cygaar Profile picture
Jun 8 1 tweets 2 min read Read on X
Hello @IGGYAZALEA (and everyone else), just wanted to give you a very simple primer on gas fees in blockchains:

1) Why do transactions have a gas fee?

This is how the validators (the ppl running computers) of a blockchain get paid. They run computations on their computers, which requires a certain amount of energy. Gas fees are how they're compensated for doing so.

Additionally, without gas fees, a blockchain may get spammed. Gas fees make it hard for a bad actor to take down blockchains (through a DDoS attack).

2) How are fees computed?

They're based on a couple different factors including how busy the chain is, how intense the transaction's computations are, and how much the user is willing to pay.

3) Why are Ethereum fees so high? Solana fees are a lot lower!

Ethereum is designed to be maximally decentralized, meaning the computers participating in the network can be pretty weak. A blockchain is as strong as its weakest link. Due to the low hardware requirements, the chain can only process so many transactions, requiring higher gas fees to prevent congestion.

Solana has more powerful computers running in the network. This allows it to process more transactions faster, thus requiring lower fees. The tradeoff here is that fewer people can participate in the network.

4) Does @VitalikButerin keep Ethereum gas fees?

He does not. Sorry, he's not actually the Ethereum gas monster.

Instead, gas fees are partially given out as validator rewards, and partially burned (deleted from existence). This keeps the supply of Ethereum relatively low (sometimes deflationary). You can argue that this helps Vitalik's pockets, but it also helps every other ETH holder's pockets as well.

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More from @0xCygaar

Apr 18
A beginner's guide to Runes - the new protocol that will bring fungible tokens to Bitcoin at the halving 🧵: Image
To start, what are fungible tokens?

These are tokens that are not unique in nature, can be divided, and are interchangeable. They exist on other blockchains as ERC20s on EVM chains or SPL on Solana.

Examples include memecoins and governance tokens.
Historically, fungible tokens have not been possible on Bitcoin since it doesn't support smart contracts.

However, with the advent of ordinals, we saw the rise of BRC-20s, which inscribed token data in individual SATs (satoshis) and were processed by off-chain indexers. Image
Read 16 tweets
Apr 11
EIP-3074 was just approved to go live in the next Ethereum hard fork.

This EIP will forever change how users interact on EVM chains, making wallet UX simpler, cheaper, and more powerful.

Here's a high level overview of EIP-3074 and how it'll change the game 🧵: Image
The TLDR of 3074 is that it gives EOAs (normal wallets) smart contract capabilities (like account abstraction).

This includes the ability to do single tx approvals, batch txs, wallet asset recovery, sponsored txs, and more.

Let's first talk about the issues with modern wallets.
@lightclients did a great presentation on 3074 which I will reference in this thread.

Here's a list of UX problems - they can be solved through smart contract wallets, but that would force users to migrate wallets which is bad UX and costs money.

Not great. Image
Read 15 tweets
Mar 11
We are now 2 days away from Ethereum's Dencun upgrade, the largest fork since the Merge.

Here's a summary of the biggest changes in Dencun and how they'll affect you 🧵: Image
First off, why the name "Dencun"?

Ethereum has 2 types of clients, an execution client and a consensus client. Each type has its own set of upgrade names.

On the execution side, we have the Cancun upgrade, while the client side has the Deneb upgrade.

Combined, we get Dencun.
Image
Image
1) EIP-4844, proto-danksharding

Sounds scary, but it's a huge step in the right direction for Ethereum scaling. This change has been in the works for 2 years, and introduces "blobs" as ways for rollups to post transaction data.

It also sets the stage for future scaling changes.
Read 10 tweets
Mar 7
The beginner's guide to understanding Bitcoin Ordinals - what they are, how they differ from other NFTs, and why they're here to stay 🧵: Image
In order to understand ordinals, you first need to understand how Bitcoin works.

Bitcoin uses "unspent transaction outputs" or UTXOs to manage balances. You can think of UTXOs as batches of currency that you own.

Bitcoin transactions result in UTXOs being consumed and created.
If you own 0.5 BTC and send 0.2 to someone, you'll receive a UTXO worth 0.3 BTC and the recipient will receive a UTXO of 0.2 BTC. The txn consumes the original 0.5 BTC UTXO, which will no longer exist.

Each UTXO is made up of satoshis (sat), which is the base unit for Bitcoin. Image
Read 16 tweets
Feb 20
A lot of people are wondering how @ethena_labs is able to generate a 27% yield on their "internet bond".

Is it black magic? Are they max levered? What's the catch?

To answer those questions, here's a simple explanation of where the Ethena yield comes from 🧵: Image
Some quick context on Ethena:

Ethena built USDe, a trust-minimized scalable stablecoin that's pegged to the US dollar. They use a combination of staked ETH and perps to maintain the peg.

Ethena also built staked USDe (sUSDe) which generates yield, similar to a traditional bond.
To understand where the 27% yield comes from, we first need to understand how USDe works.

Rather than store a bunch of dollars at a bank (like USDC) to back each token 1:1, USDe uses a combination of Ethereum collateral and perpetual contracts to maintain its peg.
Read 15 tweets
Feb 12
Excited to launch the "Divisible NFT" standard (DN404) which aims to be a hybrid ERC20/721 token.

ERC404 took the crypto world by storm over the past few days, but it doesn't follow existing standards, is inefficient, and breaks at certain edge cases.

Here's how DN404 works 🧵: Image
For those that just want the code, you can find it here (with example contracts): .

Big shoutout once again to @optimizoor @0xQuit @0xjustadev @AmadiMichaels @PopPunkLLC and other devs for grinding this out with me over the weekend.github.com/Vectorized/dn4…
Reminder: this is not a project.

We released open source code that other projects can use to build hybrid tokens. We are not selling tokens or a project to anyone, so stay wary of scams.
Read 12 tweets

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