Who doesn’t like some of that ethereum!? Ether is the dominant smart contract chain,
of which every blockchain competitor is building to connect to. They are building with the EVM,
ethereum virtual machine, fully on the top of mind & if they don’t...they
suffer! So are you ready to suffer through another 10 minutes with me!?
Well you don’t have a choice...because it’s time for Chico Crypto!!
Everyone knows Ethereum is the center of all things blockchains.
Public blockchains are all connected or will be connected to Ethereum with bridges. Shoot
out of the top 10 cryptocurrencies, they all have something to do with Ethereum.
Bitcoin has multiple bridges to Ethereum, Cardano is building the erc20 converter,
Binance smart chain already has a bridge, Tether is on the Eth Chain,
XRP partner Flare is building a bridge to ETH, dogecoin has dogethereum in the works,
USDC is mainly on ETH, Polkadot has multiple bridges to ETH, and Solana has wormhole...their
Eth bridge. Every asset in the top 10 is bending the knee to Ethereum! Like I said,
if they don’t build back to Ether... they silo themselves off, and they suffer!
Although...all of this bridging, and action taking place on the ETH chain...is pushing
it to it’s limits!! To it’s Gas Limits. As we can see since the markets calmed after the May Crash,
the gas fees have been trending up Month after Month. June higher than May, July higher than
June, and now at the end of August, they are back at high and ridiculous levels. Which can be seen
with the prices to do DeFi transactions. To do simple swaps on Dex’s it’s basically 100 dollars,
or even more….supplying liquidity to these protocols is going to cost you just as much,
basically 100 dollar or more...and removing liquidity, the cost is between 100 to 160 dollars.
What the freaking freak Ethereum!? I thought this was supposed to be fixed
with EIP 1559..the update to transaction fees on the network!? Not get worse…
Well there were some major misconceptions about EIP
1559...it wasn’t going to fix high gas fees! EIP 1559 main benefits were reducing
ETH issuance without reducing the network security with base fee burns, improving
gas fee estimations for dapps and wallets & finally improving the UX for wallet users!
The most significant improvement we are going to see with GAS fees, isn’t coming from something
being changed on the layer 1 base chain of ethereum, but when rollups are pushed out into
production. If you didn’t know, less than a year ago, Ethereum had the biggest change ever to it’s
roadmap...Vitalik posted the change with this blog “A rollup-centric ethereum roadmap”
In it, he exclaimed “the Ethereum ecosystem is likely to be all-in on rollups (plus
some plasma and channels) as a scaling strategy for the near and mid-term future.
What this means is the main L1 chain will no longer be a smart contract chain perse...but
a settlement layer for rollups and scaling solutions. Smart contracts and dapps will be
built on the rollups, and Ethereum is just going to settle their transactions!!
Sooo when Rollups then? When gas relief like a large dose of pepto bismol?
Soon my frens, soon! Everyone was talking about a Layer 2 summer earlier in the year, but it’s
looking like it’s going to be a late summer, and Layer 2 Fall! Arbitrum and their rollup Arbitrum
One is one of the more hyped rollups, that is looking to be production ready 1st!!
They already are wide open for developers and dapps to build on top of...anyone can go use it
to deploy. But it’s still not open to the general public. But that’s going to change really soon!
Their twitter said last week “No need to wonder "wen Ren" because renprotocol's
integration with Arbitrum One is live! You'll be able to use some of your favorite
Ren wrapped assets like RenBTC & RenDOGE when we go live this month!
Did you hear that? When we go live this month! We only have 5 more days left in
August! Arbitrum opening to the masses by the weekend or early next week? Chico thinks so!
What about the other hyped rollup from Optimism PBC? Their optimistic rollup, named none other
than Optimism? Well Optimism is actually in a limited alpha mainnet already! Last month
they announced that Uniswap could be used on the rollup! In the blog they said “Assuming Uniswap v3
sees equal usage to L1, OE should offer up to 10x transaction cost savings. Additional demand will
drive gas costs higher — for more details, check out Optimism’s blog post. Transaction speeds will
ramp up over the coming weeks and months as the Optmistic infrastructure is tested and optimized
at scale, with the end goal of scaling to fully meet demand for low cost, high speed DEX trading.
Yeah, you can actually use Uniswap on a rollup right now!!
And how much is GAS Fees? Well Optimism, luckily has a tool for estimating them on their rollup!
Clicking on Uniswap, it calculates, and as we can see the estimation is just
25 cents! Is that for reals? Just a quarter? Well let’s just go check…
I’m on Uniswap, on the optimistic Mainnet...and I’m going to convert
the rest of this DAI into ETH. As we can see from the metamask gas fee, it's .001955
of an Ethereum. Well let’s just confirm it...and look how quick the transaction goes through.
In seconds, instead of minutes to hours with the Ethereum mainnet.
But that cost of .001955 ETH...is that just a quarter? Well going to a converter,
no it’s not. It’s actually over 6 dollars and 32
cents. That’s a lot better than the over 100 dollars on the ETH mainnet,
but it’s not a quarter. Either something is messed up with their calculation on the website,
or that is when their rollup is fully optimized? All I know is it’s not a quarter as of now….
But when optimism!? When is their rollup moving out of alpha and into a deeper maiinet!? Well
it’s imminent according to optimism. Just a few days ago, on the 23rd their twitter
tweeted in reply to someone saying roll ups were imminent “Not just imminent - live with synthetix,
kwenta, Uniswap and 1inch apps, and many more coming in the next few days and weeks!”
So Arbitrum and Optimism...their rollups are extremely close! Like days or just weeks away.
What does that mean for the regular user, like you or I?? It means you better get your overalls
on and those farm tools ready, as there’s going to be a bountiful Layer 2 harvest here soon!
What do I mean? The DeFi apps and protocols are going to be wanting you to come use them on Layer
2. Transaction times are a thing of the past and the low fees will entice the users to come...but
there will be competition in this layer 2 landscape...big competition between dapps!
A dapp will want you to use their app, not their competitors!
What are many of these dapps going to do to entice users to use theirs and not
competitors!? Incentive with tokens!!
There’s going to be many liquidity mining programs launched on these Layer 2’s! Yield
farming opportunities are going to be far and wide, with high APYs due to the
dapps and protocols pushing out BIG incentive programs! Per example Synthetix on Optimisim!
This Glassnode insights blog puts the point across very well! It’s titled “DeFi Uncovered:
Finding Alternative Sources of Yield”...in the blog it says “. Synthetix has announced
its plan to transition the project's focus and liquidity over to Optimism (an Ethereum Layer
2). Simultaneously, news that SNX stakers could be receiving a series of airdrops in the future
has led to even more bullish narratives supporting the token. Returns for Optimism
stakers reached an absolute bottom of ~15% APY in July while L1 staking remains relatively
lucrative. Following the transition of liquidity to L2, Optimism stakers are now receiving ~50%
APY, and can expect sUSD/sETH, sUSD/sBTC, and other trading pairs to launch in July/August”
Optimism stakers with Synthetix were only receiving 15 percent APY...but
following the liquidity move, they are now making about 50 percent APY!
Liquidity mining incentives are moving from Layer 1 to Layer 2….
But it’s not only Synthetix...Uniswap is coming with incentives to Layer 2 as well!
May of this year...Hayden Adams, the founder of Uniswap said that liquidity
mining for Uniswap would be returning….very soon! Besides saying very soon Hayden said
““One thing that we’ve seen in the past couple of weeks is basically a grant from the Uniswap
grants program, which comes from governance, that was … issued to someone who’s working
on liquidity mining smart contracts. And so we’re kind of seeing the community build this out.”
Here is the Uniswap liquidity program v 0.1 proposal, first posted in July in the
Uniswap governance forum and discussion board. As we can see, one of the community authors of
this proposal is @itzler….and in the discussion, itzler said this replying to someone asking about
optimism “I think extending the program to include Optimism is an excellent idea,
and definitely one of the directions we’re hoping to include as the program evolves”
Incentives are going to be far and wide with the launch of Layer 2….so like I said,
get those overalls ready, and farm tools prepared. There will be bountiful
opportunities on Optimism and Arbitrum alike. Cheers! I'll see you next time!