Phase 0 ANNOUNCED - ETH STAKING IS HERE | Preston Van Loon of Prysmatic Labs ALPHA LEAK

🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI ❤️ JOIN PRIVATE DISCORD: https://bit.ly/2UVI10O 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- 📢 DEVS OR BUILDER? APPLY TO FILECOIN ACCELERATOR FOR $20K GRANT http://bankless.cc/filecoinapply ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️LEDGER https://bankless.cc/ledger-20%20 - BEST HARDWARE WALLET TO SECURE CRYPTO https://bankless.cc/ledger-20 💳 MONOLITH https://bankless.cc/monolith - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith 🚀ARGENT https://bankless.cc/argent - OUR MOST RECOMMENDED DEFI WALLET https://bankless.cc/argent 🤖YEARN http://bankless.cc/yearn - YIELD-SEEKING MONEY ROBOT THAT FARMS DEFI FOR YOU http://bankless.cc/yearn ------ Phase 0 is HERE - ETH STAKING December 1st! What Happens on December 1st? Can we just send ETH to depositcontract.eth? What else do we have to do? How much ETH is required in the deposit contract? What are the risks? How do I avoid getting slashed? We bring Preston Van Loon from the Prysmatic Labs team to inform us of WHAT JUST HAPPENED! LINKS: Launchpad for Staking ETH and running an ETH 2 validator: https://launchpad.ethereum.org/ MAKE SURE YOU KNOW WHAT YOUR DOING. START BY WATCHING THE VIDEO on YouTube: https://www.youtube.com/watch?v=SkUiw1y3BHU&feature=youtu.be https://www.youtube.com/watch?v=SkUiw1y3BHU&feature=youtu.be Ethereum.org Official Blog: https://blog.ethereum.org/2020/11/04/eth2-quick-update-no-19/ Deposit contract Etherscan address: https://etherscan.io/address/0x00000000219ab540356cBB839Cbe05303d7705Fa Follow Preston on Twitter: https://twitter.com/preston_vanloon Prysmatic Labs website: https://prysmaticlabs.com/ RocketPool Meet the Nation: https://www.youtube.com/watch?v=cqf6aJCFZn8&t=599s https://www.youtube.com/watch?v=cqf6aJCFZn8&t=599s RocketPool Tactic: https://bankless.substack.com/p/how-to-mint-reth-on-rocket-pool https://bankless.substack.com/p/how-to-mint-reth-on-rocket-pool------ ------ Don't stop at the video! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website for resources http://banklesshq.com/ Follow Bankless on Twitter https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState Follow DeFi Dad on Twitter https://twitter.com/DeFi_Dad ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ryan Sean Adams?

  Welcome Bankless Nation. This is a special episode that we're bringing to you on YouTube. We are bringing to you on the podcast. This is Alpha Leak. David, we only do Alpha Leaks when something alpha happens. When we know that there is something that you want to know about and you need to react to quickly, a major type of event, what is this Alpha Leak today?

• 0:23David Hoffman?

  Man, the Alpha Leak that we are talking about today is something that I think we've seen coming a long way off, but that doesn't change how big of a deal it is today. Alpha Leaks are when we just need to drop everything and get into the content production mode to talk about this. What's going on? And what is going on is the Ethereum 2.0 Phase Zero Deposit Contract has been announced. Starting on December 1st is the first, December 1st could be the day that Phase Zero goes live. So there's a lot of conversations to be had about how to prepare for this. We all want to be a part of the group that helps Ethereum 2.0 get off the ground. And so this, this podcast episode, this YouTube video, depending on where you're watching it,

• 1:07David Hoffman?

  is going to help you understand what the hell is going on with the deposit contract with Phase Zero and how you can help grow Ethereum 2.0, starting on December 1st. It could be as soon as December 1st.

• 1:19Ryan Sean Adams?

  Absolutely. We want you to be able to find the alpha in the midst of all this. So we're doing two things. First, we're going to give you kind of an overview of what is happening, what just went on, the significance of it, how you can get involved. Then we're also going to be bringing on Preston Van Loon, who's a developer at a ETH2 client called Prism. And we go through and we ask a whole bunch of questions of Preston and we get in-depth into how to stake. How can you stake from your home? What are the risks? What are the rewards? All of those details as part of this Alpha Leak episode as well. So with that, David, we should just get right into it.

• 1:59Ryan Sean Adams?

  Man, it was like, I was having kind of a rough day, you know, not knowing who the president is and everything else. Like this morning when I woke up. Uncertainty is something that you talked about on- Monday's posts on Bankless that, hey, like, this election could go one way or the other, but the worst outcome is uncertainty, and we got the worst outcome, didn't we? And then I got a very cheering message from someone I saw on Twitter that the ETH2 staking contract has been announced. So the ETH2 staking contract has actually gone live, more than been announced, gone live with a specific block time. And we'll get into what that means.

• 2:41Ryan Sean Adams?

  But high level, this is what we've talked about for a long time, Dave. This is Ethereum's initial bond offering. So think of this. Ethereum right now is the largest non-sovereign global economy, a decentralized economy that the world has ever seen, and they're getting ready to issue a bond. That's how I see it. We talked so many times before, David, about the triple-point asset. Ether being a triple-point asset, like, you can use it as a commodity, pay for gas, you can use it as money, as store of value of collateral in DeFi. Well, this is that third point, right? This is using Ether as a capital asset to actually generate returns for you,

• 3:26Ryan Sean Adams?

  and it's finally going live. I feel like I've been waiting forever, but it's finally happening. So, yeah, what, like, where were you? What was your take when you heard this news?

• 3:37David Hoffman?

  Yeah, it happened this morning, except it started to happen yesterday, and a lot of people that really pay attention to the intricate details of Ethereum started to figure this out. And people noticed this by the depositcontract.ethens address getting deployed to an address that had a bunch of zeros. And there is significance to an address that has a bunch of zeros, because those aren't easy to find, right? And so there was a lot of some behind the scenes, like, what's going on here? Like, depositcontract.eth, that's a real thing. And then the next day, the day after Election Day, which is the craziest time to announce the launch of Phase Zero, we get an official announcement from the ethereum.

• 4:20David Hoffman?

  ...org site, a new website on ethereum.org that shows you how to be a validator on ETH2. So all these things happen at once, which is

• 4:28Ryan Sean Adams?

  Did you predict this, though? I feel like a few episodes ago, you were just calling a date.

• 4:32David Hoffman?

  I came pretty close. I came pretty close. I predicted a week and a half ago that this last Monday, a date would be announced. And it happened on Wednesday morning. So I was off by two days. Not too bad.

• 4:46Ryan Sean Adams?

  That is super close. That is not too bad. So what's been the reaction in crypto Twitter? Can you talk about it? So like I put tweets out, I feel like you put tweets out, the entire community is celebrating this. This is Spencer Noon. He had to take like, this is a big deal, I think, is basically the summary of what he's saying here. It was enough to get Eric Connor back on Twitter.

• 5:08David Hoffman?

  Eric Connor's out of bed. Welcome back, Eric Connor, to Twitter. We'll see how long he stays here. I'm not sure he's in the mood to stay for the whole bull run.

• 5:15Ryan Sean Adams?

  Probably.

• 5:17David Hoffman?

  I'm glad Eric Connor's back to help lead us into Ethereum 2.0. He's a great community manager. If that's what he's here to do, then absolutely.

• 5:25Ryan Sean Adams?

  Yeah.

• 5:26David Hoffman?

  So it's, and you know, your question about how did Twitter react to this? It was mixed and that, you know, and it was a little bit frustrating because there's a bunch of, you know, very deep core Ethereum people that have been paying attention to this for a while. And to these people, people like you and me, Ryan, like, you know, at some point, this is just not a surprise. Like, we knew this was coming from a long way off. We never had any doubts that this would actually be here. We did have doubts about when, but we also were able to talk to people. We've had Danny Ryan on the Bankless Program like twice in two different capacities now. We've had a bunch of just ETH 2.0 talk. We've been seeing what's been coming, right?

• 6:04Ryan Sean Adams?

  So Vitalik a couple of weeks ago, he said, yeah, it's coming by

• 6:08David Hoffman?

  Coming in 2020.

• 6:09Ryan Sean Adams?

  The end of the year, right? We've got two months left in 2020, of course.

• 6:12David Hoffman?

  Right. And so like, some people are surprised, but like, I think the people that are paying attention the most are just like, oh yeah. Like, this is, it's very much later than we thought, and now it's here.

• 6:23Ryan Sean Adams?

  Okay, so Ethereum community is celebrating. I think one take on this is like for to me, you know, like being in the space, being you being in the space, mainstream media is not going to pick this up. Like, they have no idea what's going on.

• 6:37David Hoffman?

  Yep.

• 6:38Ryan Sean Adams?

  Crypto media, yeah, they'll pick it up, but they'll be a

• 6:41David Hoffman?

  Generalized crypto media, yeah.

• 6:43Ryan Sean Adams?

  Yes, there'll be a slant from kind of the like, is this that big of a deal? I think this is the most significant event clearly to happen this year.

• 6:51David Hoffman?

  Right.

• 6:51Ryan Sean Adams?

  Maybe it's the most significant event in the last five years. Like, this is a big deal, but

• 6:57David Hoffman?

  Bigger than PayPal.

• 6:58Ryan Sean Adams?

  Yes, bigger than PayPal. Like, you don't see it on, you're not going to see it on any of the mainstream, even if they weren't just covering politics 24/7 these days. This is below the radar. That shows how early we truly are. Like, this is a major event in crypto, and no one knows about it.

• 7:16David Hoffman?

  Right. Importantly, and I definitely do want to get to how and why this is so significant with Preston Van Loon here in a bit. But importantly, I would like to say that the 2017 bull market was pinned by ETH 2.0 being right around the corner. Turned out that was a little, we were disillusioned by that. That was a little bit of

• 7:36Ryan Sean Adams?

  Three years around the corner.

• 7:38David Hoffman?

  Yeah, but now, now we actually have phase zero, right? We actually have staking. Staking was a huge bullish undercurrent for the last bull run, and now it's actually here, or at least it will be here on December 1st.

• 7:51Ryan Sean Adams?

  All right. So are we just going to say, David, like ETH at a price of $400 per ETH is just stupid, silly, hilarious?

• 7:58David Hoffman?

  Yeah, I mean, so like, the market responded by going from $380 ETH to like $400 ETH. What should be priced in right now is ROI from staking Ether, Ether lockup from staking Ether, and also, I think perhaps even most bullishly, a complete reduction of execution risk for Ethereum 2.0 as a whole. And I made a graphic in a previous Market Monday that talked about the evolution of Ethereum 2.0, and how people think that it's like, okay, first we do phase zero, then we do phase one, then we do phase two. And we're not even That phase zero yet, so we choose a long way off.

• 8:35David Hoffman?

  In reality, if phase zero, one and two have all been working in parallel and the teams themselves have been working in parallel, learning how to work with each other. The progress I think is going to compound. So it's not going to be another three years between phase zero and phase one. I think it could be and Preston in this in this episode talks about his timeline predictions about where phase one is. I think there's overall going to be compounding progress on these fronts.

• 9:03Ryan Sean Adams?

  That is the David Hoffman ETH bull that I know coming out. Once again, good to see you.

• 9:11David Hoffman?

  I do agree with you that $400 ETH is hilarious.

• 9:14Ryan Sean Adams?

  Right. I mean, so if you're looking for like, what's the alpha? What's the alpha in today's alpha league?

• 9:20Ryan Sean Adams?

  Yeah, the price of ETH is the alpha, guys. That's the alpha. And we could talk about staking what the returns are, but I feel like in general, I don't think ETH as an asset. And the execution risk diminishment that you were talking about is appreciated in the mainstream, of course, but let alone that the crypto markets. So we will see how that feeds into price in the coming days. But can we talk about like what what folks should do? So what the announcement actually means is that there is now a deposit contract for your ETH, right? You shouldn't just send ETH to that deposit contract. You have to set up a validator and go through the steps.

• 10:05Ryan Sean Adams?

  You know, one way to do that is to look at some of the guides that we've put together on on bankless about doing this in testnet. But there are some like, you don't just get free money like in a in a yield farm. There's some responsibility that goes with. This is not a yield farm. This is the yield farm of all yield farms. And it takes some work. So you got to get your hardware together. You have to understand a little bit about how the software works. You have to secure your private keys. There are some steps to this, but. Let's talk about that date of December 1st. So in the intro earlier, you were talking, it looks like December 1st, but you didn't say it's absolutely going to be December 1st.

• 10:47Ryan Sean Adams?

  Why did you, why did you hedge a little bit on that?

• 10:51David Hoffman?

  Right. So there is a window of opportunity for many people to deposit 32 ETH or more into the depositcontract.eth address. But we want a sufficient time for people to do that, right? And this is a big deal, like we, this isn't some like random, you know, proof of stake chain that, you know, got spun up and doesn't really do much other than that. This is Ethereum and this is also Ethereum 2.0. So we're, we're going real slow here. And so we're going to have a nice, long window for people to deposit 32 ETH in order to reach a minimum amount of Ether required. Like we need some sort of like consensus as to like, yes, we're ready to start Ethereum 2.0. And we are signaling that consensus by having roughly half a billion Ether deposited into the staking contract.

• 11:35David Hoffman?

  So we're taking our time to get to there. We have almost a full month of November to get to that point. And if on December 1st, we do cross that threshold of half a million Ether, then we can have the security needed to get the Ethereum 2.0 phase zero chain up and running. If we don't hit that threshold by that time, it gets kicked out until we do hit that threshold. So we have infinite amounts of time to get to that threshold, but we aren't starting until we do get to that threshold. And then if this have, if that threshold is met at December 1st or later, the phase zero of Ethereum will start seven days after that threshold is met, right? And so that is what we can expect. That is something I think we will, we will be frequently talking about on the Bankless Podcast, on the Bankless YouTube.

• 12:19David Hoffman?

  So, you know, prepare for, for tweets and information as we watch this bar march forward into completion.

• 12:26Ryan Sean Adams?

  David, probability that it doesn't hit 524,000 some odd ETH before the date required to launch this December 1st. What's the probability on that?

• 12:37David Hoffman?

  15%.

• 12:38Ryan Sean Adams?

  15%, interesting. Okay, I hope you are

• 12:41David Hoffman?

  85% likelihood that we get there before the December 1st date.

• 12:47Ryan Sean Adams?

  I hope your calculations are better than Nate Silver, my friend.

• 12:52David Hoffman?

  My bankless predictions have been pretty, pretty local to the actual answer, so I'm feeling pretty good about it.

• 12:57Ryan Sean Adams?

  Not bad. Yeah, I would, you know what, I'm gonna, I'm gonna raise yours. I think it's a 95% chance.

• 13:03David Hoffman?

  95, huh?

• 13:03Ryan Sean Adams?

  I think, yep, I think it's absolutely, it won't take much.

• 13:07David Hoffman?

  But let's talk about I wonder if there's gonna be a prediction market?

• 13:10Ryan Sean Adams?

  I'm sure there will be, absolutely. So with that, we're going to get to the rest of the episode with Preston Van Loon, where we go real deep on some of this ETH staking stuff.

• 13:21David Hoffman?

  If you want to live a bankless life, you need to get a hardware wallet. There is no alternative for storing your crypto in a self-sovereign fashion. That's why I have four ledgers that I use to manage my different crypto assets using the Ledger Live account as well. Ledger Live is like your home base for managing your Ethereum, DeFi, and crypto accounts. It does a really good job of aggregating all of your different Ethereum wallets if you are the type of person that uses more than one. But you can also add other cryptocurrencies like Bitcoin or Cosmos or whatever your preferred blockchain is. And then it will display an aggregate portfolio of all your accounts at the main page.

• 14:00David Hoffman?

  One thing that Ledger is doing a really good job of is enabling all the money verbs that me and Ryan talk about with the Bankless Skill Cube, enabled in the Ledger Live app. So right now in the Ledger Live app, you can buy, sell, lend, swap, and stake your crypto assets, which is doing a really good job of fulfilling all of the money verbs in the Bankless Skill Cube. Something that's new to Ledger Live is Ledger Swap, where you can swap assets one for another directly inside the Ledger Live application, ensuring trustlessness in your financial activity on Ethereum and on Bitcoin. If you want to learn more about what you can do with a ledger, go to the blog post "The Power of Ledger Live" on the Ledger website, where they share some of the more advanced things that you can do with your ledger that you might not have known about.

• 14:44David Hoffman?

  There's a link in the show notes that will take you to the Ledger shop where you can get your preferred Ledger hardware wallets. I personally like the Ledger Nano X, but I also have both. They're both great options. When you own a Ledger, you own your own assets in the way that they have been designed to be held by the user and the user alone. So go get your Ledger today to make sure that you are as self sovereign as possible. The Bankless State and the Nations are brought to you by Wyarn. Wyarn is DeFi's first self building, community run project, which I just get really, really excited about. Wyarn is a system that seeks out yield in DeFi and it does that in a number of different ways.

• 15:24David Hoffman?

  A very aggressive way is with the vaults where you can deposit your preferred asset of choice. And different DeFi experts will come in and generate a strategy for what to do with your deposited token. Right. And so it'll go find ways to get yield in that deposited token in DeFi. For those who want to just earn yield on their stable coins, the earn system is for you where you can deposit your preferred stablecoin. And Wyarn will go and figure out which money market on DeFi and DeFi is producing the best interest rate, whether it's DY, DX, it's Compound or AVE. It looks around DeFi to see where the yield is coming from and it directs stablecoins automatically. So you don't have to.

• 16:04David Hoffman?

  Check them out at wyarn.finance to get started and also check out the stats page to see what other people are doing as well.

• 16:11Ryan Sean Adams?

  All right, Bankless Nation, we want to welcome Preston Van Loon, who is a developer on one of the most important clients of this new ETH2 network, the Prism client. Preston, how are you doing, man?

• 16:24Speaker 02

  Hey, doing great. Today's a pretty exciting day for us, so have a great day.

• 16:30Ryan Sean Adams?

  It is an exciting day. I feel like I woke up this morning and look, we don't know who the president is, but we know when the ETH2 launch date is. And I guess that's fine. I guess that's okay. One kind of equals the other. So how long did you know that this date was coming? Like this specific date that they were going to announce the date?

• 16:52Speaker 02

  Just a few days ago, the people from the research team reached out to us and asked if we agreed with the deposit contract and if we were okay to go. And we said, yeah, you know,

• 17:07Speaker 02

  It's time. We're ready for this to be out here. So we didn't know, this is kind of news to us as a couple of days ago. So we're not, weren't too far ahead of you guys.

• 17:16Ryan Sean Adams?

  That is pretty cool.

• 17:17David Hoffman?

  So Preston, what are some of the things that got finished? Like, what were the boxes that got checked that made this, made us ready to have this, the release of the deposit contract?

• 17:31Speaker 02

  Yeah, I think one of the, you know, like the most important pieces were that all of the clients were very stable. You know, Madasha, the Testnet Madashas are current long running. Testnet has been suffering from finality issues for like three weeks now. It was like something like five, almost 5,000 epochs in finality. But we saw the light at the end of the tunnel. Everything was stabilizing. And then just yesterday, it finalized.

• 18:02Speaker 02

  So that was good. The client stability was, was good. The Launchpad, which is how everyone's initiating their deposits, it's kind of the canonical route to do it. That tagged their version V1. Everything was good there with their audit and everything. Then the final piece was just to, to deploy it. I mean, the deposit contract has been audited and formally verified for some time now.

• 18:32Speaker 02

  Yeah, exactly. There it is. So I think those were the biggest blockers are our client stable, is Launchpad ready? And then is the contract ready?

• 18:43Ryan Sean Adams?

  And this has a, this, this is the specific address on EtherScan where the contract is deployed. So like, what was the, what was the process to get that working, right? We kind of saw it move through the GitHub process, but like finally activating this contract and creating the public key for this contract. How, who did that? How did, how did that come about?

• 19:07Speaker 02

  So this contract, we don't know specifically who deployed it. It was someone through Tornado Cash deployed it for us. And at first, some people were kind of concerned about that, myself included. But the bytecode on the contract is exactly what it needs to be, exactly what we expected. It's the first instance of it being deployed. There's really no risk in using this. So we just said, you know, reach out to all the client developers and all the key figures in E2 space and say, are you on board with this? And everyone unanimously said, yeah, let's do it.

• 19:52Speaker 02

  So that's how this became the deposit contract.

• 19:56Ryan Sean Adams?

  So what's crazy is we don't really know who pushed the button, but it almost doesn't matter because this is all social consensus in action.

• 20:03David Hoffman?

  It's a very interesting experiment in decentralized governance. I think we want to peel back the layers on what that means. But before we do, I want to make it very clear for listeners. What actually happened? What was just announced? Let's be, let's get really concrete on the details. Phase one or phase zero, this is not phase zero. This is an announcement of phase zero, right? So what are the specifics with what specifically got announced today?

• 20:32Speaker 02

  So what got announced today was the deposit contract address. So where deposits will be sent. The minimum genesis date. So a refresh, if to start E2, we need 16,864 deposits or something like that. But we also need, we have set this minimum genesis time so that if we got all those deposits today, it would still, we would still wait until December 1st at 12:00 PM UTC time for the chain of line. So that's, that's so we have enough time to prepare.

• 21:14Speaker 02

  Everyone has enough time to get their clients online, et cetera. Additionally, if we don't get the 16,000 validators before December 1st, we still have a baked in one week delay, seven days delay.

• 21:33Speaker 02

  So the important thing is now we know or have a really great idea when the chain is going to start.

• 21:42Speaker 02

  And then the the version one of the spec is now officially complete. Those were the last two things that were missing were, you know, the contract address and the minimum genesis time.

• 21:57Ryan Sean Adams?

  So that's what we're looking at here, right, Preston? So this is the ETH launchpad that you were mentioning earlier. And there's this cool graph. It almost reminds me of like the like the the battle in Biden v Trump to get to 270 electoral college seats here. We're trying to get to 5,000 or 524,000 some odd ETH in here. And so this bar is increasing. Looks like we've got four point, you know, 4,600 or so and 45 ETH right now. What's happening? So that that ETH is being deposited, but validators aren't starting yet, correct?

• 22:35Speaker 02

  Yeah, that's right. So you have validators who've sent their their deposit with their the metadata and the 32 ETH. So they're they're they're registered in that like initial genesis set. But clients aren't going to do anything with this data until we work. It's it's being monitored, but until this bar reaches the end, you don't need to have your client on at all. You don't have to do anything once you deposit, just kind of wait for this to happen. And like I said, we'll have at least seven days of lead time. So when the bar becomes full, we're going to start seven days later or December 1st at 12:00 PM, whichever comes later.

• 23:20Ryan Sean Adams?

  Very cool. So I want to go back to the conversation of like the deposit contract and how it got deployed to that particular address. That particular address has a bunch of zeros at the start of it, which is a hard thing to to find. I think like in order to find an address like that, you actually quote unquote have to mine for it. As in, you have to to run a lot of intensive computation to try and find an address with the

• 23:43David Hoffman?

  A bunch of zeros. It's a little bit like proof of work. So there seems to be some sort of forethought and planning that went into getting an address that has a bunch of zeros in it. That's really easy to identify because it's really hard to find an address with a bunch of zeros. And you mentioned that somebody put in some ether into tornado cash to withdraw it to a clean address, which spun up this contract. And you said that the bytecode matches. And what I think that means is that there is a canonical, probably somewhere on GitHub, I'm assuming, of what a deposit contract is. And the bytecode that is deployed by this contract matches that. And so that's how we have assurances that this is actually the real thing.

• 24:27David Hoffman?

  And this isn't like some rogue rug pull contract that somebody just randomly deployed. And then it seems to be that the ethereum.org website, which Ryan just had up, which has 4,000 something ether deposited into it, that is what at least the ethereum.org website is pointing to as what we are assuming to be the canonical version of the deposit contract. So this is all kind of like this experiment in decentralized coordination. It's not technically official, but it's only official because that's what everyone seems to be calling official.

• 25:00Speaker 02

  That's absolutely right. And good point about the mining the address. Someone put a lot of thought into that. To get that many zeros takes several days of hashing, probably. We did the same thing for, I think for our topaz testnet. We mined a contract address with enough zeros in front of it so that it became easily recognizable. And then now we can count the zeros and we know it's 219AB5. I mean, it's not that hard to remember. And we know that with that, you have some probabilistic security. It gets harder to mine an address the more prefix characters you're looking at.

• 25:40Speaker 02

  Additional value is that zeros are less storage on E2, so you might say actually save some gas with having so many prefixed zeros. So that's, that's a kind of cool benefit.

• 25:53David Hoffman?

  Yeah, wow, that is one of the best pieces of Ethereum trivia I've ever heard of in a while. Okay, so between now and December 1st, we expect Ether to get deposited into the, the deposit contract. If we hit that threshold before December 1st, great, that's fantastic. That means that Ethereum to the phase zero could launch on December 1st. What happens if, and you said like, if, if we don't get to that point, we have a seven day period. That will, and in that seven day period, if we, once we hit that threshold, we will start then. What happens if we don't get that Ether threshold inside that seven day period?

• 26:34Speaker 02

  So the, the seven day period starts when we hit the threshold. So let's imagine that we hit the threshold on, on November 30th. Well, then we're not going to start until December 7th, because we have to have at least a seven days lead time. But if we, like, if we were to get all of our deposits in today, well, we have a lead time until December 1st, so it's at least seven days. So, so the, if you want to put it in simple terms, we'll start on December 1st or seven days after that 16,384th deposit, whichever comes later.

• 27:12David Hoffman?

  Okay.

• 27:12Speaker 02

  That's, that's the decision.

• 27:13David Hoffman?

  There's no actual deadline. We have years and years and years to get this much Ether if we ever needed it for whatever reason.

• 27:22Ryan Sean Adams?

  And that, I think, I think that's, that's an important point to make, David, because we were, we were talking about December 1st being the launch date, right? That assumes that we hit this threshold here, of course. If we don't, we don't really know the launch date. It could be beyond December 1st. So I guess the big question, like, everyone's going to be, you know, checking this, refreshing this multiple times a day, I'm sure, Preston. I guess the big question is, are we going to hit it? Like, how much of Ether supply is that? It's like about half a percent or so?

• 27:57David Hoffman?

  Half a percent.

• 27:59Ryan Sean Adams?

  So what's, what's your take, Preston? You think we'll have any trouble hitting that?

• 28:04Speaker 02

  I think this brings a kind of an interesting chicken and egg problem because there's no incentive for me to deposit early, except maybe I want a specific validator index. But if I deposit now and the chain doesn't start till December 1st, I have opportunity loss. I could have been doing something else with that E. But I also want to be in the Genesis state because I don't want to then be in the queue. I want to start right away. So I think what we're going to see is it'll slowly move towards the end and then it's going to rapidly move towards the end, the green bar that is.

• 28:46Ryan Sean Adams?

  Is there any chance of being able to incentivize people with Poop tokens? Or maybe being able to NFT a very low number of validator slots? Is that something that is possible?

• 29:01Speaker 02

  Yeah, definitely. And I'm sure the Poop guys have something in mind.

• 29:07Speaker 02

  I don't know what exactly, but definitely having an NFT to your account that represents that you were part of the validator Genesis set would be really cool to have, especially because it's such a finite set of people. It's something to be proud of, I think, if you're one of those early adopters who wants to show off that you are part of E2's Genesis. I think that's really cool and would be a really cool Poop.

• 29:33Ryan Sean Adams?

  Yeah, David and I often talk about Ethereum as a digital nation. This is kind of your patriotic duty, you know, to you can be part of the birth of this entire initial bond offering on Ethereum. This is like a, I mean, this doesn't happen. This is like maybe once in a lifetime type of opportunity if Ethereum becomes what we all think it might be. So you want to be in there. There's like this social kind of pressure, right? Just be a good citizen.

• 29:59David Hoffman?

  All the quads are going to do it.

• 30:01Ryan Sean Adams?

  All the cool kids are gonna do it. You want to say you were there. You want to tell your grandkids. I mean, who knows what this Ethereum network could be. So there's that. But there's also, can we talk about like, why economically? I might want to put my funds in there post-launch. The Launchpad has this great section on staking rewards, which I think makes it makes it pretty simple. But there's a downward sloping curve here, which basically shows the amount of annual return you receive, denominated in ETH, based on how much total ETH is contributed to the staking validator contract, how many, you know, how much ETH is staked.

• 30:44Ryan Sean Adams?

  So how would you kind of describe or characterize, I guess, this this curve, Preston?

• 30:52Speaker 02

  This curve obviously is diminishing as the number of validators join the active set. As you can see, this is designed to incentivize those early doctors and get people in there early.

• 31:09Speaker 02

  A great part about this is you kind of have an expected guarantee that you're going to be earning this APR for some time. Because ETH2 has a rate-limiting function where only so many validators can join per day. And initially, that value is going to be 900 validators per day. So you're going to see this slide move slightly to the right by 29,000 ETH per day, which is, you know, relatively slow. That would take a pretty long time to get increased by 1 million or so. So you like to get all the way to this 5% APR, that's going to take a super long time.

• 31:47Ryan Sean Adams?

  Wow. Okay, so that I did not know. So two things there. So first, for people who are listening to this on the podcast, you can check out offline, launchpad.ethereum.org, see the chart we're talking about. But at the very start, if there's only 500K or so, half a million ETH in the deposit contract, annual returns are like 21%, 21.6. And that drops.

• 32:11Ryan Sean Adams?

  Of course, which is better, right? That's what that's what we want. If his money, maybe. All right. And then, but if there's two million ETH, then you're making less. It's 11% AP APR ETH denominated ETH is money. If you are, if there it gets up to five million, then it's 7% kind of drops in that fashion all the way to, you know, this kind of stops at 10 million ETH deposited and you're 5%. But one thing that Preston just said there that I'm not sure I picked up on fully first time around is that you want to be first because after launch, it sounds like what you're saying is there basically the contract only lets in a specific number of validators a day, like 30K

• 32:55Ryan Sean Adams?

  worth of ETH per day. So it's not going to get to that 2 million, 5 million, 10 million overnight. It's going to take a long time, which basically means if you're early, you're guaranteed to have the higher side of this curve from a return perspective. Did I understand that correctly?

• 33:15Speaker 02

  Yeah, that's right. So it the rate at which we allow the system allows validators in changes depending on the number of validators. But until we get, I think around half a million validators in the system, we're only letting in four validators per epoch. And so it's 900 per day or 29,000 ETH per day. So the slider on the sliding graph will move pretty slowly. At least at first.

• 33:45Ryan Sean Adams?

  Okay, so we deposit ETH into the deposit contract. Then what? We're starting to see it funnel in right now. But so what happens?

• 33:54David Hoffman?

  Right. And let's be clear, when we talk about these returns, this is not a yield farm. This is not a DeFi protocol on Ethereum. This is Ethereum itself. And so when Preston, when when we send like 32 Ether to the deposit contract, what else are we committing to doing when we do this?

• 34:16Speaker 02

  So yeah, that's right. This isn't free money, or you have to, you actually have to do work. You have to run your validator, you have to keep it online, and that in itself is not very expensive, but it's not like a set and forget kind of thing. You do have to monitor it and keep it going, because you're only rewarded for the time that you're online and participating. So if that's new to you, definitely check out one of the testnets so you can get a taste of it without having to put up real money.

• 34:54Speaker 02

  But yeah, you do have to do some kind of work. I mean, running your validator is pretty simple. And right now, if you send your deposit now, there's nothing you have to do until the chain starts. And like we've been saying, you'll have at least seven days' notice of when the chain is going to start.

• 35:10David Hoffman?

  Okay, so we send 32 Ether to the deposit contract, and we're ready to run our validator. How do we connect the fact that we sent 32 Ether on Ethereum 1 to our Ethereum 2 validator? How do those things get bridged?

• 35:27Speaker 02

  So when you send your deposit through the Launchpad, you will get back some, you'll get your private keys for your validating client. You'll get a backup mnemonic phrase, familiar with any kind of accounts on Ethereum. You have this like 24 words that make up a recovery key, basically. And then you'll get your deposit data, which is some metadata you have to send with your deposit that tells ETH2 system, "associate this 32 ETH deposit with this specific validator public key and its parameters on where they're going to allow withdrawals to happen."

• 36:13Speaker 02

  But the key part is you have to send that metadata, and you have to send 32 ETH, or your deposit will be rejected, basically, from the deposit contract.

• 36:23David Hoffman?

  Okay, so is it bad or incorrect to just like send 32 Ether to the deposit contract address? Or does it have to get funneled through the right route in order to have it be like registered with Ethereum 2.0?

• 36:40Speaker 02

  You can, well, I would recommend, highly recommend that everyone use a Launchpad. That's the easiest way to do it. But if you come up with valid deposit data any other way, whatever other tooling, that's, that's fine. You just have to send the metadata, the deposit data with your deposit to the deposit contract. I was looking at the contract earlier today. I've already seen a few people send 32 ETH with no data. So that got rejected and, you know, the funds refunded back to that person. The transaction was failed. So you can't just send money there. It has to come with a metadata. You should use this process, especially with a Launchpad.

• 37:22Speaker 02

  That's what it's there for. And with this kind of thing, you want to make sure you're doing it right. Because if you, like in all things crypto, if you make a mistake, it's a high chance you're not going to be able to undo that mistake.

• 37:35David Hoffman?

  Right. Don't be a cowboy. Follow the directions.

• 37:39Speaker 02

  Right, exactly, yeah.

• 37:41Ryan Sean Adams?

  There is, you were mentioning earlier, Preston, you know, a way to do this if you're unsure is to actually try this in testnet first, right? Like, so mainnet is real money. You don't want to mess up with it. And then the Dasha testnet is going, it's live. We actually put together a guide on Bankless that consensus, the folks behind the Launchpad helped write for us with the EF, a guide to becoming a validator. That's a good guide to go through, just to understand the steps. And we're actually going to be updating this for mainnet too, so you understand that. And like going through the Launchpad is definitely the best way to go.

• 38:22Ryan Sean Adams?

  But even before that, I mean, folks need to figure out how exactly they're going to stake, right? So we talked about in this guide, what sort of hardware you might want to use if you're going the hardware route. And I think people can like understand that. But there are other routes that they can go through too, right, Preston? What are some of the main, I guess, staking routes? You do it yourself, you bring your own hardware. What, are there cloud-based solutions? Are there other alternatives for staking right now?

• 38:54Speaker 02

  So right now, yeah, most people, I think, are preferring a hardware approach. This, this kind of takes the decentralized part to heart. So you're running on, on your own bare metal in your home or, or office or whatever. And that's great. It's, it, it works really well if you know what you're doing. It may not be for everyone. I mean, you have to make sure your, your internet's going to be online all the time and that your power doesn't go out, things like that. Because you want to earn the maximum. You want to be online, online all the time to be earning rewards all the time. But you, you can use a cloud deployment. That's totally, totally fine.

• 39:37Speaker 02

  The risk with the cloud deployment is now if we see a lot of validators running in, in DigitalOcean, for example, you, you could see outage on DigitalOcean, which takes off a large number of validators. And when a large number of validators goes offline, that can affect finality. And when finality is not happening, penalties start to increase exponentially and it kind of snowballs into this, this like kind of bad state that we don't want to be in. And if you look at Medasha, how it's been operating for the last three weeks, that's basically what happened. I mean, it wasn't a cloud outage, but we had a large group of people basically abandoned or turned off their nodes.

• 40:21Speaker 02

  And then the network got stuck in this state, not finalizing. It gets worse and harder to process and so on.

• 40:29Speaker 02

  So keep that in mind if you're choosing a cloud provider. Make sure you either run on like a smaller one, that's a virtual machine, or you're running your own hardware. Or you could consider running with a, some kind of staking pool. There are a number of them out there who are, are planning to have staking services either when Phase Zero launches or shortly after. And that may be something for you. Just make sure you do your due diligence there. I can't advocate for any of them in particular, but I, I do know that.

• 41:06Speaker 02

  The protocol itself is designed so there's no delegating of your stake. There's like delegated proof of stake. So you may be giving, it may be a custodial solution that you're going with. So just make sure you, you understand what you're getting into if you're choosing a staking service rather than running it yourself.

• 41:24Ryan Sean Adams?

  I think Bankless at some point will put together a guide to help people even evaluate staking services. But, but if we stick with the, the hardware approach, right? First, that might be the way to kind of get started. Let's say I've got a spare MacBook Pro. I've got like cable internet, that kind of thing. And I've got some ETH. How many validators can I run on one spare MacBook Pro with my, you know, the consumer grade? And I've got like a home internet connection. Can I run a bunch of validators on one machine or is there some limit?

• 41:58David Hoffman?

  Twenty, twenty eighteen, twenty nineteen MacBook Pro with, you know, a typical hard drive and CPU.

• 42:04Ryan Sean Adams?

  Yes.

• 42:06Speaker 02

  Yeah, and that's, that's a great option. First of all, because it has a battery. So if, if your power went out momentarily, you, your computer's not going to restart or anything. So that's great. In terms of the number of validators you can run, we think that from a software perspective, there's not, there's not really a limit. We've run as many as three hundred thousand on one laptop, which is like an insane amount in, in the real world. So in terms of like hardware, is it going to be able to keep up with that many? That's totally, totally fine for as, as much as you can imagine. Your, your validating process can operate on multiple keys.

• 42:48Speaker 02

  I think Lighthouse supports it, other clients support it, of course, Prism supports that. So that should be no problem at all, no factor at all.

• 42:57Ryan Sean Adams?

  So.

• 42:58Speaker 02

  The only thing you're considering now is like, oh, you have all your, I use the one basket. So.

• 43:02Ryan Sean Adams?

  Right, right.

• 43:03Speaker 02

  Your, your laptop could be. You know, everything's on that one laptop. So maybe you want to distribute it if you're running like hundreds, maybe you want to on different machines. But for a technical perspective, it's totally fine.

• 43:15Ryan Sean Adams?

  So what you've got one power supply, of course, like one hard set of hardware components, one internet connection. Just a quick question, then I want to ask you about slashing because that's part of the risk, the risk. But so let's say, you know, let's say, I guess I am, I am running this setup. How am I securing my private keys, right? So by the way, all of this is so cool because it feels like the old days of like mining GPU from your home, you know? Like we could do it again. We're minting money in magic internet money again, back in the old like Bitcoin days, back in the old Ethereum days when it launched. There's like something so pure about running your own hardware and getting started that way.

• 43:56Ryan Sean Adams?

  Something so exciting about it. But, but anyway, so where am I, where could I store my private keys? Can I have a different, I guess, withdrawal type address? Like I could keep that on a Ledger Nano or something, some sort of hardware wallet. So if it's, if my machine is in my office or something, like I could keep my private keys totally separate from it. Or is there a component that needs to be like always plugged in and like a private key live validating the entire time?

• 44:27Speaker 02

  So with these two, you have two sets of keys. You have this hot key, which is what you're using to sign all the work you're doing as a validator. Then you have this cold key, which is where when you do withdraw, your funds will go to this withdrawal account, which is this other, you know, separate account from your validating key. And when you go through the launch pad, you'll give back that mnemonic phrase, the 24 word phrase.

• 44:58Speaker 02

  And then you're validating private key, which is, you know, derived from that recovery phrase. But also your withdrawal, your withdrawal account is also derived from that mnemonic phrase. So, once you get that mnemonic phrase, you want to put that into some kind of cold storage. If that's writing it down on a piece of paper with a pen or printing it or, or encrypting it and filing it away somewhere. Uh, that's the one you want to really keep safe. Uh, because if, if your keys were to be compromised, I mean, what an attacker could do is limited with your hot key. Uh, but if they were to get access to the cold key, they could then transfer the funds eventually.

• 45:41Ryan Sean Adams?

  Right.

• 45:42Speaker 02

  Transfers aren't available in Zero, but that's the one you want to keep super.

• 45:46Ryan Sean Adams?

  That's super cool. If somebody comes in and snatches my laptop with my validator on it, I'm not losing my, my private withdrawal keys. I'm not losing that storage, cold storage piece. Cause I'm doing, yeah, I lost my laptop.

• 45:59Speaker 02

  And your hot keys, your hot keys are always encrypted at rest. So you have to, every time you start this process, you either type in your password or load your password in somehow. But if, if they were to snatch your laptop, they close it. Um, when they, if they weren't able to get, extract the files off the disk somehow, um, they're still encrypted at rest. So they would then again have to know what your password is to specifically for those, uh, hot keys.

• 46:29David Hoffman?

  Preston, the, the thing that I think is the, the biggest, not, not the biggest risk, but the most generalizable risk is slashing risk, right? Um, and that's just something that everyone is going to be exposed to. Uh, so, um, we'll talk, talk about the, the parameters around slashing risk. Like how, how does one get slashed? And then how bad is that, is it if they were to get slashed?

• 46:52Speaker 02

  Right, slashing is a mechanism in ETH2 to discourage a certain type of behavior which could confuse or delay finality in ETH2. So, for example, if one of the roles you have as a validator is you're attesting to the state of the world, you say, "This is my view of the blockchain, what I think the head of the blockchain is, I'm gonna sign it and send it out, broadcast that to everyone, that gets included in the chain, we use that to determine finality, what's the head of the chain, what should we be building on." Now, if it's your turn to attest and now you start saying two different things, say, "Oh, I think block B is

• 47:37Speaker 02

  the head of the chain, but also block D, which is on a fork," now you're gonna be confusing the system, trying to mess it up. That's typically a behavior you're doing on purpose.

• 47:49Ryan Sean Adams?

  Right, that's malicious behavior, right?

• 47:51Speaker 02

  Malicious behavior. Yes, exactly.

• 47:55Ryan Sean Adams?

  That's called a double sign, sometimes, right?

• 47:58Speaker 02

  Yep, that's a double sign, there's also double proposals, if you create two different blocks for the same slot, if you're, you know, assigned to be a proposer, that's an issue. And so, how do you avoid this, right? Like, we just said it's something you do on purpose, but it can actually happen on accident. If you're running those keys, those validators, in two separate processes, the beacon node may determine that the head of the chain is block B on this process, but on another process, block D, so you actually might accidentally be producing that scenario. So, the key thing you want to keep in mind is that your hot key

• 48:40Speaker 02

  should only be active on one machine at a time, running one process at a time. If you're thinking about an automated failover, don't think about that, think about something else, just have your monitoring in place, and when your internet goes out or whatever, do some manual interaction to fix it. Don't try to do something clever, because you're probably gonna mess it up, and that's how you're probably gonna get slashed. If anyone's getting slashed in ETH2, that's probably what's gonna happen.

• 49:09Speaker 02

  So yeah, I mean, it's really easy to not get flashes to not have this like

• 49:13David Hoffman?

  Do the clients provide some sort of double sign protection, just a little bit to help with that?

• 49:18Speaker 02

  Yeah, we do. Yeah, most clients do, but it's not bulletproof. So don't rely on that entirely. You could think like, oh, if these two, for example, if these two machines are running on opposite sides of the earth, I mean, they may not receive each other's message by the time they've already broadcasted theirs. Uh, and by then it's too late. So, yeah, really just keep your machine with the keys running, just the one key, one machine. You know, keep it safe that way.

• 49:46David Hoffman?

  And what we're really talking about when we're talking about running two machines with the same hotkey is we're talking about something relatively sophisticated when it comes to maintaining uptime with our validators, right? And this probably is not really applicable to like the average amateur validator. This is really for people that they have a system, a redundant system where if one computer goes down in one household under one internet connection, then they have the system that spins up another computer that it has claims on a similar amount of validators that start signing in a different location, different internet, and that maintains uptime. But from what I understand about ETH to slashing in the event of inactivity, just being absent,

• 50:27David Hoffman?

  you're actually not punished all that much, at least in the short term. Can you kind of go into the economics behind slashing as a result of downtime, which might happen to, you know, almost perhaps everyone, depending on how long we're talking about?

• 50:42Speaker 02

  So we, we think of that as a liveness penalty. It's a little bit different than slashing. Um, but it, it is essentially equal to the amount of ETH you would have earned if you were online. So, um, if you think about, if I was offline for 24 hours, I lost 24 hours worth of opportunity loss there, but I also lost, you know, 24 hours uh, value of ETH. So if I'm making Let's just say point one ETH per day. That's not the amount, but if I'm earning point one ETH per day, I and I had thirty two ETH at the start of the day, I would have thirty one point nine ETH at the end.

• 51:23Speaker 02

  And so it will just take me two days to get back to basically or another twenty four hours of being online to get back to thirty two and then I'm whole again and it's fine. So if you're thinking, oh, I'm going to go on a three day vacation and I'm worried about my laptop dying or internet goes out, you're going to be fine. Like it's not, it's not going to be the end of the world. So don't stress about it too much.

• 51:43David Hoffman?

  That's just like opportunity cost, right? No. It's not being sorry. Two X opportunity cost.

• 51:50Speaker 02

  Yeah. Well, it's, it's opportunity cost and you do, your balance does diminish. Uh, you do realize a loss in addition to the opportunity loss. So it's kind of like a double, double loss there, but um, it's not that big of a deal. Um, so i- if you're worried about going like away from your computer for extended period of time, you'll be fine. Um, I wouldn't worry about it too much.

• 52:16David Hoffman?

  Yeah. So, so think about it this way. Say like the average individual, you know, amateur staker is live for ninety nine out of a hundred days. Uh, that means like maybe on average, three days out of the year, maybe four days out of the year, they are receiving this offline penalty. And so their rewards go backwards uh, by four days when it could have gone forward by four days. And so like by the end of one year, they maybe have like, you know, out of three hundred and sixty five days in a year, they're maybe behind by eight days of rewards, which in the grand scheme of things, not that big of a deal. Like, congrats, you were able to go on a four day vacation without having to stress about it.

• 52:57Speaker 02

  Yep. Yeah. The only, yeah, the only thing to, to I guess worry about or, or consider is being offline in an event where there's.

• 53:08Speaker 02

  No finality happening because then those those liveness penalties we're talking about start to increase exponentially. So if if if it's been two weeks since finality, the penalties for being offline are so much more than they than they were if you the system was healthy and finalizing. So if you're

• 53:27Ryan Sean Adams?

  That's almost a different scenario, right? That's like, it's not just one guy going on vacation. It's like, everyone parks their hardware in some data center and the data center goes dark. Or like, everyone's on the East Coast in the US and East Coast gets knocked out by something.

• 53:42David Hoffman?

  Yeah, this is an anti-centralization mechanism, right?

• 53:46Ryan Sean Adams?

  And

• 53:47Speaker 02

  Right.

• 53:47Ryan Sean Adams?

  Finality.

• 53:50Speaker 02

  It only happens when two thirds of valuers can't agree on the head of the chain, basically. So you'd have to see about one third of valuers stop participating for this event to happen. And we expect that to never happen in unless some like extraordinary event occurs, like a whole data center or a whole nation going offline or something like that.

• 54:14Ryan Sean Adams?

  Okay, so those those slashing fees, if you're you're off the internet, not too bad. I almost think about it as like, there's like misdemeanors and felonies, right? So like, you get slashed because you're offline. It's a

• 54:24David Hoffman?

  Parking ticket.

• 54:24Ryan Sean Adams?

  Yeah, parking ticket, slap on the wrist, right? But if you double sign, that's a big penalty, isn't it? That's a bad one.

• 54:31David Hoffman?

  That's a similar explanation.

• 54:34Ryan Sean Adams?

  And you get thrown in like, it's the harshest, the harshest penalty is the nation can devise.

• 54:42Ryan Sean Adams?

  All right. Okay, so one thing, while we're talking about the risk, so what what the risk we outlined for kind of slashing and going offline, we're right, we're there. But there's another risk in just even venturing into this new territory. And I want, I think we want to make this clear for for bankless readers, like, or bankless listeners. We're all on this journey west. We always say at end of every every episode, you could lose what you put in. This is this is crypto. It's dangerous stuff. If you're deciding to stake your ETH, right, in this new ETH 2.0, it's one direction. There's no coming back. You are effectively burning your ETH on the ETH main chain.

• 55:26Ryan Sean Adams?

  And you're you're caching that burned ETH into ETH 2.0. So you're effectively taking a bet.

• 55:34Ryan Sean Adams?

  There's a one-way bridge and there's a land over here that you're in, a nice city you enjoy because you're a member of the city Ethereum. And then what we're talking about is, oh, we're going to go build a better city across this bridge. And you are literally taking your stuff and crossing the bridge and you can't ever come back. It's just one way, right? I think that's what you're getting at with your tweet, Preston, because you said depositing ETH into ETH2 deposit contract is effectively a burn. And you just wanted to remind folks of that. Can you dig into the risk there?

• 56:11Speaker 02

  Right, so yeah, it is essentially a one-way transfer of ETH from ETH1.x to ETH2. And you really won't be able to do much with that ETH until ETH1 and ETH2 merge together. So you are kind of locking yourself into this

• 56:38Ryan Sean Adams?

  Into the future.

• 56:40Speaker 02

  Time period where you're on ETH2 and you're not going to be able to transfer it back and you're not going to be able to move it. You're kind of signing up. It's kind of a long-term commitment. I think that Phase 1.5 or even Phase 1 when transfers might be enabled, it should be coming towards the end of next year. I mean, it's not that far out. Some people have said two years, which is still a possibility, but I am kind of on the optimistic side going forward is that it's about a one-year commitment. But you have to be prepared that if you want to be one of these early adopters, that there is no bounded limit. There's no hard date when you're going to be able to move that ETH.

• 57:23Speaker 02

  So yeah, it is an adventure and it is kind of going into the Wild West here and it has some uncertainties. You have to be prepared for that.

• 57:35David Hoffman?

  The next conversation comes about the mechanisms of producing an alternative to this in an off-chain environment. And a lot of people have brought up the topic of Beacon Ether, or Beef, or Beth, as like, well, because of this one-way bridge, we can actually like centralize services, like Coinbase, or Binance can offer you to purchase your beef, and you know, we have a off-chain like, trading market for this beacon chain ether. And you know, there's some people from the Ethereum side who think that this is not really that big of a deal, not really going to happen. And other people from the, from, I don't know, generalized

• 58:19David Hoffman?

  crypto Twitter that think that this is actually, you know, totally going to happen, and it's going to generate, you know, two separate ether prices, two separate assets. Is a separate beacon chain ether asset with like a separate ticker symbol on centralized exchanges, is that a big deal? Should we be worried about this?

• 58:39Speaker 02

  I think it's good to have some, some healthy skepticism of that, you know, these are two blockchains running in parallel, right? It's not a fork, it's not, if one with some new features is a completely different blockchain running in parallel. So whether or not it's another asset, I don't know. I feel like it's not because, you know, for one, in phase zero, there are no transfers, right? So you're not going to be able to give up ownership of this ETH to some, to anybody to sell it in phase zero, right? So I don't know what exchange is

• 59:21Speaker 02

  going to, I mean, unless the exchange is like kind of issuing IOUs and they're holding the

• 59:28Speaker 02

  ETH on ETH2 themselves, that's a little different. It's kind of like a derivative, I suppose. But yeah, I don't see it as that big of an issue ultimately because these two blockchains running in parallel will be merging soon. And then there's again, only one ETH. So yeah, I don't really see that as too big of a concern, but definitely a good topic to talk about and keep talking about in the community. And yeah.

• 59:54Ryan Sean Adams?

  It's also the case that it's it's still one ETH. Like it's not like there's a total separate supply schedule here, right? We're trying the same Ethereum, the same sort of issuance policy, right? I mean, effectively what you're doing is you're you're putting it almost in like a bonding mechanism. It's just you don't know the end duration date, right? If you put your US dollars in a bond and that bond is maybe two to three years, does it become something other than like like US dollars in a bond? I mean, it's just staked. It's staked US dollars. This is just staked ETH. So, yeah, I

• 1:00:29Speaker 02

  Right.

• 1:00:30Ryan Sean Adams?

  I don't know. I guess people are thinking about it in maybe different ways. And I wouldn't be surprised to see different asset with a different kind of price point. But at the end of the day, I don't know why you would call it a different asset when it's got the same issuance schedule. It's like the same thing, essentially. It's just living in a different place, right? It's like when I move my ETH to Coinbase, it doesn't become Coinbase ETH. It's just I've just moved it to a different network, right? I don't know.

• 1:00:59Speaker 02

  Right. And does does RAP ETH trade differently than ETH? I don't think so. Like it's the same, you know?

• 1:01:08Ryan Sean Adams?

  Exactly.

• 1:01:10David Hoffman?

  All right, Preston, this has been absolutely fantastic. I really appreciate you hopping on the call with us and getting us informed about ETH2. This is exciting times and sir, you have been at the spearhead of this effort. So on behalf of the Bankless Nation, thank you for help building out this new this new entire city for us to move to.

• 1:01:31Speaker 02

  Of course. Thanks for, thanks for thinking of me. And you know what? It's an absolute privilege to work on this stuff. So I'm really excited for, for maintenance to come this quarter. Just excited for the future. And thanks for having me.

• 1:01:44Ryan Sean Adams?

  I was very excited to stake. But you, Preston, was one of the guys who was, decided to build on Ethereum, building Ethereum, while everyone was saying it would never ship. And I think they're still saying that. So Let's have a job at Google. Let's have a job at Google for Ethereum. Super cool, man. It, it takes believers like that to make this dream a reality. Super cool.

• 1:02:07Ryan Sean Adams?

  Take care, Preston.

• 1:02:09Speaker 02

  All right. Thanks for having us.

• 1:02:11David Hoffman?

  If you are looking for a mobile wallet to hold and access your crypto, you need to go to argent.xyz and download their smart contract wallet app right onto your Android or iOS device. Argent is the most secure way to hold money on your device while still being able to access DeFi services that we all know and love on Ethereum. Through Argent, you have one tap access to the beloved DeFi apps like Compound, Uniswap, Aave, and you can even invest directly into some yield generating assets right from your Argent wallet. Crucial to maintaining security over your assets is Argent's Guardian service, which, which allows you to use a friend to make sure that you can always restore access to your funds in case you were to ever lose your phone or for your device to break. You

• 1:02:56David Hoffman?

  can also use a local hardware wallet to ensure that you can always restore access to your funds yourself. One of Argent's newest features is their ability to route trades through 10 decentralized exchanges, including Uniswap and Kyber, to make sure that you are always getting the best trade on your assets. Similarly, pushing the fold on what we can do in Ethereum and DeFi, Argent has replicated some of the legacy financial services that you would expect from your bank, but put it directly into the hands of the user, such as send limits and whitelisted accounts, ensuring that if anyone were to be able to access your funds in your Argent wallet, they could only send up to a certain amount and only be able to send them to approved addresses, which is creating one of the most safe environments

• 1:03:37David Hoffman?

  to hold your assets in, which is why people have put millions and millions of dollars into the Argent wallet that they use on their device. In order to see the Argent wallet in action, go to argent.link/bankless and download the Argent wallet on iOS or Android today. We're also brought to you by Monolith. Monolith is your cool new DeFi account, your DeFi savings account, your DeFi checking account. Except the cool thing about the Monolith DeFi account is that it gets software updates, right? You actually get to increase the usefulness of this over time. So here are some of the features. Monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know DeFi and what it is. You can, you can add money to it.

• 1:04:19David Hoffman?

  You can put that money to work in Compound and accessing yield. But you can, and you can also swap through Uniswap. What was cool with Monolith is that they will send you a very sexy Monolith Visa card that connects to your smart Monolith smart contract wallet on Ethereum. So it's a really awesome tool to live a bankless life with a savings account that gets software updates. So this is something that you're never going to find out in the real world, but you can still do real world things with, you know, real money and like buy your groceries. So that's just fantastic. Coming soon to Monolith, actually already here to Monolith is now you can buy, die and get it sent to your wallet directly, right? So it's also being an on-ramp.

• 1:05:01David Hoffman?

  So you don't have to go through your centralized exchange like Coinbase or Gemini or wherever. You can just go straight from your bank account, right into your Monolith checking account, smart contract wallet. So check them out at monolith.xyz. Man, Ryan, I'm just so excited to get the ball rolling on here. We are about to enter the golden age of Ethereum, it feels like. Dude, press in Van Loon is such a trooper. He's been grinding since day one, so tip of the hat to him. And, you know, there's a, so many people have put so many hours of labor into Ethereum 2.0. So I think we want to talk about like, what does that actually turn into? And, you know, some, some people may, may consider this a controversial statement,

• 1:05:43David Hoffman?

  but like when you, when a bunch of very, very smart, dedicated people believe in something and pour an absolute magnitude of man-hours into something, I expect that that thing would be valuable, right? And this is something that I'm going to be looking to the secondary markets to really signal if that, if that is a valid take or not. And this is why we think Ether is undervalued. And interestingly, Ryan, is that, you know, there's a bunch of conflating data here. Like, we're also looking at the crypto markets during the US election.

• 1:06:13Ryan Sean Adams?

  Yes.

• 1:06:14David Hoffman?

  The SPX, the S and P 500 index is also moving bullish, bullishly upwards. But like, we had this on November 3rd, Election Day. We had that, what I was talking about earlier, which was the movement of the ENS domain, depositcontract.eth. A lot of people started to figure it out, and Ether price jumped from 380 to 400, right? And Bitcoin price jumped from 13,700 to 14,000, right then and there. And that, to me, like crypto markets have actually been uncorrelated the last two days. And so to me, that signaled that Bitcoin price moved upwards on the rumor of phase zero.

• 1:06:55Ryan Sean Adams?

  So you think Bitcoin is maybe going to follow ETH a little bit? And, and I showed some signs of that yesterday, right?

• 1:07:03David Hoffman?

  Yeah, I showed some, showed some signs yesterday. And then I got into a debate with Nick Carter, and he was like, you know,

• 1:07:09Ryan Sean Adams?

  What did he say?

• 1:07:10David Hoffman?

  I said, I said, like, you know, the reason why Bitcoin is moving on to 1400 is because of Ethereum 2 deposit contracting. He goes, like, why would that impact Bitcoin? And I said, well, I don't really know, but like, look at the charts, they're happening at the same time. And then this got repeated again today, where we, first it was a rumor, and then it was the official ethereum.org site, and all the people in, who are working on Ethereum 2.0, like, all said, like, yeah, this looks legit. And then Ether price mooned from, from 400, from, it went back down to 390, and then it moved up to like 410, 415. And then Bitcoin price blasted through 14, 14K, it's at 14,200.

• 1:07:52David Hoffman?

  And again, conflating variables, SPX is also mooning. But I think Bitcoin's mooning because of Ethereum, man. And it's always done this, it's always done this. Like, the 2017 Bitcoin all-time high was the ICO mania on Ethereum. And Bitcoin moving past 10K was as a result of DeFi summer in Ethereum. And now Bitcoin moving through 14K happened when the Ethereum 2.0 staking contract got locked, or got, got announced. And so like, I'm a fan of conspiracy theories, and my conspiracy theory is that Bitcoin moves when cool things happen on Ethereum.

• 1:08:29Ryan Sean Adams?

  Oh yeah, and I think that's like, for me, that's like, that's not a conspiracy theory. That's like what we see empirically and those instances. Sometimes Bitcoin moves, lots of times Bitcoin moves and then ETH follows. But sometimes ETH moves and then Bitcoin follows. I think some people are unwilling to accept the latter or the ETH leading because they feel like it's the tail wagging the dog a little bit, right? And they're like, no, Bitcoin is the dog and ETH is the tail and you follow me. And I'm not sure that they're right about that.

• 1:09:00David Hoffman?

  I don't see the evidence for that.

• 1:09:02Ryan Sean Adams?

  Right, I know. Regardless, look, Bitcoin does well, ETH does well, ETH does well, Bitcoin does well.

• 1:09:09David Hoffman?

  This is true.

• 1:09:10Ryan Sean Adams?

  You should buy both. That's the final AlphaLeak right here.

• 1:09:13David Hoffman?

  Yeah, but you can't stake your Bitcoin, so.

• 1:09:16Ryan Sean Adams?

  You can't. That's David flipping ETH Bowl again. So, hey, man.

• 1:09:20David Hoffman?

  I've always been an ETH.

• 1:09:21Ryan Sean Adams?

  Excited. Alright dude, so what do we got next? So this was AlphaLeak. What can folks do now? What kind of resources are we going to provide for them? You want to start with the Rocketpool resource that we have?

• 1:09:35David Hoffman?

  Yeah, so Rocketpool is something that I have close, dear to my heart. And the reason why I say that is because Rocketpool, of all the other projects on Ethereum, like YieldFarms, DeFiApps, or whatever, Rocketpool is a little different because it's related to the core infrastructure of the Ethereum blockchain. It doesn't, it doesn't actually have any code in the L1 itself. It's like not a natively built system, but it does operate impacting the actual fundamentals of the Ethereum blockchain, right? And what Rocketpools are, is our staking pools. You know, we have a theory that Ether is going to be really valuable one day. And that means 32 Ether to stake might be like out of reach for a large amount of people. And so Rocketpool is a staking pool where people with less than 32 ETH

• 1:10:19David Hoffman?

  can come together to stake on a single node. And this is really good for decentralization of Ethereum in two different, in two different ways. It decentralizes the nodes by incentivizing more total nodes and also decentralizes the set of possible staking individuals. So it really is increasing decentralization. On two separate fronts in one product, there's a fantastic video with David Rugendike, who did a, we were talking about the end, at the end of the interview about how efficient we were with the interview. There's really good information in there. And so if you're looking for more information, there is going to be a link somewhere in this YouTube video in the corner here where you can click and it'll take you right there. Some, some definitely, some juicy info there.

• 1:11:03Ryan Sean Adams?

  Absolutely. So if you've heard everything we've talked about so far, you're still interested in staking, but you don't have 32 ETH, you want to stake less than 32, you don't want to run your own hardware. This is a decentralized way to start staking. Super cool. I'm not sure.

• 1:11:16David Hoffman?

  On the flip side of things, however, if you are interested in running multiple nodes, you can receive your staked ether and then a little bit of a dividend on top of that for allowing other people to stake their ether on your nodes. And so you can actually make a little bit more money than just vanilla staking yourself.

• 1:11:33Ryan Sean Adams?

  Yep. Pretty cool economics there. And they've been doing this for a long time. Two other resources that we're coming out with. So we've got a how to, how to become a validator on the ETH2 testnet on Bankless. We will include a link to that. You can look at the testnet, but we are updating this for mainnet here shortly. So we'll have a mainnet version for you as well at some point. Subscribe to the program. You will receive that as well. Lastly, we are putting together a summary of an ETH2 economics report that Consensus is publishing. And we're going to have that for you probably Thursday, if not early next week.

• 1:12:14David Hoffman?

  Hot.

• 1:12:15Ryan Sean Adams?

  Yeah, it's going to be hot. We might talk about it on Meet the Nation too. So anyway, lots of resources coming at you on the Bankless program that we will be providing. David, this has been AlphaLeak. We've been waiting for this specific AlphaLeak for years, a very long time. Super exciting, man. Anything else you want to say?

• 1:12:35David Hoffman?

  Yeah. Hey, Ryan, congratulations on making it all the way through the bear market into phase zero, right? We're finally here. Like, we did it the days.

• 1:12:42Ryan Sean Adams?

  You too.

• 1:12:43David Hoffman?

  Yeah.

• 1:12:44Ryan Sean Adams?

  You too.

• 1:12:44David Hoffman?

  Cheers to everyone who went on the journey with us and really stuck it out during those, you know, kind of dark times.

• 1:12:51Ryan Sean Adams?

  Well, right now, it's even still, even though we had DeFi summer, it's not many tourists in the space. It's, it's all the people who've been here for the long run. And yeah, like cheers. Bear markets are not fun. I think we're on the other side of that and looking forward to staking with you guys alongside of you guys. All right. Well, risks and disclaimers, of course ETH is risky, so is ETH staking. None of this was financial advice, guys. You know, this is the bankless journey. You know the drill. You could lose everything that you put in if you're putting it in ETH, if you're putting it in DeFi staking. So it's not for everyone, but we're glad you're with us on the journey. This has been our AlphaLeak ETH staking edition.