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Thought Of The Week

Ethereum, the most valuable ($67B) smart contract enabled public blockchain, has begun its much anticipated transition to a Proof of Stake Network enabling exponential scale and added utility to the “Internet of Money”.

Yesterday, December 1, 2020, at 12:00 PM UTC the “Beacon Chain” launched with over 20k+ unique validators (600,000+ Ether/$300M+) to kick off Phase 0 of the ETH 2.0 upgrade. The upgrade to ETH 2.0 will take place in 4 phases. Phase 0 is the launch of the “Beacon Chain”, Phase 1 enables a scalability solution “sharding”, Phase 1.5 merges Eth1.x state onto ETH 2.0, and Phase 2 allows for executable logic to happen on the fully upgraded Proof of Stake Network. This transition is projected to be a multi-year upgrade expected to be “completed” by 2023. 

Why is this important? Well besides making Ethereum a highly scalable, completely decentralized, 100% transparent/auditable, global monetary network, the upgrade provides a couple more value propositions to the underlying asset, Ether ($ETH/$ETHE). For some context, Bitcoin is provably scarce due to its hard-coded supply schedule, 21 million hard cap and supply halvings every ~4 years. That is why Bitcoin is considered by many to be “Digital Gold”. Ethereum has a different approach where supply is based on “Minimum Necessary Issuance” meaning Ether will inflate at the lowest rate possible for the highest amount of network security. This mechanism is dynamic/variable as it can be changed through consensus.

Taking into account Robert J. Greer’s “What is an Asset Class, Anyway?” and David Hoffman’s “Ether is the Best Model for Money the World has Ever Seen”, Ether now has the makings of a superior asset class. Ether is currently used as money (payments), as a commodity (network gas), and working capital (staked Ether). Staked Ether can be thought of similar to a Treasury Bond, it provides holders a “safe” interest rate. Right now, staked Ether earns ~15% APR paid in new Ether from Inflation Rewards but will continue to decrease until the rate is no longer enticing to those who would lock up the capital. ETH 2.0 Economics Resource. Ethereum’s current annual inflation rate is about 4% per annum. In the next few years or so, Ethereum is projected to incur negative inflation (deflation) due to an Ethereum Improvement Proposal (EIP-1559) which burns/removes Ether from Circulating Supply every block (~13 seconds). This mechanism can propel Ether to be incredibly scarce, maybe even more so than Bitcoin.

To describe how I view Ether in layman’s terms, Ether = Digital Bond + Global Digital Currency + Scarce Digital Resource. 

Messari ETH2.0 Report: The Next Evolution of the Cryptoeconomy

The ETH2.0 Deposit Contract now has 1,171,000+ Ether.

Market Update (Monday 9:30 AM ET)

Percent Change (Rounded) Based on Last Monday Open (9:30 AM ET)

Bitcoin- $19,209 (UNCH)

Ether- $596 (-1%)

Gold- $1,859 (+4%)

DJI Average- 30,233 (+2%)

NYSE Composite Index- 14,375 (+2%)

NASDAQ Composite Index- 12,399 (+1%)

S&P500 Index- 3,694 (+2%)

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New Developments

1. MicroStrategy Bought another $50M of Bitcoin at $19,400, SEC GOV

2. BitMEX Names German Stock Exchange Veteran As New CEO, The Block

3. Coinbase Helps Corporate Companies Diversify With Crypto, Coinbase Blog

4. Facebook Crypto Group Libra Changes Name to Diem Network, Bloomberg

5. Ether Capital Corp Announces Commitment to Staking on ETH2, Business Wire

6. Visa Partners With Ethereum Digital Dollar Startup Raised $271 Million, Forbes

7. DeFi Protocol 1inch Closes $12M Funding Round, CoinTelegraph

8. Guggenheim Fund Reserves Right to Put Up to 10% in Bitcoin Trust, Bloomberg

9. Grayscale Ethereum Trust (ETHE) Announces 9-for-1 Stock Split, CoinDesk

10. Lawmakers Introduce Bill For Stablecoin Issuer Obtain Bank Charter, CoinDesk

11. Bitcoin & Wall Street: S&P Dow Jones Launch Crypto Index 2021, CoinTelegraph

12. Yearn x Sushi Merger, Andre Cronje

13. Coinbase joins Square’s crypto patent effort COPA, The Block

14. Visa, USDC, & Centre Momentum

Industry Insights

• EIP1559 Economic Analysis, Tim Roughgarden

• Institutional Money Managers Are Going Bankless, Bankless

• Crypto Wallets Are Not Bank Accounts, Fred Wilson

• Leadership In The Ownership Economy, Variant Fund

• Uniswap’s Financial Alchemy, Paradigm Research

• Crypto Long & Short: Bitcoin Development, CoinDesk

• An Intro to xDAI: Ethereum’s Sister Chain, Bankless

• Talking Crypto With Tracheopteryx (Yearn Finance), Gabriel Haines

• STABLE Act “Stablecoin Tethering & Bank Licensing Enforcement”, House Reps

• ThorChain ($RUNE) Report, Delphi Digital

• Gitcoin Grants Round 8 Insight, Kevin Owocki

  Ξwoki - GR8 HALPbot @owocki Interesting trend: - In round 1-6, the EF (mostly) funded Gitcoin Grants matching pool. - In round 7, many DEFI projects were primary funders of the matching pool. - In round 8, @binance and @krakenfx leading the charge!

  Gitcoin @gitcoin

  Welcome @krakenfx to the Public Goods Justice League ❤️ Thank you for funding Ethereum Infrastructure in #GR8! 👏👏👏 https://t.co/3cW3ov0dLl

  December 3rd 2020

  3 Likes

Dev Talk

1. Ethereum Dev Onboarding #2, ETHGlobal

2. Baseline course on “Ivan on Tech Blockchain Academy”, Unibright

3. Staking on a Raspberry Pi 4 Day 3 Update, Ethereum on ARM

4. First ETH 2.0 Validator Slashed for 0.25 ETH, Validator 20075

5. Running an Eth2 Node with Alchemy, Elan Halpern

6. Seamless MongoDB to PostgreSQL Migration, Coinbase Blog

7. Taproot Activation Signal, Taproot Activation

8. Flashbots: Frontrunning the MEV Crisis, Alex Obadia

9. Miao - EVM Transaction Decoder, kndrck.co

10. How To Learn Solidity ASAP, Ian Lee

11. Status of Ethereum Roadmap, Vitalik Buterin

    vitalik.eth @VitalikButerin The roadmap I made back in March updated with (very rough and approximate!) progress bars showing what has been done and some of the recent tweaks to the roadmap itself. A lot has been accomplished, but still a lot remains to be done!

    December 1st 2020

    483 Retweets2,966 Likes

dApp Education

*Great Youtube video created by Mark Jeffrey explaining how Yearn Vaults make money

Developer Activity

Analyze Opyn Options Factory:

*Tools: Metamask (Wallet), Remix IDE (Development Environment), Solidity (Smart Contract Language) Ethereum (Blockchain), Etherscan Block Explorer

**Created by Opyn (I only brought in ~25 lines of the contract, there is over 2000 lines that make this work)

# set pragma

pragma solidity ^0.5.0;

# contract (Source)

contract OptionsUtils {
    // defauls are for mainnet
    UniswapFactoryInterface public UNISWAP_FACTORY;

    CompoundOracleInterface public COMPOUND_ORACLE;

    constructor(address _uniswapFactory, address _compoundOracle) public {
        UNISWAP_FACTORY = UniswapFactoryInterface(_uniswapFactory);
        COMPOUND_ORACLE = CompoundOracleInterface(_compoundOracle);
    }

    // TODO: for now gets Uniswap, later update to get other exchanges
    function getExchange(address _token)
        public
        view
        returns (UniswapExchangeInterface)
    {
        if (address(UNISWAP_FACTORY.getExchange(_token)) == address(0)) {
            revert("No payout exchange");
        }

        UniswapExchangeInterface exchange = UniswapExchangeInterface(
            UNISWAP_FACTORY.getExchange(_token)
        );

        return exchange;
    }

    function isETH(IERC20 _ierc20) public pure returns (bool) {
        return _ierc20 == IERC20(0);
    }
}

Blockchain Jobs

• Reflexer Labs: Developer Evangelist

• Chainlink: Partner Integrations Manager

• Complement Capital: DeFi Smart Contract Developer

• Aave: Business Developer

• Yield: Smart Contract Engineer

• Circle: Sales, Engineering, Finance, Product

Earn Opportunity

Earning crypto is becoming easier everyday for those who provide real value to the space. Last week Gitcoin kicked off Gitcoin Grants Round 8 providing upwards of $1M in matched funds for blockchain/crypto projects in need of community funding. There are no restrictions to apply, it’s super easy to create a profile, and it also helps market your project to the community. If you are working on any kind of a blockchain project you can apply to receive grant money from the community: Gitcoin Grants