolerance and a few more optional things and the app will spit out an exit strategy that mathematically minimizing your total regret, be it regret of selling early or regret of waiting for a higher price that never comes. I think it's really cool and im super excited to hear what you have to say! If you have any questions or suggestions please dont hesitate :)

</details>
<details>
<summary>u/AElowsson introduces the topic of the day and don't skip on the amazing replies which are too numerous to doot</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bsv48f/daily_general_discussion_april_1_2024/kxji2a6/)

Here is a long-form "[EIP research post](https://ethresear.ch/t/reward-curve-with-tempered-issuance-eip-research-post/19171)" on my reward curve with tempered issuance.

</details>
<details>
<summary>u/impliedpotential3497, u/KuDeTa, u/asdafari12, and u/pa7x1 discuss protocol proposals</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bsv48f/daily_general_discussion_april_1_2024/kxlctc4/)

[u/impliedpotential3497](https://reddit.com/u/impliedpotential3497):

There shouldn't be any significant issuance or monetary policy change unless the issue is something so obvious and objectively agreeable or existential already. The reasons for any significant changes to issuance now seem to be for highly subjective reasons. The threat to centralization comes much more from some central body trying to tweak monetary policy, not from the market, institutions, individual users, and the broader ecosystem naturally figuring itself out. Even if only a small percentage of ETH is in circulation in the future then so be it... Anyone drumming up ideas for changes to monetary policy right now should rather maybe consider simplying user experience for solo stakers or try to educate the masses on holding or using ETH the hard asset. Even advocating to LST's and the like to follow some kind of better defined framework would be a better approach. There are so many other ways to address subjective issues like the ones being brought up imo. Monetary policy changes are like the absolute last resort.

---

[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bsv48f/daily_general_discussion_april_1_2024/kxmligt/)

[u/KuDeTa](https://reddit.com/u/KuDeTa):

There are good arguments on both sides of the issuance debate. I don’t, however, believe _consistency_ of monetary policy is a good argument in favour of doing nothing. It’s naive to imagine we could have ever designed the yield curve correctly the first time around, given MEV, LSTs and restaking had yet to appear. It would therefore be hubris to suggest that any changes we make now will ever be considered final, given all the unknown unknowns. Crypto just moves too quickly. The capacity for evolution and adaptation is a core strength of the ethereum community and we should embrace it to stay ahead of the competition.

---

[View on Reddit →](https://reddit.com/r/ethfinance/comments/1bsv48f/daily_general_discussion_april_1_2024/kxl3cfe/)

[u/asdafari12](https://reddit.com/u/asdafari12):

Some things I believe are true. I could be wrong on some.

- The large validator size is growing quickly, in part thanks to Eigenlayer, and it is becoming a huge problem for the clients to handle. This is the main reason the EF wants to limit issuance.
- The current reward of 3% is not enough to encourage solo stakers, let alone half of that, which is what the new EF proposal would mean.
- Solo staking is too difficult. Since I started early 2020, not much has changed (officially). It's still the same arcane terminal commands + you now "have" to run MEV boost too. Ethdocker seems awesome, I trust the guy that made it but would have liked to see something more "official" and ideally at staking release rather than two years later. I think it would have had better penetration.
- More should have been done to incentivize solo stakers financially. More could have been done as well. We have seen airdrops to solo stakers and even incentivized smoothing pools.
- The community is overall fine with how much ETH we pay to validators today and our issuance. We even have deflation.
- I mostly trust the EF to know better but I don't want anything rushed, this shouldn't come in the next fork imo. Earliest is like a year, but then it looks to be too late in regards to slowing the validator growth rate, we need something now.

---

[View on Reddit →](https://reddit.com/r/ethfinance/comments/1buk90w/daily_general_discussion_april_3_2024/kxwjtnz/)

[u/pa7x1](https://reddit.com/u/pa7x1):

For me this is the best take on the issuance reduction so far: <https://warpcast.com/orangesamus.eth/0x7668549c>

> My thoughts on issuance reduction:
>
> To target < 100% staked ETH you assume:
>
> - There is some yield “x%” where the market finds it irrational to take on the risks/opportunity costs of even delegating to someone else to stake
> - Issuance curve is chosen such that we cross below x% before we get to 100% staked ETH
>
>
>
> The problem is that I think:
>
> - There is also some nominal yield “y%” that makes it irrational to be a solo or home staker after you get any lower than y%
>
> And until you find a way to make solo/home staking more competitive relative to centralized alternatives:
>
> - y% will always be greater than x%
>
>
>
> So I think the worst case scenario is the one that we get an issuance curve that leads to:
> - crossing below y% (no longer rational to solo/home stake)
> - And even worse: we are still > x% even at 100% ETH staked, meaning we didn’t accomplish our primary goal, and our validator set is highly centralized
>
> Even if we choose a good x% and land at less than 100% staked ETH, we could still end well below y% and our validator set may end up highly centralized.
>
> I’d rather Ethereum “over pay” for a robust validator set in the short term, than “under pay” and end up without a robust validator set
>
> I think we should prioritize research to make decentralized staking more competitive, like ideas shown below:
> - [https://ethresear.ch/t/how-optional-non-kyc-validator-metadata-can-improve-staking-decentralization/17032](https://ethresear.ch/t/how-optional-non-kyc-validator-metadata-can-improve-staking-decentralization/17032)
> - [https://ethresear.ch/t/supporting-decentralized-staking-through-more-anti-correlation-incentives/19116](https://ethresear.ch/t/supporting-decentralized-staking-through-more-anti-correlation-incentives/19116)


If solo staking equilibrium yield is lower than pooled staking equilibrium yield. Then we must overpay issuance to ensure solo stakers can exist, otherwise the network will become strongly centralized.

Another argument on top of this one, whatever the optimal issuance curve is (if there is even one), we must approach it from above. Because if we overtighten we will end up having to raise issuance. And this creates a very bad precedent that will likely erode any monetary credibility Ethereum may have.

</details>
<details>
<summary>u/LogrisTheBard explains the potential of Fully Homomorphic Encryption</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1buk90w/daily_general_discussion_april_3_2024/kxvmtnr/)

A limitation of permissionless execution for as long as I've been around has been that everything is necessarily public. We use mixers on occasion to obfuscate fund movements but the underlying program and underlying data for smart contracts is always public. If there's a chain adjacent service like an Oracle, everything about its function is public. If I wanted to use a smart contract or a keeper to serve some data for me conditionally on authorization I end up having to use a centralized service at some point to issue a decryption key. Otherwise whomever wants the data could simply join as a data provider, download everything, and then exit without paying for the data. The root problem is just that if a system is permissionless then it can't be entrusted with secrets.

This has become an acute pain point for AI x crypto applications recently. We can't use DePin to train on private data or to serve answers from private models. However, there's some math magic just on the fringe of development at the moment that could blow this space open: zk-proofs + **fully homomorphic encryption** (FHE)[1](https://www.zama.ai/introduction-to-homomorphic-encryption).

Here's an ELI5: I want you to add two numbers for me but I don't want you to know which numbers I'm adding. Let's say I want the answer to 1+1. So I add a secret number known to me but not to you to each input, let's say 3 and 4, and I give you the problem 4+5. You calculate 9. To get the decrypted answer I just subtract the sum of the secret numbers in my input from your answer: 9-(3+4)=2. This looks silly in the reductive case but makes a lot more sense as the number operators (+, -, *, /) and operations in the calculation grows. Today, there are workable FHE encodings that can support any combination of multiplication and addition on an encrypted space. This is promising because as it turns out neural nets are nothing but a very large combination of simple arithmetic operations...

Hence a [FHE encoded neural net](https://link.springer.com/article/10.1007/s12083-021-01076-8) can potentially be run on [DePin](https://tokenomicsexplained.com/depin) infrastructure while protecting property rights to the underlying model. Once we see some of the initial projects like [zama](https://www.zama.ai/), [privasea](https://www.privasea.ai/), and [based.ai](https://arxiv.org/pdf/2403.01008.pdf) prove out this concept and it becomes more widely understood the full applications of FHE in crypto are going to be **huge**. I highly suggest Rabbit Holing on this one for a few hours.

</details>
<details>
<summary>u/dondochaka share a cool new [DAO product they created for Reddit users!</summary>
[View on Reddit →](https://reddit.com/r/ethfinance/comments/1buk90w/daily_general_discussion_april_3_2024/kxvovul/)

The startup I work for just shipped [https://www.rdatadao.org](https://www.rdatadao.org). Without sharing my own opinion or involvement, I'm curious what impression it leaves you all with...

---

Warning: It was realized this also exports your DMs.[u/dondochaka](https://reddit.com/u/dondochaka) is bringing this up with the team.

</details>
</details>










<details>
<summary>Week #60: March 29, 2024</summary>

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