Unchained - How Ethereum’s Dencun Upgrade Could Lead to the Rise of Millions of Layer 3s - Ep. 620

Episode Date: March 15, 2024

Listen to the episode on Apple Podcasts, Spotify, Fountain, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform. Ethereum’s long-awaited Dencun upgrade finally went live this week, and many L2s immediately saw their transaction fees fall dramatically, as was the intention. Among them was the Coinbase-incubated Base, which was created by Jesse Pollak. Pollak joined Unchained to discuss the impact Dencun was having on Base; how he thinks Layer 1s and Layer 2s will start to differ from one another and eventually spawn a multitude of specialized Layer 3s; his response to criticisms of the increasing use of Layer 2s, what he’s focusing on now, and why he supports using the word “onchain” over “crypto” or “web3.”  Show highlights: The problem that Dencun is trying to solve The benefits of blobs and blobspace How Dencun has already reduced Base’s fees, but also increased its transactions How Jesse thinks Layer 1s and Layer 2s will start to become differentiated from each other The rise of Layer 3s How Jesse addresses criticisms of fragmentation and centralization arising from the increasing use of Layer 2s Why Jesse is particularly excited about two features of the Dencun upgrade—transient storage and increased composability between L1s and L2s What Jesse and the Base team are focusing on now Why Jesse thinks that “onchain” is a better word to describe the industry than “crypto” or “blockchain” or “web3”  Thank you to our sponsors! iTrustCapital Polkadot Uniswap Guest Jesse Pollak, creator of Base at Coinbase Previous appearances: The Chopping Block: All About That Base With Jesse Pollak  Links Recent coverage on Unchained of the Dencun Upgrade and Base:  Dencun Day One: Ethereum Layer 2 Networks See Drastic Drop in Transaction Fees Ethereum Completes Milestone Dencun Upgrade, Which Should Substantially Reduce Fees How Much Will the Dencun Upgrade Really Reduce Ethereum Layer 2 Fees By? Why Base’s Creator Thinks Social Apps Will Be a ‘Huge Part’ of the Layer 2 Blockchain’s Success CoinDesk: Debating Dencun: Will Ethereum's Big Update Help or Harm the Network? Jesse’s tweets on Dencun October 2022  January 2024 March 13, 2024  Blobs / Proto-danksharding EIP-4844 proposal Blobs unleashed: Ethereum’s Dencun upgrade activates on mainnet  Base says it will support EIP-4844 from 'day 1' following Dencun upgrade  Ethereum stans are putting the Bee Movie on blobs for as little as $5 Superchain Decentralizing Base with the OP Stack and Optimism  Base’s Commitment to Decentralization with the Superchain  Learn more about your ad choices. Visit megaphone.fm/adchoices

So the average amount of transactions per second right now, you know, I just looked at it, is about 5x where we were before the fork because more people are able to transact at these lows fees. That's, again, kind of driven up the price a little bit. And so I think right now we're seeing average fees in the like one to three cent range, which is still like a 10 to 20x reduction. Hi, everyone. Welcome to Unchained. You're a no-high resource for all things crypto. I'm your host, Laura Shin, mother of the Cryptopians. I started covering crypto eight years ago and as the senior editor of Forbes was the first mainstream meter reporter to cover cryptocurrency full-time. This is the

March 15th, 2024 episode of Unchained. With I Trust Capital, you can buy and sell crypto in a tax advantage retirement account. Enjoy significant tax advantages, 24-7 access, and the industry's lowest fees. Pocod is the original and leading layer zero blockchain with over 2,000 plus developers, and the PogoDOT 2.0 upgrade will be a massive accelerator for the ecosystem. Join the community at PogoDot.network slash ecosystem slash community. Uniswap makes it easier and safer than ever to access DFI seamlessly across desktop and mobile. No more clunky experiences, just clean, simple, and smart. Visit smarter.uniswap.org to learn more.

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Today's guest is Jesse Pollock, the creator of base. Welcome, Jesse. Thanks. Thanks for having me. Excited to be here. Ethereum Improvement Proposal 4844, aka the Denkoon Upgrade, activated on Wednesday. What problem did the Denkoon upgrade attempt to solve? Yeah, so Ethereum's been working to scale for the last many years.

And about two and a half, three years ago, it changed its strategy a little bit. Originally the plan was to scale Ethereum by just making it so that people could do more transactions on Ethereum layer one. But then we saw the rise of these things called Layer 2s, which run on top of Ethereum and let you run the same apps, but way cheaper. Those were organically being successful. And so Ethereum said, hey, what if instead of just trying to scale layer 1, we said, hey, let's invest all our efforts in scaling layer 2 and make it so many layer 2s can kind

of scale on top of Ethereum. We can have what's called a more modular scaling strategy, where a lot of people can work on it together. So that kind of change happened in, you know, 2021 or so. And that started a new process, basically, a new strategy inside the Ethereum community to figure out how do we make it so layer two's are cheaper? The way we kind of identified that in 2022 was to create what you can kind of think about as an HOV or carpool lane on Ethereum, where there's a special kind of new resource called blob space, where layer two, can post their data so that when they're doing a ton of transactions on layer two, they kind of

get a fast path and a cheaper path on Ethereum that lets them lower their fees. And so over the last two years, we worked on this effort. It was called EIP 4844 or Proto Danksharting. It took about two years of hard work across, you know, the Ethereum core developers and the base team and the OPE Labs team. And yesterday it shipped. And what it did is it created the first version of blob space, which is that HOV lay. And then all of the roll-ups are right now in the process of upgrading to use blob space, which is significantly driving their fees down. And then what we're going to see over the next few years is we're going to be able to increase

the amount of blob space. So what's going to kind of happen is this dance, where roll-ups lower their fees from using blob space, and then people want to use them more. So more and more transactions happen. That fills up blob space. And then we increase blob space because we do a new scaling improvement on Ethereum. That gives roll-ups more space. their fees go down, they fill up again, we increase blob space again. And so this was really

the first step in what is a long-term strategy for making, so Ethereum and the layer two is on top of it can scale to thousands, tens of thousands, hundreds of thousands of transactions per second. And just to further elaborate for the listener, previously data in order to verify transaction accuracy was stored in the more expensive and permanent call data. And so since the these blobs are temporary, that is what enables these fees to go down. Yep. And one other benefit about the blobs is that they're actually also a separate pricing market than the call data.

And so whereas before layer twos were kind of competing with all of the other applications on layer one, so for instance, if there was a price spike and everyone was trading on uniswap on layer one, that would drive up the fees on layer two. Now the blobs will actually have a separate market. And so that's going to mean that there's much more stability in the pricing, basically, for layer twos, which is going to make their fees more consistent even. And so since this went live on Wednesday, what have you seen so far in terms of how Duncun has helped base and other layer two rollups reduce their fees?

Yeah. So we didn't really know what to expect going in. We'd been pretty conservative, you know, saying that we expected, you know, two to five X reductions in fees. But we didn't want to give an exact number. Since we went live, we've seen a fair amount of variation. We saw some times where we've seen thousand X reductions in fees or 500 to a thousand X reductions in fees, subset transactions.

We've also seen actually more demands start to pick up on base. So the average amount of transactions per second right now, you know, I just looked at it, is about 5x where we were before the fork because more people are able to transact at these lows fees. That's, again, kind of driven up the price a little bit. And so I think right now we're seeing average fees in the like one to three, three cent range, which is still like a 10 to 20x reduction. But I think what we're going to see over the next couple weeks is that it's going to stabilize at kind of this demand point. And then we're going to see more and more people start to come on chain. And we're going to see more and more

transactions. And what's kind of up to us is how we keep improving the scalability of both Ethereum and base to make it so we can increase throughput and drive down fees. And when you see that you're already seeing increased activity on base, what types of transactions are people doing, or what is this enabling them to do that previously they were maybe priced out of? Yeah, I mean, all sorts of things. You know, we're seeing USDC sends be way cheaper and people doing more of those. We're seeing NFT minting be way cheaper and people doing more of those. We're seeing trading on things like uniswap and perpetual exchanges be way cheaper and people doing more of those. And so I think, you know, we didn't really know how much kind of induced

demand there would be as a result of this. But I think particularly right in this moment, because everyone's so excited. And base was really, I think, one of the first out the gate in terms of showing how much lower fees would actually be. It's kind of created this groundswell of energy around base. And a ton of people have bridged to base for their first time. They started trading. They've started using it as kind of a home for their money. And I think that that's leading to a lot of increased demand across the board. And so when you look kind of like across the spectrum, not just at base or other layer twos, but Ethereum itself, how do you think we'll kind of see like the transactions maybe differentiate across the different layers.

Like, what do you think will be reserved for layer one versus layer two's, etc.? Yeah, I mean, the way we think about layer one is that it's going to end up being mostly kind of settlement. And so I think what that means is that layer twos are obviously going to be a big user of layer one. They're going to be kind of bringing Ethereum from layer one. They're going to be posting their data to layer one. They're also going to be doing interoperability between each other through layer one in many cases.

And so I kind of think about layer twos as a business that is buying block space and services from layer one Ethereum. And I think we'll see other businesses as well. And so when businesses have, you know, really high liquidity needs or they want to be doing cross-chain settlement where they're moving assets between different kind of economic zones that are roll-ups or L-2s, I think they're going to be using that for Ethereum. And so I think we're moving much more towards a world where Ethereum is really a business chain. And the primary consumers of it are other businesses.

in the form of roll-ups or in the form of kind of large economic actors who are using Ethereum to move large amounts of money or transact with large amounts of money. I think layer two is going to be kind of the general purpose, user-focused context. So when we're talking about onboarding billions of people on chain, which is kind of the base vision, we expect that the vast majority of those people will onboard directly to layer two. And they will primarily experience layer two because it's going to be fast, it's going to be cheap, it's going to be decentralized, and it's going to be this global, economy that they can actually participate in.

And so I think that's what's going to happen at layer two is it's really giving me a place where everyday people transact. And then I think the last thing that we're going to start seeing is the rise of layer three. And this is something that can sometimes be hard to wrap your head around. But the easiest way to think about it is today there are millions, billions, trillions of servers running all around the world where people are running the applications that powered the internet. But none of those applications are really deeply connected to this new on-chain economy that's being built. But what's going to happen over the next few years is that the on-chain economy is going

to grow faster and faster. And things like assets, you know, USDC or Ethereum and identity, i.e. your actual wallet and all of that history and kind of context that comes with it are going to become really, really valuable for application developers. And so what they're going to want to be able to do is they're going to want to be able to run their great applications, but have them deeply connected with the on-chain economy. And that's what an L3 is going to enable. It's basically going to let people have their own dedicated server where they can write any kind of application. They can power their whole backend, but it will just plug right in to base or other layer twos.

And so if they want to say, bring USDC into their application, it's as easy as that. Or they want to use someone's identity. It's as easy as that. And I think that's going to lead to this rise where we have, you know, millions and billions of layer threes that are really just kind of servers that are deeply connected into the on-chain economy and gradually start to actually. kind of replace the existing Web2 compute offerings that we've seen the rise of over the last couple decades. So in a moment, we're going to talk about some of the criticisms of Dancun,

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Back to my conversation with Jesse. There are some critics that say that having Ethereum rely on layer twos by third parties to scale could put Ethereum at risk in some fashion. You know, basically it would push the general purpose computation off Ethereum to the layer twos. And that also results in a little bit of a fragmented ecosystem. And they also point out that these layer twos are more centralized, which compromises kind of the trustless nature of blockchains.

What do you think of these concerns? Yeah, you know, I think when Ethereum decided to kind of focus on this layer two or roll-up-centric scaling strategy, it was a big strategic decision. And the thing that it really prioritized in many ways was decentralization. It was saying, hey, we're not going to solve it all if we just try and do this ourselves. We're actually going to be less successful versus if we bring in more people to help solve this problem with us. And that's what they've done with layer two's. They basically said, hey, we're going to open up Ethereum as a platform. We're going to attract the best minds from around the world to come and scale Ethereum.

And they're going to have autonomy and sovereignty to do that by building on layer two, while still depending and integrating with Ethereum by depending on layer one. And I think what we've seen in the last couple of years is that strategy has been incredibly successful. You look at the caliber and scale of Ethereum developers today, and it's way further than where we were a few years ago. You look at the consistency with which Ethereum is shipping, and it's way more reliable, way higher throughput than where we were a few years ago. And I think if you look at the quality of the teams that are building on Ethereum, you have people like Coinbase, you know, large Fortune 500 company that said, hey, we're going to actually start dedicating significant engineering resources to scaling Ethereum. And I don't think that that would have been possible if Ethereum hadn't embraced this kind of decentralized, modular, open strategy where they said, hey, come build with us, come build together. and we can accomplish more together than we could accomplish a loan. So I think that's the kind of philosophical decision that Ethereum's made.

I think it's been very successful thus far. Now, are there room for improvement? Absolutely. Yes, roll-ups have to decentralize more. And we're making really great progress with that. Base is working towards becoming a stage one decentralized roll-up, which is a huge milestone. We're really confident that's going to happen this year.

And how do you define stage one decentralized roll-up? Yeah. So stage one is basically when you remove a bunch of training, wheels. And so that includes us kind of moving to use a much more decentralized security council for upgrades, as well as having live fault proofs, which are actually just going live on test net in I think a few days with the kind of like basically production ready implementation. And so that's going to be a huge milestone for base and the rest of the super chain. Beyond there, I think we have a clear path to stage two, which is kind of when we remove all those

training wheels. And it basically inherits the decentralization of Ethereum. And so I think if we were saying, hey, we're five, ten years away from having that level of decentralization, that'd be a problem. That's not where we're at. Instead, we're months, quarters, maybe a couple years away from being all the way there. So that's on the decentralization side. I think we're making really good progress. I think the other critique that you hear is kind of this interoperability question of how do we make it so that for the everyday user, it's super smooth to transact across all these different layer tubes. And I think we're also making a ton of progress here. This is actually one of the reasons why base decided not to build our own technology stack and instead build on the OP

stack, which is this open public good that base is built on in OP Mendes, built on in Zora and mode and a bunch of other chains are built on. And the goal with that and the goal with other infrastructure we're building like the Security Council is to make it so that these chains increasingly feel and operate like one chain to the user. And we have, I think, really good progress that we're making in that direction at the chain layer. And then we're also seeing really good progress at the UX layer. I think from an application perspective, increasingly people aren't even thinking about the chain.

They're just transacting, and it's using the balance wherever they have money, and everything just works. So I guess all that to say, it was a big bet from the kind of strategy perspective. I think it's paying off strategically in terms of the talent, the velocity, the motivation that we have in the ecosystem. And then the two big challenges that we have around decentralization and interoperability, I think we're making a really good quarter over quarter progress with. And we'll see that over the next year or so, a lot of those challenges that people see today really disappear.

And so just so I understand when you talked about how Base chose the OP stack, this is kind of that vision of the super chain. And there's a bunch of different communities that are using a similar tech stack. But then so for others that are on a different tech stack, other roll-ups, you were saying that then additionally, you guys are all working on interoperability to address that fragmentation issue. Yeah, absolutely. And I think that this will end up being kind of concentric circles where, you know, maybe in the super chain will have the highest levels of interoperability. And so you can basically just treat it literally like one chain. Whereas for another layer two that's built on a different technology stack, you might get atomic composability, but you might not get fungibility of assets across them. And so that's going to still be a huge amount of interoperability.

We're going to be able to build abstracted experiences, but it's going to have slightly different security characteristics that might impact developers. And so I think one of the benefits that we get from all of us building on Ethereum is that it's this context. And we actually have a kind of leadership team on Ethereum that's saying, hey, we really care about interoperability. And they're working on things like base sequencing, which can make interoperability work much better. They're working on things like having a native ZK Prover in the layer one that can actually make it. So all of these chains are using the same context for proving. And that might take a little bit of time to get all of that integrated at the layer one. I think we're going to make progress at layer two in terms of proving out those solutions,

showing kind of how valuable interoperability can be, and building the first concentric circles that will gradually become more and more tightly integrated over the next few years. So there were several other features that were included in this Dengoon upgrade. There were eight total. I'm not going to have you run through all eight of them. But are there any particular ones that you'd like to call out as notable? Yeah, I think two ones that really stood out to me that were excited about. one was EIP 1153, which is what's called transient storage, which is, it's basically a developer

tool that lets you set a value in a transaction in a block and have that value be persisted for the whole block, but not kind of saved in perpetuity. And so that allows many transactions in a single block to coordinate through this kind of transient value. The really big, I think, new use case that's going to enable is actually uniswap, V4. Uniswap V4 is the next generation of the Uniswap protocol. It is built using transient storage because it was too expensive without transient storage to actually implement it. And it opens up a really big design space in terms of people building on top of Uniswap. And so I'm already in

touch with a large number of teams that are building on top of Uniswob v4 using hooks. And transient storage enables that. So I think we're going to see over the next five, six months a ton of innovation around decentralized exchanges driven by transient storage and the kind of new design space that that opens up. The other one that I'm really excited about is I think it's EIP 4788. And it basically includes the block header in the state of the block. Maybe that's not even the right way to say it. But the thing that it enables for layer two's like base is you can actually get much cheaper ability to reference data. on layer one in layer two.

So you can use EIP 4788 to basically say, hey, we're gonna in an L2 transaction prove something about a transaction that happened on layer one. And so you could say, hey, only if X happened on layer one, will we allow this transaction to go through? Or only if, you know, there's certain people who hold an NFT on layer one, will we let them participate in this mint on layer two? And that opens up a huge amount of composability between the L1

data and the L2 transactions. And I think it's also going to enable a lot of this interoperability functionality that we're talking about, because not only can you prove information about layer one, you can also now prove information about layer two because other layer twos are posting their state to layer one, and now other layer twos can reference it. And so I think both 1153 and 4788 have really kind of opened up the design space for developers building on layer two and layer one. and we're going to see a ton of new use cases over the next six months that leverage that new

technology. Right before we started recording, we were talking about how you would just accomplish this big feed after working for a few years on something. And then you said, oh, but, you know, the work continues. So where are you going to be focusing next when it comes to, you know, Ethereum's roadmap and scaling? Yeah. I mean, one of the base team's motto is barred from Kobe, you know, rest in peace, Kobe.

and it is the job's not finished. And every time we hit a milestone, that's kind of the mantra that we say to ourselves, like the job is not finished. And that's because our job will only be finished when we have brought the entire world on chain into a new global on-chain economy that increases innovation, creativity, and freedom. And so, you know, the way we feel this morning as we woke up post blobs and post-dankoon is the job's not finished, head down, get back to work.

A few things that we're really focused on this year. One is obviously continuing to drive down fees. My high-level assessment is at this point, we've made a ton of progress on the kind of data availability cost, which has been about 90 to 95 percent of the costs for layer twos. What's going to happen now is now that the data availability costs are way lowered, we're going to see more demand, which is actually going to increase the throughput on layer twos and increase execution costs. And so now our kind of scaling focus is turning to how do we increase throughput and how do we

reduce execution costs for layer two transactors. We have a bunch of things we're working on there. I think we're going to make really great progress this year. So that's kind of on the scaling front. It's how do we increase execution throughput? The next thing that's very top of mind for us is how do we make smart wallets the default? This is something that we think is really critical if we want to

enable the next billion people to come on chain. Today, wallets are too complex. They're scary for everyday users. They take way too long to set up. and they're really limited in terms of what developers can do with them. With smart wallets, you can get a user set up in less than 10 seconds without an app or an extension. You can have much better security that actually can replicate what we all get from a bank account, but have it be fully on-chain in terms of trust and security.

And then we can actually enable developers to build next generation experiences with things like totally gasless transactions, where they can subsidize the fees and the user doesn't even have to worry about it. And so the base team has kind of made this a strategic pillar for us in 2024. It's make smart wallets the default. We supported Coinbase a couple weeks ago in launching their smart wallet. I think that's a huge step forward in terms of how quickly we're going to be able to get people on chain. And we're also working with tons of ecosystem partners to make it so anyone who's building with smart wallets can get started for free. You can go to basically any account abstraction infrastructure provider today.

And you can get up to five-eth worth of gas credits from base that we funded. So if you're building with smart wallets, you can get started building for free. So that's the second big thing that we're focused on. And then I'd say the third thing that we're working on is just how do we support developers to build more great products? At this point, I feel like we've solved the three, or not solved, but we've made enough progress and 10x improvements on the three big challenges, fees, identity, and wallets.

And so what remains is supporting developers to build applications that, millions and then tens of millions, then hundreds of millions and then billions of people want to use. And so every day, I spend all of my time talking to builders when, of course, I'm not talking with you to actually make it happen, like actually support them in building the next generation of applications. While I have you here, I know that you're a proponent of this word on chain. And I think you like to use it as a substitute for the word crypto. Can you talk a little bit about that?

Why is that? Yeah. So I've been working in the industry for 11 years, and it has been kind of a journey of seeing different words get tried and, you know, blow up and then get kind of lambasted. We've gone through blockchain, we've gone through Bitcoin, we've gone through crypto, we've gone through Web3. And I think in the last year and a half, our team has seen the rise of a new word, on chain. And where on chain comes from is kind of the analogy with online, that we had this transformation. that happened in the early 2000s where the whole world came online. And it originally started as on dash line.

And no one knew what it meant. People were like, oh, what's that online thing? And then gradually more and more of our world moved on to this new platform. People groped it and it became a part of kind of our day-to-day existence. We think that the same transformation is happening right now with on-chain. And also, on-chain started as on-dash chain. We've now simplified it to just on-chain, one word. And I think what we've seen from both kind of consumer research as well,

well as our data and anecdotal experience is that people really immediately grok on chain because they can draw that analogy to online. And the thing that I think is really powerful is instead of hearing crypto or Web3 and thinking about speculation and, you know, pump and dump and all of this kind of legacy of the crypto industry that has really been driven by speculation for the last decade, people hear on chain, they get to see it in a new light, they get to analogize it to online, which is this thing that has transformed their lives over the last 20 years, and they see it first and foremost as a technology change. They say, oh, if I come on chain, I can earn more money for my business, or I can cut out the middlemen who are taking my creative work and

profiting off it, or I can play this new game that wasn't previously possible, or I can collaborate and send money to anyone anywhere in the world instantly and for free. Those are not about speculation. It's not about making more money. It's about taking a technology and making your life better. And I think that is the theme of on-chain. On-chain is about upgrading our systems. It's about acknowledging that a lot of the stuff we've been doing with money is built on systems that are 50 to 100 years old. And if we use technology, if we use software, if we use these blockchains to build new experiences and to bring the world on-chain, we actually make everyone's life a lot better. And so that's what on-chain means to us. When we're

We've talked to everyday people, both developers and users, both crypto natives and, you know, crypto beginners, they get it too. And when they hear that word, that's the thing that lights up in their brain. So our kind of mantra for the industry is it's time for change. And it's time for us to embrace this new language, the language of on-chain that really centers crypto as a technology change that is upgrading our systems to make the world a better place. All right, Jesse. Well, it's been such a pleasure. Thank you so much for coming on Unchained. Thanks so much. Don't forget. Step is the weekly news recap. Today, presented by Unchang contributor Megan Christensen. Stick around for

this week in crypto after this short break. Did you know you can buy and sell crypto with tax benefits in an individual retirement account? I trust capital makes this possible. But what does this mean? When you buy crypto outside an IRA, like on an exchange, you face taxes on gains. But in an IRA, like a Roth IRA, gains can be tax-free. I-Trust capital also has some of the lowest fees in the industry and 24-7 accessibility. Start now and maximize your retirement savings with I-Trust Capital. With Amex Platinum, $400 in annual credits for travel and dining means you not only satisfy your travel bug, but your taste buds too. That's the powerful backing of Amex. Conditions apply. Welcome to this week's crypto roundup. This week, Ethereum completed its dank and upgrade. Bitcoin blasts

past its all-time high and the success of U.S. traded spot Bitcoin ETS has driven some issuers to make adjustments to remain competitive. A Bloomberg ETF analyst turned more bearish about potential spot ETH ETF approvals, plus legal updates for some crypto heavyweights and much more. Thanks for tuning in. This episode was written by Brandy Betts and edited by Jeannie Kim. I'm Megan Christensen. Let's jump in. The much anticipated Duncan upgrade has led to a significant reduction in transaction fees on Ethereum Layer 2 networks. The Duncan upgrade went live early on Wednesday after it activated on the Ethereum Mainnet at Epic Heights 269-568.

The upgrade introduced the highly anticipated proto-dank starting functionality via EIP 4844, which integrates off-chain, quote, data blobs, end quote, that decrease the costs associated with storing transaction data. Ethereum Layer 2 networks, which are designed to provide a faster, cheaper route, to executing transactions on the underlying blockchain were the biggest beneficiaries of the upgrade. In the first day after the upgrade, median transaction fees had dropped to 0.05 on optimism, 0.064 on base, 0.5 in arbitrum, and 0.16 on ZK Sync era. So far, optimism and chains based on optimism's tech stack, such as base, have seen the biggest reductions in fees.

After the strong debut of the spat Bitcoin ETFs, investor attention turned, toward one spot ether ETFs might soon receive relatory approval. The SEC has a May 23rd deadline to make a final decision on the first of the spot ETH ETF applications. However, Bloomberg analyst Eric Belhounis revised his estimate downward of the likelihood of the likelihood. He now wagers a 35% chance of an approval by the deadline compared to his production in January of a 70% likelihood. Belhounis said that while the probability is halved, it is not zero, and an approval may still happen in the long term. Other experts, including Jane Sefer and Jake Chervinsky, chief legal officer for the Valiant Fund, echoed Valhoonis, noting minimal activity from relevant parties

and concerns about the SEC's apparent reluctance to engage in necessary discussions for approval. Issuers are adjusting fees and launching spinoffs amid the booming market for spot Bitcoin ETFs, which have collectively amassed over $55 billion in assets under management, within two months of their launch, signaling a positive shift in Main Street investor sentiment, as well as market dynamics within the cryptocurrency space. Fannack has cut the fees to zero for its spot Bitcoin ECF, with the ticker Hodel, opting to waive management fees entirely for a year. The move was a strategic response to a competitive market that has been dominated by BlackRock's iShare spot Bitcoin ETF. And it worked. The fee reduction spurred a surge of investment, with Hodel experiencing a record-breaking 119 million inflows on the day following the announcement. Meanwhile, gray-scale Bitcoin Trust, which has experienced outflows partly due to its comparatively

higher fees, filed with the SEC to create the Grayscale Bitcoin Mini Trust, a spinoff that would offer a lower-cost alternative to its flagship product. GBT has seen outflows of over $11 billion since its conversion into an ETF. In a significant legal development, the U.S. District Court for the Southern District of New York has rejected motions from Genesis and Gemini to dismiss a lawsuit filed by the SESA. The SEC. The SEC alleges that the two crypto firms offered and sold unregistered security products through the Gemini Earned program. Judge Edgar Ramos, presiding over the case, ruled that the SEC's complaint was plausible enough for the case to continue to court. The Gemini Earned program,

at the heart of the case, promised retail customers up to 8% interest on tokens invested through the platform. Gemini Earned thralls were halted when its lending partner Genesis struggled to meet demands amid the market turbulence triggered by the collapse of FTX and Alameda research. Gemini then terminated the de-earned program, leading to the SEC's lawsuit, alleging billions of dollars were collected from investors without adequate risk disclosures. The legal case is unfolding alongside Gemini's commitment to reimburse affected customers up to $1.1 billion as part of a settlement with the New York State Department of Financial Services, coupled with a $37 million fine for compliance shortcomings.

The denial of Genesis and Gemonized motions to dismiss continues the legal confrontations between major players in the crypto industry and regulatory authorities. The SEC has also initiated legal action against crypto exchanges, Coinbase, Cracken, and Binance over alleged illegal securities offerings. Notably, Binance has settled with other regulatory bodies for various violations, but its case with the SEC remains ongoing. Speaking of Binance, former Binance CEO, Cheng Peng Zhao, known as CZ, was ordered to surrender his passport under a modified bail bond ahead of his sentencing hearing. According to court documents filed with the U.S. District Court in Seattle on March 11, Zau now has to inform pre-trial services before conducting any interstate travel within the United States

and surrender his Canadian passport to a third party, who is under the supervision of his counsel. These modifications mark the second change to Zau's bail bond. He was previously forbidden from leaving the U.S. overturning an earlier agreement that would have allowed him to travel to the United Arab Emirates. Zao had offered his $4.5 billion stake in finance as a security for his return, but a judge wasn't convinced. Zahle's legal trouble stem from his guilty plea to violating the Bank Secrecy Act and failing to maintain an effective anti-money laundering program at finance. As part of his plea deal, he stepped down as CEO, and finance was fined $4.3 billion. Currently released on a $175 million bond, Zalb, awaits his sentencing hearing, originally scheduled for February 23rd but postponed to April 30th.

In other crypto-related courtroom news, Roman Stirlingov, the Russian-Swedish-national standing trial in the U.S. for his alleged involvement with Bitcoin mining protocol Bitcoin Fogg has been found guilty on charges related to conspiracy, money laundering, and operating an unlicensed money transmitting business. The verdict in the U.S. District Court for the District of Columbia leaves Sterlingham facing a maximum of 50 years in prison. His sentencing is scheduled for July 15th. Prosecutors argued that Sterlingov operated Bitcoin fog from October 2011 to April 2021, facilitating the laundering of approximately 400 million predominantly sourced from dark net markets engaged in illicit activities such as drug trading and identity theft. The court determined that

Sterlingov marketed Bitcoin fog as a tool for anonymizing Bitcoin transactions to evade law enforcement, charging fees primarily to users of dark net markets like Silk Road, Agora, and Alpha Bay. The defense team had argued that prosecutors failed to conclusively prove Sterlingov's connection to Bitcoin fog, and they question the jurisdictional reach of the U.S. government in an international case. Sterlingov's attorneys plan to appeal the verdict. A UK judge has declared that the infamous Craig Wright is not Bitcoin creator Satoshi Nakamoto. Right, was sued by the Crypto Open patent alliance over alleged forgeries and attempts to claim he is the creator of Bitcoin. Judge James Miller made some stark declarative remarks prior to issuing his final ruling.

Quote, first, that Dr. Wright is not the author of the Bitcoin White Paper. Second, Dr. Wright is not the person who adopted or operated under the pseudonym Satoshi Nakamoto in the period 2008 to 2011. Third, Dr. Wright is not the person who created the Bitcoin system. And fourth, he is not the author of the initial versions of the Bitcoin software. End quote. Wright's public claims of being behind the pseudonymous author of the Bitcoin white paper began all the way back in 2016 in an interview with the BBC.

The veracity of Wright's claims have long been disputed by Bitcoin users, as he has never been able to provide cryptographic signatures related to addresses presumed to belong to Satoshi. And moving on to Elon. Speaking at an event to a Tesla factory in Germany on Wednesday, Elon Musk was asked, quote, when can you buy a Tesla with Dogecoin? End quote. Musk answered, quote, you know, at some point, I think we should enable that, end quote.

In a video originally uploaded by X user, Ad Doge official CEO, quote, you can buy Tesla merch with Doge, which is cool, so Dogecoin to the moon, end quote. Ending things on a lighter note, nearly $690,000 in funds were raised to put the Dog With Hat meme on the Las Vegas sphere. Massive spherical entertainment venue with LED displays that wrap around its interior and exterior. The popular Dog With Hat meme features the image of a Shibu Inu puppy sporting a pink woven beanie. Donors to the cause transferred USDC stablecoins into a multi-sig wallet controlled by five individuals. The fundraiser exceeded its target of 650,000 to reach a total of 68,469 within a few days. With, the Solana-based meme coin associated with Dog with Hat, surged along with the fundraiser

to become one of the most actively traded assets on Salana-based decentralized exchanges. And that's all. Thank you so much for joining us today. If you enjoyed this recap, go to Unchained Crypto.substack.com. that is Unchained Crypto.substack.com and sign up for a free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin with help from Nelson Wang, Matt Piltcher, Juan Aronovich, Egan Gavis, Shashank, and Ruger Korea. Thanks so much for listening. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily five days a week.

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