Eric Wall Profile picture
24 Nov, 13 tweets, 3 min read
I don’t know who needs to hear this but something having a lower gas cost does not immediately mean that once that thing gets adopted, transaction fees will be lower

Gas cost can go down but gas price can go up

I think if all Ethereum activity got squished into a single rollup L2, it would probably be a mistake to assume transaction fees would go down. ”Cost” would go down, but fees would probably trend back up again
Only with multiple rollups do you have a very good chance of lowering the fees for the longterm, atleast for certain transactions

This comes from that you segregate the bidding contest for block space into separate mempools essentially.
I think the fee problem unfortunately will prove to be quite pervasive and hard to get rid off

We’ve created too much opportunity in DeFi and block space will always be a finite resource

More block space perhaps leads to even more opportunity, not necessarily less
I hope I’m wrong though or DeFi will always be quite expensive to use
Rollups do a decent job of addressing the problem but I would be a bit surprised if we’ll see any vibrant DeFi ecosystem with negligible fees as a result

It might be such that there is no way we can eliminate fee problems without breaking composability
I do expect that it would be possible to have low fees for a rollup where there isn’t any arb, a rollup that only does account-to-account transfers for instance. But that doesn’t really solve anything for DeFi
On a second thought I realize I’m working from an assumption that sequencers will prioritize including transactions into the rollup that pay higher fees to the sequencer

If the sequencer uses some successful fair ordering mechanism and isn’t trying to earn fees => diff situation
It’s on atleast @arbitrum’s roadmap to enable fair ordering (first come first serve) at the sequencer level
Quite counterintuitively (or atleast not how the narrative goes) this would mean that DeFi rollups wouldn’t remedy the fee problem by doing computation offchain, but by enabling new ordering mechanisms by virtue of having sequencers
The sequencers would still of course have to post data to the L1, and sequencers would (unless subsidized) need to charge users atleast enough to cover the L1 fees. If L1 fees become fierce, it would trickle up to the users. But they could end up subsidized.
Thought: maybe allow sequencers to cheat just enough with fair sequencing and extract MEV just enough to cover all the costs for the users (and focus on good MEVs like DEX arbs and liquidations)?

Also am I just repeating textbook @optimismPBC right now?
Another form of subsidy would be to pay sequencers via inflation of the rollup governance token. But seems like it would need constant adjusting to make sure it covers all L1 costs and I’m not sure it’s a great idea to try to make them either

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More from @ercwl

25 Nov
Swedbank—one of Sweden’s absolutely largest commercial banks—just blocked cross-border payments to a whopping 103 countries.
Handelsbanken blocked 50 countries last year and are up to 113 now.
Reason: ”as part of the work to follow updated policies regarding money laundering, terrorist financing, and financial sanctions”.
Read 5 tweets
22 Nov
I own this NFT that gives you a free dinner with the Chief Protocol Architect of $AVAX, @kevinsekniqi.

It's currently on the X-chain. I want to transfer it to the C-chain if there are any good UIs for people to place bids/take offers for NFTs there? Any suggestions? ImageImage
What's cool about this NFT is that you don't need to buy it just because you want to eat dinner with @kevinsekniqi. You can buy it because you expect the demand (and therefore the value) of a dinner with @kevinsekniqi will be higher in the future. It's basically a social token!
Side-question: Am I personally turning this NFT into a security right now by giving you an expectation of profit? @kevinsekniqi issued it and transferred it for free and didn't create any expectations when he issued it. But am I myself committing a crime by marketing it as such?
Read 7 tweets
21 Nov
We built this city

We built this city

We build this city on bitcoin bonds Image
Technically it’s not built yet and it’s a USD-denominated bond (not a bitcoin-denominated bond) but the loan is used to buy bitcoin and invest in/fund Bitcoin City
I don’t know what I think about the whole authoritarianish gov building a honey pot of crypto wealthy in a country with one of the highest murder rates on the planet but I do love volcanoes and volcano-powered cities & the Sovereign Individual touch where govs compete for people
Read 6 tweets
20 Nov
ETH is priced as if it can flip BTC (% of BTC mcap)

ETH-killers are priced as if they can flip ETH (% of ETH mcap)

Even though they aren’t optimized as monetary assets

And nobody knows what the value for “smart contract fuel” is..

..when they’re supposed to solve high fees...
There’s a monetary premium here that’s being broadbrushed all over everything that’s on CoinGecko.

Most of it is just valued by association (in relation to something else) even though those links don’t really survive when they’re interlinked in two, three, questionable steps
I’m not complaining but FA is completely broken at this point
Read 4 tweets
19 Nov
Everyone complains exchanges aren’t enabling Lightning withdrawals/deposits & the narrative seems to be that ”exchanges don’t want to admit bitcoin scales!/they’re busy listing shitcoins” and then @binance integrates @arbitrum Ethereum L2 straight out of the box what’s that about
Binance has every incentive to pretend Ethereum doesn’t scale since it leads to tons of trading volume in other competing L1s, including their very own Binance Smart Chain geth-fork, which they’ve been trying to steer people toward heavily on their withdrawal page interface.
Maybe it’s because all you need to withdraw to an Ethereum L2 is an Ethereum address, no set-up or inbound liquidity needed, and that Ethereum L2s can do large transfers just fine and don’t need to worry about routes?
Read 5 tweets
6 Nov
Lol, @Vattenfall_Se, Sweden’s own *state-owned* power company (Sweden’s absolutely largest fossil-free energy producer) just completely rejected the notion—put forth by our financial regulator and environmental protection agency 2 days ago—of bitcoin mining’s wastefulness.
Instead, they talked about how crypto mining was an excellent ”buffer” in energy production that is highly useful for controllable load management and a way to monetize excess energy which would otherwise go to waste.
Their stance is that this actually strengthens the power grid, not siphons from it.

That’s from Sweden’s own 100+ year-old state-owned power company.
Read 12 tweets

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