Ethereum Audible

"crypto markets are becoming highly interconnected with the traditional financial sector" -----------------------------------------------------------------------------------

"crypto markets are becoming highly interconnected with the traditional financial sector" -----------------------------------------------------------------------------------

"In this article, I'll talk about L2s on Ethereum, the state of the current scaling ecosystem, and why I believe running L2s on top of Ethereum is the most economically and technically sustainable scaling solution long term." ------------------------------------------------------------------------------------

"In this article, I'll talk about L2s on Ethereum, the state of the current scaling ecosystem, and why I believe running L2s on top of Ethereum is the most economically and technically sustainable scaling solution long term." ------------------------------------------------------------------------------------

"I'll take the opposed, in that I think there is decent precedent to find ETH to not be a security in a post-merge environment. Let's breakdown some specifics:" In this readthrough I'm going to Twitter for the first time to read a 43 long tweet thread (yup - 43 tweets) by @adamscochran, aka Adam Cochran, Partner at CEHV and Adj. Professor of Info Sci/Biz Analysis. He analyzes whether Ethereum's shift to Proof of Stake makes it eligible to be names a security by the SEC and analyzes Ethereum vs the Howie test, previous rulings in the US court system and theories of what different staking make ups could lead to. ------------------------------------------------------------------------------------

IT'S MERGE WEEK! To celebrate I'm going back to the OG episode for this podcast - Vitalik's article on Why Proof of Stake! On Nov 6th 2020 Vitalik Buterin wrote a short article on why the Ethereum ecosystem is migrating to Proof of Stake (PoS). Despite the shift being planned for years there's a lot of discussion in the ecosystem on why Ethereum is doing this, what are the benefits to PoS over Proof of Work (PoW) and whether this migration is fair to all the players in the ecosystem. ------------------------------------------------------------------------------------

The merge is coming - right next week! Here are some of my recent favorite pieces of content that cover the bull and the bear case. To read: The Complete Guide to Rollups: https://members.delphidigital.io/reports/the-complete-guide-to-rollups The Hitchhiker's Guide to Ethereum: https://members.delphidigital.io/reports/the-hitchhikers-guide-to-ethereum Bankless: https://shows.banklesshq.com/p/debrief-arthur-hayes https://shows.banklesshq.com/p/debrief-ethereum-unsensored http://podcast.banklesshq.com/dissenting-from-chinas-censorship-with-jiajun-zeng-layer-zero Unchained: Given the sanctions on Tornado cash is Ethereum Censorship Resistant? https://youtu.be/_ohvRtxJzrc Magic Internet Money: https://www.bradmills.ca/podcast/navigating-the-cryptocurrency-chessboard-with-guests-lyn-alden-dylan-leclair-and-checkmate

The Bitcoin whitepaper! This is a plain readthrough of the whitepaper. Here is the conclusion of the Bitcoin Whitepaper, if you can understand this section, you've understood the whitepaper: "We have proposed a system for electronic transactions without relying on trust. We started with the usual framework of coins made from digital signatures, which provides strong control of ownership, but is incomplete without a way to prevent double-spending. To solve this, we proposed a peer-to-peer network using proof-of-work to record a public history of transactions that quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of CPU power. The network is robust in its unstructured simplicity. Nodes work all at once with little coordination. They do not need to be identified, since messages are not routed to any particular place and only need to be delivered on a best effort basis. Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone. They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism." As always, you can support the show by supporting and subscribing to Alpe Audio:

The Bitcoin whitepaper explained! This is a readthrough of the whitepaper interspersed with commentary that breaks down the important parts and offers explanations and meaning. Here is the conclusion of the Bitcoin Whitepaper, if you can understand this section, you've understood the whitepaper: "We have proposed a system for electronic transactions without relying on trust. We started with the usual framework of coins made from digital signatures, which provides strong control of ownership, but is incomplete without a way to prevent double-spending. To solve this, we proposed a peer-to-peer network using proof-of-work to record a public history of transactions that quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of CPU power. The network is robust in its unstructured simplicity. Nodes work all at once with little coordination. They do not need to be identified, since messages are not routed to any particular place and only need to be delivered on a best effort basis. Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone. They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism." As always, you can support the show by supporting and subscribing to Alpe Audio:

"I continue to view the digitization of money as a key theme for the 2020s decade and beyond, both in bottom-up ways (e.g. bitcoins) and in top-down ways (e.g. central bank digital currencies), and am interested to see the directions that it goes in." Today we're reading part 3, the final part, of Lyn Alden's 1:30 hour long article on the state of network. This will be a 3 part series due to length. In the first part we'll cover why a medium of exchange first needs to be built on top of a store of value. Lyn uses the lessons learned from previous Bitcoin forks and imitators to bring this point home. In part 2 we cover why layers make sense to scale and how the Lightning Network is structured. In part 3 we cover the critiques of the network and a summary of thoughts. As always, you can support the show by supporting and subscribing to Alpe Audio:

"All manner of individual hardware electronic devices became mostly-obsolete as they became applications on a smart phone. I view the Bitcoin/Lightning stack as being similar. The network is still tiny and has a lot of development work still to do, and nothing is for certain. But to me it looks like a powerful monetary network with a ton of upside potential over the next decade." Today we're reading part 2 of Lyn Alden's 1:30 hour long article on the state of network. This will be a 3 part series due to length. In the first part we'll cover why a medium of exchange first needs to be built on top of a store of value. Lyn uses the lessons learned from previous Bitcoin forks and imitators to bring this point home. In part 2 we cover why layers make sense to scale and how the Lightning Network is structured. As always, you can support the show by supporting and subscribing to Alpe Audio:

"If the purpose of sanctions is not to punish, but to change behavior, then it makes no sense to add to the SDN List an immutable smart contract that cannot change its behavior because it has no agency. It is not a person nor is it under the control of any person. By conflating the Tornado Cash Entity and the Tornado Cash Application and adding both to the SDN List, the government has essentially accomplished a ban on Americans using a particular internet tool without any clear prospect that the restriction will ever be lifted." Today I'm departing from our analysis to read Coincenter's analysis of the Tornado cash sanctions that OFAC laid down last week. This is a critical time for the web3 and general crypto ecosystem - the first real attempt at censoring by a nation state and it's on us to understand the legal case and ramifications. As always, you can support the show by supporting and subscribing to Alpe Audio:

"A truly decentralized and permissionless payment network requires its own underlying self-custodial digital bearer asset. If instead it runs on top of the fiat currency system or relies on external custodial arrangements at its foundation, then it is neither decentralized nor permissionless." Today we're reading Lyn Alden's 1:30 hour long article on the state of network. This will be a 2 part series due to length. In the first part we'll cover why a medium of exchange first needs to be built on top of a store of value. Lyn uses the lessons learned from previous Bitcoin forks and imitators to bring this point home. As always, you can support the show by supporting and subscribing to Alpe Audio:

"Bitcoin is a disruptive new crypto-currency based on a decentralized open-source protocol which has been gradually gaining momentum. Perhaps the most important question that will affect Bitcoin's success, is whether or not it will be able to scale to support the high volume of transactions required from a global currency system. We investigate the implications of having a higher transaction throughput on Bitcoin's security against double-spend attacks. We show that at high throughput, substantially weaker attackers are able to reverse payments they have made, even well after they were considered accepted by recipients. We address this security concern through the GHOST rule, a modification to the way Bitcoin nodes construct and re-organize the block chain, Bitcoin's core distributed data-structure. GHOST has been adopted and a variant of it has been implemented as part of the Ethereum project, a second generation distributed applications platform." As always, you can support the show by supporting and subscribing to Alpe Audio:

"Tendermint is awesome. The future is now" Today we're diving into the original whitepaper on modern proof of stake blockchains: Tendermint. This paper from 2014 lays the groundwork for many of the proof of stake blockchains that come after and is the basis for the entire Cosmos ecosystem. We'll breakdown why proof of stake over proof of work how consensus is reached and the game models and theory for cooperation in the system. This is a great place to start from when you're exploring what proof of stake is and how it works, in depth. As always, you can support the show by supporting and subscribing to Alpe Audio:

When should you use tokenomics in your web3 project? What purpose does a token serve? Let's break down the core 'why' behind adding a token to your project and when you should or shouldn't use a token. This is the core question to ask when you evaluate a projects token or consider using a token in your own project.

"We introduce Casper, a proof of stake-based finality system which overlays an existing proof of work blockchain. Casper is a partial consensus mechanism combining proof of stake algorithm research and Byzantine fault tolerant consensus theory. We introduce our system, prove some desirable features, and show defenses against long range revisions and catastrophic crashes. The Casper overlay provides almost any proof of work chain with additional protections against block reversions." Today we're diving into Casper, the finality gadget that is the base for Ethereum PoS finality mechanism. ____________________ As always, you can support the show by supporting and subscribing to Alpe Audio:

"Honest-but-rational or ideologically motivated validators could use this attack to increase their profits or stall the protocol, threatening incentive alignment and security of PoS Ethereum. The attack can also lead to destabilization of consensus from congestion in vote processing." Part 2! Today we're reading through a recent paper that pokes some serious holes in the security of Proof of stake Ethereum. As we get closer to the merge, it's more important than ever to understand the different attack vectors on Ethereum, what the consequences are and how likely these attacks are to come to fruition. This readthrough is dense and build on previous episodes we've done, so if you haven't been a long time listener, go back and listen to these first, otherwise it will be hard to understand: 1. Why Proof of Stake 2. The Beacon Chain Ethereum 2.0 3. What is Byzantine Fault Tolerace 4. Flashboys 2.0 ____________________ As always, you can support the show by supporting and subscribing to Alpe Audio:

Have you heard the sentence "I believe in blockchain just not Bitcoin"? I have - many times. It's usually said by people who have a tech background and want to sound tech savvy but anti crypto. They want to hedge their bets: sound techhie but not crypto fanatics. They're missing the whole innovation that crypto and web3 bring. They're missing all of it.

"Honest-but-rational or ideologically motivated validators could use this attack to increase their profits or stall the protocol, threatening incentive alignment and security of PoS Ethereum. The attack can also lead to destabilization of consensus from congestion in vote processing." Today we're reading through a recent paper that pokes some serious holes in the security of Proof of stake Ethereum. As we get closer to the merge, it's more important than ever to understand the different attack vectors on Ethereum, what the consequences are and how likely these attacks are to come to fruition. This readthrough is dense and build on previous episodes we've done, so if you haven't been a long time listener, go back and listen to these first, otherwise it will be hard to understand: 1. Why Proof of Stake 2. The Beacon Chain Ethereum 2.0 3. What is Byzantine Fault Tolerace 4. Flashboys 2.0 ____________________ As always, you can support the show by supporting and subscribing to Alpe Audio:

A lot has been argued about whether crypto is or isn't an inflation hedge over the past few months. IMO the answer is clear: for any realistic time horizon, yes it is. But to understand why, we need to zoom out and dive into what inflation is and how an inflation hedge acts. Let's explore inflation, Bitcoin and Ethereum.

"So beyond a token, how can web3 protocols and companies build competitive moats that help them capture part of the value they're creating? Below is a ‘five power' framework on moats that web3 projects can utilize, beyond tokens." As always, you can support the show by supporting and subscribing to Alpe Audio:

Today I'm diving deep into the oracle problem with probably the most qualified person out there: Nick Fett, CTO of Tellor protocol. Tellor is a decentralized oracle protocol aimed to help Ethereum based projects solve the oracle problem. As we discuss, the oracle problem is a tough nut to crack, especially in a decentralized manner. It opens up protocols to a whole host of other issues, risk vectors and attack surfaces that developers, builders and investors need to be aware of. This was a fantastic conversation which I enjoyed thoroughly, and Nick schooled me on a lot of topics. Links and resources: Nick on Twitter: https://twitter.com/themandalore9 Tellor on Twitter: https://twitter.com/WeAreTellor The future of Money by Bernard Lietaer As always, you can support the show by supporting and subscribing to Alpe Audio:

"With 'The Merge' coming, up to 64 million total ETH will be available to be staked and become activated within one year. Lido's size and network effect gives them a major advantage in absorbing this potential inflow as well." __________________________

BFT, aka Byzantine Fault Tolerance, is a key part of distributed systems consensus mechanisms. As we approach The Merge and discussions heat up about Proof of Work vs Proof of Stake, I thought it would be a good time to go back to basics and discuss a core part of any consensus mechanism.

"We additionally show that high fees paid for priority transaction ordering poses a systemic risk to consensus-layer security. We explain that such fees are just one form of a general phenomenon in DEXes and beyond—what we call miner extractable value (MEV)—that poses concrete, measurable, consensus-layer security risks. We show empirically that MEV poses a realistic threat to Ethereum today." __________________________

The merge is coming! Don't believe the FUD, things are happening and this blockchain bite, a read of Anthony Sassano's Daily Gwei newsletter is a little primer on the status of the merge. You should subscribe to the Daily Gwei: https://thedailygwei.substack.com/ __________________________

"We additionally show that high fees paid for priority transaction ordering poses a systemic risk to consensus-layer security. We explain that such fees are just one form of a general phenomenon in DEXes and beyond—what we call miner extractable value (MEV)—that poses concrete, measurable, consensus-layer security risks. We show empirically that MEV poses a realistic threat to Ethereum today." __________________________

"As in normal economics, the two forces we are most interested in are Supply and Demand. Understanding how those are baked into the tokenomics give us a good sense of how desirable a given token or cryptocurrency should be." __________________________

Today is a special episode! We're diving deep into the Liquity protocol with a guest: Robert Lauko, the co-founder of the protocol. Liquity is a great case study in everything we've been discussing these past few months: - The importance of decentralization - Immutability vs governance - DeFi risks and trade offs. I really enjoyed this conversation and hope you will as well. Resources: Liquity protocol docs and information: https://www.liquity.org/ Follow Robert on Twitter: https://twitter.com/robert_lauko ___________________________________

"EIP-1559 is poised to greatly enhance the user experience on Ethereum for processing transactions. Of course, most people like to focus on the fee burn aspect of EIP-1559 (and so do we), but the overall benefits of EIP-1559 go far beyond the fee burn and will have a positive impact on end-users." ___________________________________

It's been a while since we first discussed why Ethereum is adamant on the shift to Proof of Stake, so as the merge gets delayed a bit yet again, I wanted to chat about why we care about proof of stake and the reasons for the shift to it. Full readthrough of Vitalik's 'Why PoS' Can be found here: https://open.spotify.com/episode/6pL31iFiUj5ncIL8lPd9K2?si=15roUb4XSC-ySFhySPrBMg

"Tokens can be an effective way to bootstrap networks that need passive user participation, but they can be counterproductive for those that need active participation" ___________________________________

"crypto markets are becoming highly interconnected with the traditional financial sector" In Part 2 of this read we're going to complete all 5 risk factors that DeFi brings to the table. ___________________________________

The Howey Test is one of those terms that gets thrown around a lot in the crypto world when it comes to the legality of many projects. But most don't know where it comes from and what it actually means. Let's break it down.

"crypto markets are becoming highly interconnected with the traditional financial sector"

Welcome to Blockchain bites! This is a new format where I'll cover topics, terms, debates but in short bite size takes. Think of it as your lexicon for your blockchain discussions at a cocktail party. This bite is about why crypto can't just be 'copied' - which is one of the most ridiculous arguments that keep on popping up on Twitter or in discussions with friends.

"For a blockchain to be decentralized, it's crucially important for regular users to be able to run a node, and to have a culture where running nodes is a common activity."

"While there are many paths toward building a scalable and secure long-term blockchain ecosystem, it's looking like they are all building toward very similar futures. There's a high chance that block production will end up centralized"

"To most users, the freedom to pack up and move your digital assets and identity does not matter. But it might matter one day, and when it does, it will matter a lot." ____________________________________________________

"This was surprising to me. So much work, energy, and time has gone into creating a trustless distributed consensus mechanism, but virtually all clients that wish to access it do so by simply trusting the outputs from these two companies without any further verification." ____________________________________________________

"But wherever this leads us next, it's clear to me now that I was too hasty to completely dismiss crypto on the basis of all the things wrong with it at the moment. Instead of appreciating the fundamental freedom to transact that it's currently our best shot at protecting. You don't need laser eyes or an NFT avatar to appreciate that." ____________________________________________________

"Thanks to L2s users will finally be able to enjoy low fees using their favorite web3 applications, a much better UX emerges as transaction confirmations are almost instant (thanks to L2 sequencers), and help scale blockchains massively." ____________________________________________________

"In this article, I'll talk about L2s on Ethereum, the state of the current scaling ecosystem, and why I believe running L2s on top of Ethereum is the most economically and technically sustainable scaling solution long term." _______________________