Today Gerbz chats with Anthony Bertolino of DV Labs about bringing home staking to the masses to help decentralize Ethereum, and which narratives he sees on deck for the coming cycle.
Episode Links
- Anthony on X
- Obol Collective
- Obol Contributions
- Lido’s Simple DVT Module
- Mellow’s DV Vault
- Stakely’s Obol Portal
Squad Up & Help Decentralize Ethereum
What up crew? And welcome to the BitLift Podcast, where we don't just stack crypto, we use it. I'm Gerbz and I've been deep down this crypto rabbit hole for over 10 years now and I'm still poking around at the fringes. Looking for new opportunities, things that I can share with you guys to help you crush it with crypto in this coming cycle Today, I'm talking with my buddy Anthony, who's head of ecosystem at DV Labs, and they're building the Obol Collective, or Obol, which is helping bring home staking to the masses.
And this is a big deal because this is the way that we're going to help decentralize Ethereum. Even Lido is using it to help decentralize themselves. Today, Anthony and I, we talk about various ways that you can stake and whether or not Obol is a good option for you to stake. We talk about where we think Ethereum is heading in general, and Anthony gives me a couple narratives that he thinks could be a big deal in this upcoming cycle.
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Hope you enjoy this conversation with Anthony from Obol.
[00:01:47] Anthony's Intro
Gerbz: What got you into working with Obol?
Anthony: Yeah. Yeah, so I've been full time in Ethereum since 2017. When I was younger I played a lot of video games, so I kind of learned about digital scarcity. I also had built a few small businesses, so I kind of was familiar with like economics to some degree.
I also had, you know, the great financial crisis being younger. I was put in like conspiracy theory YouTube when I was a kid. And so I started buying gold, and all of this kind of culminated into when I discovered Ethereum in 2017. It was like, it just answered all these different questions I had, like moving to a digital society. And like, the dollar is not really that great, and like, trust in commerce. And even like from video games, like I played Diablo 2, and we would like, copy or duplicate rare gear. So it was like, not even rare anymore. We would like, illegally duplicate it. And like, all of these things were being theoretically solved by this technology.
And at the same time, it was when the Enterprise Ethereum Alliance was being announced. So it was like Toyota and MasterCard and Bank of America. And I was just like, dude, what are all these companies doing together? This has to be something. And I basically, ever since then, have been writing, investing, and operating full time.
So about for about seven years now. My first major stint was I co founded a company called iTrustCapital, the first crypto IRA platform in America. I coined the phrase crypto IRA. So, the crypto retirement accounts. Then, I was the first growth hire at proof of attendance protocol, POAP, working on precious digital collectibles and was there for the whole NFT hype cycle, so got to do amazing work across web2 and web3.
Gerbz: Dude, while you were there, we put out a pull up for every episode of the BitLift Podcast for like, going on over a year. But we kinda, it kinda faded, but it was a fun ride.
Anthony: Yeah. So yeah, those are the early movers that really made POAP what it is. It's like, how can you document and cherish these memorable moments? And even, to riff on POAP for 30 seconds, even for a while, like when me and my buddies would go out and do stupid shenanigans, I would make a POAP later for us to remember when we hopped the fence and rode the dinosaurs. Or like, whatever, fake dinosaurs.
And now, yeah, head of ecosystem at Obol Collective. We are super Investing in building a decentralized validator ecosystem. And what I mostly care about is the portion there of the decentralized validators and getting basically more home stakers to run Ethereum at home.
So that's the only reason why I think we care and believe in Ethereum, and we're building the technology to make it so anyone can stay from home. Even like, people in emerging markets.
[00:04:25] Staking Options: The Trilemma
Gerbz: Yes, homestaking is a big deal. I met you at ETH Denver, it's also where I met Nixo, and I did an episode with Nixo at that point. That was my first like, homestaking rabbit hole. I am a solo staker, not a home staker. There's so many ways to stake. Maybe just, let's kick it off with the staking options spectrum. And maybe the trilemma also, like risk, reward, and decentralization. I think that's, those are the points that I put on the triangle anyway. Let's start high risk, high reward, because we'll work our way towards the way people should be doing it.
Anthony: Yeah, so let's say we wanted to keep it in the model of a trilemma and we'll see if we make this work. So the first thing I would say is, dela is you are giving your ETH away to someone else. So let's call it like, custodial staking, okay?
Gerbz: like
staking your ETH
with Coinbase for example, which would be one of the safer custodians, but you're giving it away.
Anthony: Yep. So let's just call that like, custodian staking. You're right, you're giving it away. This is so great because you can give it to a trusted brand who has economic incentive to not mess up. Because in Coinbase's case, they're taking a 25 percent fee. So, mind blowing.
One of my best friends is like, a low key ETH whale, and he's crazy. He keeps all of his ETH on Coinbase, and I'm like, dude, you're giving them like a lot of money every year. And he's like, I don't know, I don't really see it in the UI, so it's fine, it's safe. And I was like, alright, so the option number one in a trilemma, let's call it custodial staking.
The next one I would say is probably liquid staking, and this is where you do give your ETH sort of away, through a protocol, but you get like a receipt token back. So let's say you put your ETH in Lido.
Gerbz: The biggest example is Lido, right? There's also FraxETH. Coinbase actually does let you withdraw as CoinbaseETH. Most people don't even know that. But yeah, so these are those liquid staking token options.
Anthony: So we have custodial staking, liquid staking, and then, which is a broad spectrum, I'm going to call it home staking. You know what, maybe that's not fair. Because let's do like, fully self custodial stake. Maybe a trilemma doesn't work, but let's talk about a little bit about solo staking, for example.
So the difference between solo staking and home staking is solo staking is where you have 32 ETH, and you are going to have dedicated keys that you own, but you might not be running the infrastructure.
Gerbz: Yeah, I use Allnodes. It's the only one I've ever used, so I can't really talk highly of other ones, but there are, I'm sure, other good ones. Maybe you know some good ones. I just, I fired up one node on Allnodes maybe like a year and a half ago, I ran it for a month or two. It was just cranking and working great.
So I fired up the rest of them there, and that's where I've been doing it. I create the validators myself, I do it with my hardware wallet, I hold the keys. I then can upload the public keys and the other funky keys that validators make you generate.
Anthony: Auditor keys.
Gerbz: And then it's just been a race horse, man. I use Beaconchain to get notifications of when I propose a block and when I'm selected to be part of the sync committee and all that fun stuff. But yeah, it just works. I have nothing at home. I don't trust myself to run a validator.
I just don't. And we're going to have to get into that, because I know every time I go down this rabbit hole, it's like, it's so easy. Just plug it in. And every time I've tried that it's not as easy as it sounds. I'm sure it's getting better, but that's how I do it. But from a decentralization standpoint on the trilemma, I know that my validators, they're probably on AWS or some big infrastructure thing on the behind the scenes.
That doesn't help necessarily with decentralization. It does in one way, but not in another way. It helps in that I'm running it on a big centralized infrastructure, but I'm running my own validators at least. So I don't know, is that decentralized more?
Anthony: You know, I think people could argue it in different ways. I think that it's still great because you own the keys and you can theoretically shut that down as you see fit. You even could deploy infrastructure. You could even turn off Allnodes and take those same keys and return back on your validators, cause you own the keys if you want it. So like, you technically do own that validator, it's just running on centralized infrastructure.
What is the most exciting is the whole new landscape of home staking, which has a lot of different flavors. And the first one would be like, solo home staking, where you do have 32 ETH. You are running a single computer in your home. And the great thing about this is, this is why I think we believe in Ethereum. It's like the number of unique locations in the world that have a unique validator where if people wanted to shut down or attack the network, like, they need to come knock on everyone's door and go after that.
Although, the 32 ETH requirement is like so, so, so high. And so there's been a few solutions to solve that. It's like one is, we'll say Rocket Pool, right? Where you can take less than 32 ETH and you bring a small bond, and then you can stake from home. And you're running validators, but it's like, you brought some of the ETH and then the Rocket Pool protocol puts some ETH on top of you, right? It's called delegated stake.
What we pioneered with, Lido is the first team to use our technology, was Lido had this existential problem where they are a liquid staking protocol, so everyone is depositing their ETH in hordes. And then Lido is like, okay, we need to go put this ETH and get it to work.
And what they initially did was they had, after a few waves of onboarding, they had 30 enterprise, like big boy grade, operators who would take all of the stake, which ended up being like almost 30 percent of the staked ETH, and delegated it to just 30 guys.
And this is huge risky, and bad for many reasons. But Lido realized this, and what we did was we went on a mission with them to turn their operator set from 30 to over 250. So almost 300, and this is what's uniquely enabled by distributed validators. By squad staking, by our technology.
What you can do is, the old model is you run one computer with one person and you put ETH on top of it, whether it's your ETH or delegated ETH.
And this was like the Lido model, the solo staking model, right? Now it's you and multiple people, say a squad of four. Me, you, two other people, we each run a computer in our home. And then Lido would say, hey, you guys have this decentralized little validator setup you have, you four working together. And then Lido delegated the ETH on top of hundreds of operators.
And so what we did was we brought hundreds of operators onto the network and Lido brought the ETH.
Gerbz: They brought all the ETH or they brought like a portion of it?
Anthony: All of it.
Gerbz: Oh I
see. Yeah, cause they've got more than they know what to do with, basically. Everyone's depositing there.
Anthony: Correct, yeah. And they're working on a new thing. So that was a module, that was called the Simple DVT module. Ethereum has like the rollup centric roadmap, right? Like Ethereum plus rollups. Lido has like, what I call the module centric roadmap. It's Lido plus modules, different kinds of modules.
Their first module was Simple DVT, which we helped them. They have a new module, which is called CSM. Community Staking Module that is going to have a bond. So the old module was no bond, this one has a bond. It's more similar to Rocket Pool. But I think them and other protocols who want to decentralize will have this module type system, and a distributed validator technology is really great for that.
Gerbz: Yeah, that's cool. So people were spinning up nodes and they weren't even bringing any ETH to the table. What's the benefit to them? Was Lido paying them for it?
Anthony: Correct, correct. People don't know this yet, but you now can become a small business, theoretically. Like, legal. I don't care about legal, but like, you can put a computer in your home and earn passive income from it, even if you don't have ETH.
And This is like, because what are you offering? You're offering a home, or like a home esque location. It could be a van, it could be a boat. Which is like decentralizing, and protocols want access to decentralized locations. And then you are running the actual validator. And historically that kind of needed people who were like, good at DevOps. And like, who could do this? But with our technology, with squad staking, it's made easier because you're in a squad with multiple people.
If your node goes down and you're like, dude, I can't figure this out, I need a week to troubleshoot it. Or, I'm out of town. The actual validator is still online and running fine because it has this fault tolerance infrastructure built into it. So as long as a certain threshold of people in your squad are online, it's fine. And so it's leveling the playing field where you don't have to be online 24/7 anymore.
It's not as hard as it once was, and you don't even need 32 ETH anymore. But not a lot of people know about this yet.
Gerbz: Yeah, so I know Lido takes 10 percent of the cut. So were they taking some percentage of that and paying the guys spinning up on that module? Is that how it worked?
Anthony: Correct, yeah. So it was something like 6 percent of the fee is going to the operators, or something like that. So of the 100 percent of rewards, it was like 90 percent is going to the stETH holders, 4 percent is going to the Lido DAO, and then 6 percent is going to the actual operators. Like, roughly speaking.
Obol also receives a 1 percent cut, and that goes into our whole like economic sustainability movement which is part of the Obol collective. Yeah, I'm excited for new home operators.
Gerbz: I am too. And this idea of helping Lido decentralize itself, like, that's a really, really big deal. It's a big topic. I'm not super deep down that rabbit hole, but a lot of people are pretty paranoid about the size of Lido. You said they got to the point where they're 30 percent of all the staked ETH.
What percentage of ETH is staked right now? I forget, I usually pull up a dashboard for that or something.
Anthony: Yeah, I actually don't know the best dashboard for that. I should have the answer to that, but it is incrementally creeping up. I would probably say it's in the 20 percentages, but I could be off. Yeah, the Lido is such a nuanced topic. I've asked people on both sides of the aisle if they would be down to debate each other live.
And it seems like the Lido team I found is very ready to debate this, but I haven't found many people who want to go up against them. And I'm always the kind of guys that's like, well, I just want to learn. So can someone please make this happen? Because, and I can argue both sides of course, but I think it's a nuanced argument that like Lido has gone through these various ups and downs. But regardless of what they're doing. One good thing is if we can start to help them decentralize. That's like, an objectively good thing.
Gerbz: Yeah, it reminds me just of the 51 percent attack on Bitcoin argument. It's just always been like, before there was mining pools, like there was solo mining, I guess. I don't even remember what we called it, but it was just home mining or whatever. And then, you know, mining pools.
Is that a good analogy for where we're going with like, this way that we're circling back to solo staking? It's almost like we went to pooled staking and now we're like circling back to wait, the pools are getting too big. And now we need to just go back to more solo staking stuff.
Anthony: I think so. What we want to have - Ethereum's an infinite garden, and I think what's supporting that garden, if it was like flora or soil, it's like we want to have a lot of different kinds in there. And I think we want to make sure we have at least a reasonable percentage of solo home stakers as well.
Like squad staking, I think is great and powerful. And I believe that squad staking is like the spiritual ancestor of regular solo home staking. Like home squad staking is, because it lowers the barrier to entry. It makes things easier, like in so many ways. But I think you also still want people who have a hundred thousand dollars who are willing to put it on a single computer in their home to decentralize the network, and I think we need to attack this problem with a lot of different options.
[00:16:19] Staking Yields
Gerbz: Yeah, we talked yield for a second. When people are deciding whether to stake and how to stake, yield is pretty high on their priority list of how they're going to make their decision. I think right now, like yields, I always say 3%. That's just like, it goes above, it goes below. You can do some funky stuff with FraxETH, maybe to juice it a little. Or you can like, I think CoinbaseETH pays you the least because they're taking their cut before you even know it hits.
But it's somewhere around 3%. And the math on that says that if I want to make a hundred bucks a month, and I kind of put that as like my base. Like if I'm a crypto investor and I'm like willing to stake my ETH, I gotta make at least a hundred bucks a month. That's how it was in my mind. Like for me, for it to be worth my time.
I cut at 3%, that's still $40k worth of ETH. Like, you still need half a validator to get to $1200 bucks a month, and that's at $2400 per ETH, which we should talk about that for a minute too. Because if and when ETH moons, all those staking rewards you've been earning, it won't equate to 3 percent anymore at the end of the day.
But as of right now today, I need $40k worth of ETH to make a hundred bucks a month. What do you think about that? I'm just curious, cause I don't hear people thinking about it that way.
Anthony: Yeah. I think the big lever that anyone can pull is always like, what is the fee, as you mentioned. And I do think that probably the cheapest option if you do have 32 ETH is to use something like Allnodes or P2P or ETHpool, because you're paying a smaller monthly fee.
But yeah, the whole APY thing is interesting because it's like, there's a combination of what is ETH price versus how much ETH do you have versus what fee are you paying. And then once you decide on those things, it's like, what trade offs am I taking to get that yield? Cause there's like restaking as well. There's all the Ponzi's that you can get into. I'm definitely the kind of guy though, is I think 3 percent on an asset like ETH is amazing because it's going to outperform the dollar.
And so you get this real yield plus base asset value. I stake on most of my ETH upwards of 80-90%.
Gerbz: I do the same thing. I just keep enough for like, playing around, snagging an NFT if I want to here and there, transaction fees. But I stake it. I've been saying for a while, like ETH is now designed to be staked. That's what it's for at the base level now, so it should be.
Anthony: True.
[00:18:39] Decentralized Validators
Gerbz: All right, cool. So if people are thinking about staking, where does DVs fit into this kind of spectrum we talked about? And DVs is decentralized validators. This is what Obol this is what you get, this is your bread and butter.
You guys, I know Rocket Pool, it's not DVs. Maybe we should bring that up first, cause they started this. I know they have the bond that they have a bond component, which means you got to buy a bunch of their, Rocket Pool token, which has just been tanking and everyone who's made anything there has actually lost
more than they've made.
But it's not DVs though. So like, maybe they were just really early and they just scrapped their own thing together. What's the difference?
Anthony: Yeah, so we're working with Rocket Pool. We'll have stuff go to market in the coming months. And I can explain how Rocket Pool works and then explain how DVs work.
So, Rocket Pool is a system where people who have ETH can deposit it into, let's just call it a bucket, and everyone puts their ETH in there. And the reason they're putting it in there is they want to earn yield. And so Rocket Pool, the protocol gives them back a token called our rETH and is like, hey, hold on to this, I'm going to go take this bucket and make sure it's earning yield. And your rETH token will be redeemable for more over time.
And then they have this problem. They're like, okay, we have this whole bucket of ETH. And what they did was they built the other side of the market, cause it's a two sided marketplace. And it's like people who will put up a bond, then they can take some ETH out of that bucket and they can validate it. And the validator infrastructure that exists there is a normal, regular Ethereum validator with an execution layer client, a consensus layer client, a single computer, unless they're running some complex Kubernetes clusters.
But regardless, it's a single vanilla validator stack. And this again is like an execution layer, and a consensus layer, and a validator client. And so think about these two main things. What we have created is instead of you having a single validator with the software stack we slide in a new software that sits in the middle.
It's a middleware called Charon, and it allows you to, instead of having this one validator with something in the middle, you can actually connect multiple. So in this case, say four. So then four different people are all communicating in this like, squad, or this cluster. And then they're still having the ETH put on top of it.
And the difference is with the single validator model, if you go offline or make a mistake, you can get slashed or you are not earning rewards. In this squad model, if one of you goes down or less than a certain threshold, the actual validator runs fine. So it's a, it's just a totally new, a new thing.
And this all happens through a middleware, which cannot be slashed, does not have access to runtime, does not have access to the keys. It really is like an amazing Ethereum aligned technological innovation and the adoption of it has been relatively slow outside of players like EtherFi and Lido. Who, that's their job, is to pay attention to what can improve for their users, for their operators. And it's accessible to anyone. It's permissionless, so anyone can use it.
Gerbz: Cool. I would imagine like a lot of the big funds or a lot of the big centralized exchanges, like, they don't care about decentralizing anything. And they've already got their infrastructure, and they just want to like, every time they get 32 more, they just spin up a new one. Like, they're good.
But yeah, and how many can how many people can squad up? Can we get 32, 64? How many people can question. Yeah, so what actually happens in this new squad is imagine you're sitting one layer above the Ethereum consensus layer now. And you and your squad need to come to consensus, digitally, before you guys actually attest or propose a block on the Ethereum network. The minimum number in a squad is four. The maximum number in a squad design right now is 10, but you always want to be careful of, because you need to come to consensus and we're bound to the realities of space and time, it's an equation of how far are you away from your squad members geographically.
Anthony: How fast is that internet? Because what needs to happen is quickly you guys come to consensus and then you come down to the Ethereum layer. And this adds this like great new layer of anti fragility. And if some people in the squad can are not there, you can still come to consensus because it's, a threshold.
And so with that said, the recommendation is usually like squads of four to seven, but it can be more. Ideally in the same continent, although you can theoretically be on different continents.
Gerbz: You might couple attestations here and there though, that way.
Anthony: Correct. If you know, if you had, say, a seven node cluster, one person on each continent, I think you're probably for now, never kidding your blocks, you know, roughly.
And this is also because we use consensus mechanisms that are tried and true, built on things like libp2p for the gossip layer. And so, we were not here to add additional complexities or risks to the Ethereum stack, but to be something that is optimized for security and decentralization, and so subsequently it's not as flashy or sexy.
One comment on the big boys who are, every 32 ETH, they just want to stack another validator, they're running on their existing massive infrastructure. Those players have been slower to adopt DVs, and they're currently running a lot of expensive hardware to carry all the validators that they have. Like, literal mini data centers in most cases.
When Pectra comes into play, there's going to be max EB, which is max effective balance. And that is going to actually have Ethereum right now, where it has I think 800,000 unique validators on the network, people will now be able to consolidate and have like, chunkier validators. Thicker validators, instead of 32 for one validator.
validator.
Gerbz: is it?
Anthony: Yeah. I think it's up to like a thousand and 28...
Gerbz: That's what I heard.
Anthony: And so then you'll have people who used to have say 10 computers running thousands of validators, they could consolidate into just a few computers. Maybe a single squad that they control.
And then, before they needed to make sure all computers were up a hundred percent of the time everywhere. Now it's like, hey, we just need to keep a certain percentage of this online and our stake is safe. So there is economic realities that will help the adoption of distributed validators. And in my view, if 25 percent or more of Ethereum is running on DVs five years from now, this is purely positive for the decentralization and security of Ethereum.
Gerbz: Yeah, that's cool. And that upgrade you were talking about, that's like an Ethereum roadmap upgrade. Pectra, is that the name of the next one? I'm sure, I would imagine you guys are like way ahead and ready for that to come. Probably like we're involved in all the fricking chatter about dialing some of these EIPs in and whatnot.
And, that sounds like a good opportunity. Like, that's a moment for you guys then to be like, okay, you guys are going to have to change a bunch of stuff. How about like, bring some DVs into the mix when you're doing that. So that, I can imagine that's going to be an interesting moment for you guys there.
Anthony: Yeah. And luckily, that's kind of on the business team to worry about these like larger mass migrations. My scope for now is really focused on the community and the ecosystem of who is going to be involved in governance. Who is like the real big thing, needle I'm trying to move, is like number of home stakers actually. It's like, dude, just buy this $500 computer, plug it in. You can have Dappnode on it. So it's literally like, you just literally click buttons. Like I even use Dappnode. I'm not good at command line. Command line is scary.
Gerbz: It's scary.
Anthony: I can fumble my way through it, but like, I don't need to do that. Like, Ethereum needed that in the early days, and there's no reason why great product builders and designers can not build interfaces to make this more adaptable.
And we are now finally doing this. And I genuinely believe we need to see hundreds or thousands of new home operators. And not only in first world countries, like think about Africa. You know, Africa, you couldn't run a validator because if you didn't have 32 ETH, and you didn't have internet, even if you did, maybe your power goes down, that's just a bad validator, right? Now it's like, I have no ETH, I have Starlink, my internet goes down sometimes. But I'm in a squad, so I'm going to run this. The ETH is coming from another player, another delegation partner. And, I now have decentralized nodes in Africa or in certain areas of Latin America.
No one is working on this problem. You know, not no one. We need to invest more in this. And I feel that our team are uniquely positioned to help Ethereum in this way.
Gerbz: What's this new initiative where you're kind of like pairing people up with some partners to help them stake?
Anthony: Yeah, so there's something called the Global Contributions Program. This was internally, you know, we were discussing what does it look like for Obol to move to community ownership and governance of our technology and of our ecosystem. And I wrote a blog post on this, but if you look at the history of community ownership, the earliest is like, Bitcoin and proof of work.
It was like, if you were on the forum, on the Bitcointalk forum in the early days, you were an early miner. You got a lot more, and then eventually that distributed heavily across the globe and is now the Bitcoin mining industrial complex that we know today.
And then Ethereum had an initial ICO, then a proof of work phase, now a proof of stake phase. And all of this is how the community ownership gets generated. Then we've seen other experiments like other ICOs. We've seen fair launches with DeFi. We've seen yield farming.
Gerbz: We've seen unfair launches.
Anthony: Correct, we've seen unfair launches. And now we have just, in my opinion, completed or are inside of a meta called points.
And this was the current meta, we have all these other metas. Obol was not interested in us just being another points company who is trying to attract users and do community distribution through some kind of points. And so with this, we wanted to move the industry forward.
We created or invented this contributions program. And what it is when someone wants to go stake on DVs or run DVs, there's kind of two paths. Let's just talk about staking on DVs for people who don't want to run infrastructure.
You take your ETH and you can go deposit it somewhere, a partner that's running DVs. So now your ETH is going on distributed validators. You're helping to decentralize and secure Ethereum. And 1 percent of those total staking rewards are going to a new funding pool which is the 1 percent for decentralization fund. So you're losing 1%, you're actually giving away 1
Gerbz: 1
Anthony: rewards.
Gerbz: 1 percent of your 3 percent. So not 2, you're not earning 2 percent. You're earning, it's 1 percent of the 100 percent that you're making.
Anthony: Correct. Coinbase is a 25 percent fee, this is a 1 percent fee. And although the difference is with Coinbase is it's going into their corporate balance sheet. With this, the 1 percent is going into a pool which you can track your contribution. So this is sort of like points, like you can track your contribution. So you have an ability to track.
And then later, this pool of money will be community owned, community governed, as well as the Obol technology and the ecosystem itself. And if you want to own and help make governance decisions of all this technology, of this community, of these funds, that's how you get your stake in this, is by making your contributions. And then you'll have a pro rata share. That's kind of the tldr, I haven't had to say that out loud that many times, so it's probably not that clear.
Gerbz: No, I understand. And I mean, a lot of this, there's a lot of weird regulatory stuff in crypto obviously, too. I think that some of the point stuff may have even come from there. Everyone's waiting to find out where and if and how legit projects and legit companies are going to be able to act within the regulatory system that we have.
And so we've got to come up with all these crazy fricking systems until they give us some guidelines and let us do it legally. So maybe part of it's there, but also you're just, you're trying to get ahead of this and like, how can we act responsibly early? How can we let people know that, hey, like your contribution is going to be worth something, this is a big deal. We're just not allowed to issue you tokens yet because those might be securities. So let's, we'll figure that out later once we get some guidance on it. I'm not putting those words in your mouth, but like, that's kind of the way that I've been seeing it.
Anthony: Yeah, and we do have a separate legal entity, the Obol Association, and we are building the right infrastructure to have community governance and all the things as you would expect done in a way that is as good as all of the major companies that you see in the space. Like the way Optimism and Arbitrum and Uniswap, the way they run their governance, is we're looking at similar models. Because at the end of the day, we want to make sure that there is an economic, sustainable system and a decentralized group of contributors who can make sure Ethereum gets its distributed validators.
Because all the other blockchains, their software stack is not as unique as Ethereum or as decentralized. And they could never have a distributed validator because when I talk about this squad consensus that you and I could go through before we get down to the Ethereum base layer, these other blockchains, like you can't stake that from home.
You can't stake that from home, and you definitely can't stake that from home with another layer on top, which is a squad DV layer. And so this is something that makes Ethereum like, so robust and so decentralized. And we need to make sure that this technology can be developed, governed, distributed.
Gerbz: You know, what I was thinking about recently was like, you know how like, Bitcoin, white paper? Satoshi's like, there's just too many middlemen in the financial system in order to make it work. And I was thinking, well, we've always, we always nod our head to that. Like, yeah, like fuck TradFi.
But, a lot of these middlemen are adding value, too. Like, it's not all extractive, and I think you guys are a perfect example of this. Ethereum doesn't enable a lot of these new things that like, we got to be able to do. Not only to help decentralize it, but to help bring more people into the fold and help get more contributions from more people.
And so you guys are adding, you're a middleman. It's a middle layer. You call it that, it's called a middle layer. But like, it's necessary. It's adding, it's definitely adding more than 1 percent of value, is the way that I'm thinking about it. And that's, I think that's important. Like, not all middlemen are bad guys, you know?
Anthony: Yeah, and the great thing is that a) it's permissionless. So people can run it if they choose. If they see value, they can run it or not. Also, for normal individuals who want to run a distributed validator and only run like a single validator, like 32 ETH, they do not have to pay that 1 percent fee. They can choose to opt in.
And if they do, they're contributing and they're earning those contributions, right? There's a real economic reality that I think my contributions into the Obol collective will be worth much more in, for many reasons, than I am currently giving. Like, for sure.
But the larger entities that are using this technology, they need to give 1 percent and they're sort of mandated. Because if not, then they are extracting. Like, they need to make sure money is going back to the funding of this community and this technology. And again, for those who don't see the value, like, they don't have to run it. You know, that's the great thing about Ethereum.
Gerbz: Yeah, to circle back to the income side of this little bit, you guys have this contributions layer. This is the points layer. This is just how you track like, how much people are contributing to the Obol Collective, to this future of kind of a more decentralized Ethereum.
On top of that, people are earning just their typical yield that they would if they were staking anywhere else. How do they collect that yield? Is it like, issued to them? Is there like a withdraw button? Like, how does it work from your side?
Anthony: Yeah, good question. So that's the great thing about what we're building, is because we're building this middle layer and we have this ecosystem of partners, what's happening is every ecosystem partner that is participating in the contributions program, they have their own front end, their own product, and their own user experience.
Right now there's three easy access points. One of them is with Chorus One. Chorus One has a stakewise vault that you literally go deposit, and later when you withdraw, you just collect all your yield at once, right? If you want, you can get a liquid staking token back because it is a stakewise vault.
Gerbz: More like a yield farming kind of a vibe, like people who are familiar with that. They just deposit into a bucket, watch number go up, and withdraw when they're ready.
Anthony: Basically, yeah. The other partner is Stakely. Stakely is much more unique. This requires 32 ETH, sort of like Allnodes. And this allows you to deploy your own independent, full distributed validator. A 32 ETH validator that is not pooled, is not owned by anyone, and, is all its own single unit.
And that is a single validator, so you need to withdraw that in normal ways. You can pull the rewards from the UI, you can shut down the validator anytime. It's more of an Allnodes type of situation, but at the same time, you're earning those Obol contributions.
Gerbz: Allnodes does like a weekly withdraw, I think it's automated. I don't even know that I can change how it works, but like once a week I get my withdrawal from whatever. And it's usually about the same amount every week. But yeah, that's how that works.
Anthony: So it's triggering, it's triggering your taxes every week.
Gerbz: I know, fun.
Anthony: The third one is something called Mellow. We partnered with Lido to build a Mellow vault, which allows anyone to deposit ETH. It gets staked into Lido on distributed validators. And in this contributions partner product, you earn both Obol contributions as well as Mellow points.
So it's sort of like a multiplier. I'll be honest, I think this is cool for people who have ETH and who don't want to stay from home. But I want them to ensure it's like, just do know that's staking from home is no longer as hard as it used to be. So please choose this path with your
ETH.
And what I'm really excited about, again, is there's a huge opportunity for people to form a squad. You get four to seven of you guys, you run a validator, you get on testnet. So first we can, we provide everyone a clear pathway. You get on testnet, we have education and support to get you on testnet. Then we give you an on chain credential, a technique credential, that verifies your experience and your skill once you're on testnet performing.
And then we take you and other squads and put you into operator sets where you get the ETH. And it's literally like, who doesn't want to do this? And it's in the early phases, this is like a little bit of alpha. But right now, the meta is go find a squad, brand your squad, get on testnet. And let me know, and we'll get you your ETH.
Gerbz: Ah, interesting. So we don't even have to bring the ETH and you'll pay us a little, a little for our contribution there. You talked about this technique credential. Is this a, like a soulbound POAP or something? What is this thing?
Anthony: Yeah, that's a good question. It is soulbound, and it's different than a POAP. Where I think POAPs are like precious memories, and I have this whole collection of them that like, I can review. The technique credential, there's nothing like it really. And it really is more like a degree or a certification.
Gerbz: This use case comes up all the time. I'm glad to see you guys went for it, because I don't see anyone using it. It's a fun, new kind of thing to experiment with.
Anthony: And it's respected. It's respected by the ecosystem. So like EtherFi, Lido, Gnosis, a lot of our partners, they respected it. And so if you get one of these, it's because you genuinely know how to run a distributed validator. And that puts you into a special class of people who have a right to receive delegated ETH and earn business on that or yield on that.
Gerbz: Yeah, that's cool. This idea of not having to bring the ETH, but being a validator and generating income that way, that's interesting. How much you'd have to earn in order to justify buying a Dappnode, for example though, that's an interesting trade off. That's gotta, that's gotta happen.
Anthony: My mental model right now is, it's kind of funny, you mentioned $100 a month. That's actually like the low base case, where I'm not interested in offers to our community of squads and techni holders unless they at least are earning $100 a
month.
Gerbz: Yeah, it seems like it's gotta be that. It's gotta be,
Anthony: And that's huge in some parts of the world, right? Like, we've done a lot of user feedback. We're like, a hundred or $200 a month almost pays for my little apartment so my family doesn't have to sleep on the street. And all I need to do was put this box in my house and keep it online. And coincidentally, it's really helping to decentralize Ethereum.
And this, dude, we have hundreds of billions of dollars in Ethereum. And if we do not use this to put hardware in homes and give people money who otherwise could have no money, it's like, what are we doing here? We're decentralizing our blockchain and we're giving people sustainable income where they may not have it in underserved regions. Like this is the greatest win-win situation I've ever heard.
Gerbz: Yeah, it is.
Anthony: What are we doing with all this
money? It's sitting with centralized operators. It makes no sense.
Gerbz: No, it's awesome to be able to empower people in this way. It's cool, man.
[00:39:47] Narratives / Metas
Gerbz: All right, let's, we talked for a second, you talked about the points meta. Let's talk metas. I call them narratives. Maybe you take off Obol hat and put on your Tony hat for a sec here.
Anthony: Sure. This is the Ethereum logo. This is a
Gerbz: Killin Yeah, killer. There aren't any more of these, by the way. These are done. Maybe we'll do another round of them at some point, if people want some fresh black on black, low key ETH hats. Hit me up. If we get like, I don't know, if we get 20 of us? We'll make some version twos of them, there we go.
But yeah, let's talk metas. You're following crypto as closely as I am, I know how deep you are in all of this. What other things you seeing? We're on deck for this new cycle, man. I know you're thinking about it every day. You're like, from a work and a personal perspective, I bet. It's like, how do we capitalize on this incoming cycle? It's going down again, and we've seen it now a few times. Where's your head at on new narratives, new opportunities, things that you're keeping an eye on, or maybe you're just like deep down the rabbit hole in?
Anthony: Yeah. I went and saw the Vitalik premiere last night in Vegas, someone hosted an event. It was like sponsored by Stand with Crypto Coinbase. So shout out to them for getting that event to exist. And I noticed, dude, like half the people in that room were not like Ethereum people. They were Farcaster people.
And then they were all about this, they were all about new, apps that were built like SocialFi. And they were interested, "Use this new Mochi app, do this stuff." And I was like, "Oh..." So, I think we're getting into this new consumer phase of crypto, finally. After investing all our money in infrastructure forever.
Gerbz: Web3 social
Anthony: Correct. I think that was a narrative a little bit last cycle, and that's hard to chase and capitalize on. And, you know, friend tech had a whole cycle. I think for those who are deep in the weeds, there's probably a world there where you can find one or two breakout apps and you can be an early user and an ideally an investor and all this stuff and hit big.
For me, I've honestly, I've had my faith shaken, but let me clarify. I've had my faith shaken in allocating capital outside of ETH at this point. So I only have - heh, only - I only have like 60 to 70 percent of my portfolio in ETH. And the rest is in you know, DeFi, layer twos, a lot of this stuff.
And maybe this is me calling the bottom of the ETH: alt ratio. Cause I'm like, scared to buy alts
at this point because they're so dead. They're so dead!
Gerbz: And last cycle burned us all so hard. It's like, why would we do that to ourselves again? We're probably about to do it to ourselves again. You know, because we forget so quickly. But yeah, it's hard to see ourselves going deep in alts right now.
Anthony: Here's the bull case though. I do think at this point for people who have the time and the interest, I think you can dig and find assets that are down 90 percent plus with teams who are still building. And their valuation is unreasonably low.
This isn't a call to buy, but for example, because I'm so heavily in the staking space now, there's a company protocol called StakeWise, and they invented this staking vault infrastructure. Their technology was used recently with the Metamask staking integration. They're doing great work, and their token is literally valued at 12 million fully diluted right now. Which is like, a pre-seed, seed stage company valuation for someone who did not invent something who has users and some revenue.
Now, do they just run out of cash and go away? Maybe, because it's so bare bones and dire straights. Or, do they land one or two deals, hit all the TVL, get the revenue, become sustainable, and come around next cycle? I don't know, but for 10 million dollars for deep tech, valuable staking infrastructure, it feels wrong. It feels misvalued.
Gerbz: This is why alts are going to come back, man, because there's so much bottom feeding to be had right now. There's so much opportunity. And like you said, these guys that have been through the trenches, maybe they've been through a few cycles and they're still building. They're still launching. I think a lot of them have a lot of stuff in their pocket, waiting for that energy to flow back.
And then they're going to launch all this fresh stuff into that energy. I think that's a big part of what drives the cycle.
Anthony: What are you looking at?
Gerbz: Actually Web3 social is very high on my list as well. The best position for it that I've found is actually, is Ton. I think the valuation is huge, obviously a lot of chaos and a lot of, a lot to be worried about there too. But like, risk reward, right?
And I think some of these massive winners, like we had last cycle, they come from these kind of risky spots. I just think they're building out that whole ecosystem of really weaving social into the wallet. They launched a browser and I think they're best positioned to capitalize on Web3 social.
Farcaster stuff, I've heard so much flip flopping on it. Obviously, ETH Denver was like Farcaster mania. Everyone that I know, I talked to a couple people who went to FarCon in California, they said they thought Farcaster is being like, taken over by big VC kind of
Anthony: Uh,
Gerbz: And that it's already kind of losing it's edge in a lot of ways. So I'm curious to see how that plays out.
$DEGEN was a thing. Is there going to be a way to invest in Farcaster? I don't know.
Anthony: How do they generate revenue?
Gerbz: Yes, all of those things. And like, I heard running a node, it's just not even really possible I think anymore. They're already, they're moving to a lot of caching layers and stuff. People are just going to start using APIs instead of hosting nodes. Which is, I mean, that makes sense.
Anthony: I want to get your opinion on what are you feeling with layer twos right now? Because something like Arbitrum is still down 80 percent from the top, 70 percent from the top. The valuation compared to like, a Solana, is like, Arbitrum is 50 times cheaper. How are you thinking about layer twos in general? Or do you, are you buying layer two?
Gerbz: Boy, you're not going to like this. I want to hear your opinion too. Not only am I not buying layer twos, I'm pretty bearish ETH.
Anthony: Oh, get rekt, bro.
Gerbz: I know, I knew you'd hate that, but seriously. And bearish is, it's not the right word. I talk, I think about this a lot. I think the valuation of Ethereum compared to like, a single public company, is like, it's foolish that it's not a trillion dollar network. That's absolutely foolish.
So am I bearish in that, I think it's going down from here? No. Am I as bullish as I was? I'm a product person. User experience weighs heavily on my investment criteria, and ETH has just been fucked, man. Using Ethereum, using layer twos, bridging around, using DeFi.
It's a fricking mess, and it has been for years. I know this was like Ethereum did this to itself on purpose knowing that it has a bigger vision, and that this is all going to come smoothly together sometime and some dumb upgrade coming, soon. But I'll believe it when I see it, and right now, using Ethereum sucks. So, that's where I stand.
Anthony: Damn. Okay, yeah. You know, the only reason why I think I'll push back against there is, so aside from I believe that cross roll up fragmentation, uX will be solved, whether it's through async means or synchronous means. And there's a lot of incentive to solve that, and everyone is trying to build their own. Layer twos are trying to build their own, other people are trying to build their own, all those layers...
Gerbz: Polygon is becoming, they're like
pivoting to being the ag layer. I mean, there's so much happening there.
Anthony: So what I think is a little unfair though is like, if we're going to look at the alternative, okay. So the alternative would be, okay, a monolithic chain where I don't need to bridge and then it'll all be this single fairytale world. And it's fundamentally incompatible with the law of space and time and technology for a system like that to be on a single thread and to be able to be decentralized, to run validators and homes.
And then, so then there's a trade off. It's like, is it run validators in homes? And it's fully like actually government protected, and we temporarily have this fragmentation, and probably solve it? Or we have a single fat blockchain, everything is in one chain, it's so amazing. But we agree that most likely the government can shut it down if they really wanted to. And I got to just invest on the first one. I got to do it. It makes the most sense.
Gerbz: Yeah.
Anthony: Especially being in infrastructure now for a few years. It's like, I've talked to a lot of these operators and Solana is great for what it is. But anyone comparing it to Ethereum fundamentally has more research to do. They're different things entirely.
Gerbz: They are, I know. I just, every time I use a bridge, a little part of me dies. And I, I need to, until I see a solution to this that really works, I'll be stoked when it does, let's put it that way. And you know, I've got 70 percent of my stack in Bitcoin, and it probably always will be.
Anthony: Sorry to hear that.
Gerbz: No, I love it.
Anthony: 20%! Right now is when you need to trade it for ETH, buddy.
Gerbz: I've got plenty of ETH, too. I got 20 percent of my stack is ETH. I got half of that staked, half of it in DeFi. Half of it's solo staked rather, half of it's in LSTs and then in DeFi shenanigans. And then 10 percent is where I'm exploring the edges of crypto still and having some fun.
But, my ETH position is sound. I wanted to watch it go up. You know, the Bitcoin to ETH ratio, hasn't been doing so hot. I watch it just in my, portfolio. If that becomes more than 20%, then I'm happy with that. I'm okay with that.
Anthony: Yeah, right now is the time to swap BTC for ETH and I fully believe that before the next cycle. It's a great time.
Gerbz: Yeah, it could be. It very well could be.
[00:49:27] Obol: Closing Thoughts
Gerbz: All right, fun, dude. We had a good riff. I learned a lot about DVs. Hopefully other people did too. What's next for Obol and what should people do if they want to squad up?
Anthony: Yeah, so obol.org to learn high level on the tech. Obol Discord, which you can find on the obol.org website to get in the Discord. And we've tried to build the Discord user journey to clearly allow you to know, if you want to do something, there's a few different options for you. And if people want to stake from home, literally get in there, go through the technical credential path, ask questions. Our staking community manager will get on the call with anyone.
We are focused on quality over quantity for sure. Like, it's very understandable that we're not going to have thousands of new home operators on Ethereum this year, but we're trying to bring in hundreds. And so for every human that comes in and who is really interested and might be able to find a squad, whether you find a squad with your local community, or whether you want to find a squad within the Obol community or the broader Ethereum community, both of those are reasonable options.
And man, I almost think that two, three years from now, if people claim that they're Ethereum people and they're not running a box from their home, they need to reassess the situation.
Gerbz: Alright, very good. Time to reassess, time to squad up. Check out Obol and you can join the big squad. Throw a couple ETH in there just to learn and get yourself acquainted. Go down the rabbit hole, get more comfortable. Then you can even set up a box. You could even just start testnet.
That's, I think testnet's technical. People who are like, dabbling, even that's a little technical. But there's so many different ways, basically. Whatever sounds right. I think it's time we start considering not dropping our ETH and Coinbase and Lido and start looking at contributing in ways other than just our stake, but in our decentralization as well. So cool.
Anthony: For those who don't want to run it at home, yeah, the contributions program. You send your ETH on the DVs, you earn future governance and ownership.
Gerbz: Future governance and ownership. Stack those points, people. All right, cool, man. This was great. Good syncing up and we'll try to not to make it like, eight months next time we do this.
Anthony: Definitely. Thanks so much, man. We'll see you soon.