Bitget AMA review: The countdown to the upgrade of Ethereum Shanghai - the ecology and opportunities of the LSD track
Last week, Bitget conducted an online topic interview on TwitterSpace with the theme of "Ethereum Shanghai Upgrade - Ecology and Opportunities of the LSD Track". This interview is hosted by the aunt who is rolling, and I have the honor to invite five professional guests in the industry, Mindao, Joy Lou, 0x Todd, 0x RJ.eth, and Yuuki, to discuss and share the topic.
This space focused on the upgrade of Ethereum, analyzed LSD and Ethereum ecology and other dimensions, and the guests shared their personal views from different angles before and after the upgrade in Shanghai. There were also exchanges and collisions of different views in this discussion.
Q1: Since its launch in 2015, the Ethereum blockchain has implemented several major upgrades. What is the most unique thing about this upgrade compared to previous ones? The upgraded part corresponds to the current status of the LSD track. What are the most direct benefits?
0xTodd：The upgrades of Ethereum are all unique upgrades. Last year, the upgrade of Ethereum changed the proof of Stake to the proof of rights and completed the consensus switch. However, the current proof of equity is still short of the last part, that is, it has not been able to withdraw cash from staking, and it is considered a complete PoS to be able to withdraw cash. The most important content of the Shanghai upgrade is to allow the withdrawal of Ethereum PoS. The core of this upgrade is to completely complete Pos and pave the way for the subsequent expansion of Ethereum.
Yuuki：The biggest benefit of this upgrade is that ETH can be used for withdrawals. Secondly, there are four protocols mainly aimed at three points. The first point is to reduce the gas of Ethereum, such as EIP-3860 and EIP-3855, which all reduce the gas of Ethereum. A protocol upgrade, the second point is to make the transaction speed faster. Everyone is currently doing some observations or research around the upgrade of ETH withdrawals. For example, the subsequent Layer 2 should be postponed to subsequent upgrades.
Mindao：If the entire PoS does not have this withdrawal function, it is actually incomplete. It is a bit like a country’s policy, which can only raise interest rates but not reduce them, and can only increase taxes but not reduce them. This cannot form a closed loop. One of the biggest problems with ETH is that the pledge rate is very low, only 15%. The pledge rate actually represents the security of the entire network, so the low pledge rate itself is definitely not good for the security of the network.
The main reason why the pledge rate of Ethereum is so low is that it cannot be withdrawn, so LSD products will be overly enlarged by the market due to the inability to withdraw cash, so this upgrade is a milestone event for the integrity of the economic security of the entire Ethereum, so the Shanghai upgrade It is a big event after the PoS transformation of Ethereum.
Q2: When the withdrawal of Ethereum is opened, the question about the selling pressure: How much is the selling pressure on the price of the secondary market? How will the current pledge price change compared to now? Will it increase or decrease?
RJ：Many people actually think that there may be a lot of selling pressure in the short term, but in fact, from a longer-term perspective, the overall selling pressure will not be particularly large. If the Shanghai upgrade is successful, it will be a very direct benefit to the entire Ethereum ecosystem itself. The enhancement of liquidity will also be a very direct benefit to market confidence.
The reason why the short-term selling pressure is not strong: If we look at the four current pledge methods of Ethereum, the real risk of selling pressure is actually a single pledge and a single node. And this part of users are often early pledgers. They can choose to be a separate node with such a big risk, or they need to lock their positions for a long time. On the contrary, it shows that they are optimistic about Ethereum in the long run. It can be said that Be of faith. So in the current situation, they must be more confident that the Ethereum upgrade can be successful. Many technicians and investors who participated in the pledge in the early stage have a consistent attitude: even if it is proposed, they will pledge it again immediately, or immediately add it in other ways to get a higher return.
Joylou：As for the view that selling pressure can be withdrawn, I think there will be selling pressure, and selling pressure will also have a greater impact on the price of the secondary market.
Yuuki：From a qualitative point of view, it is similar to the general opinions in the market. First of all, if we make a qualitative statement about Shanghai’s upgrade, whether it is from a medium-term or long-term perspective, it must be a good thing for the entire Ethereum. . With the Shanghai upgrade and everyone’s confidence in the increase in the proportion of ETHStaking, more ETHStaking will reduce the flow rate, which is also beneficial to the price of Ethereum. This is a mid-to-long-term judgment. When we do transactions, we may pay attention to some short-term At this time, some more quantitative calculation methods are needed. The most important point in time is the first four or five days before the upgrade in Shanghai. It is necessary to make a rough judgment on the selling pressure in the secondary market, because the selling pressure in the later period is relatively small, and there may be only tens of thousands of coins per day. The principal and profits of Ethereum may have a relatively large impact on the market and currency prices after the upgrade.
Mindao：From the perspective of verifiers and currency standards, different opinions have been put forward on the definition of selling pressure. At present, the assumption that this group of users will buy and sell fiat currency after they come out of ETH is doubtful, and ETH standard people should not consider exchanging profits for fiat currency. One month after the upgrade, there is a very high possibility that a large number of people will withdraw cash. One of the reasons for the withdrawal is that the new format has a lot of convenience. Many people want to convert to the new address format. Another reason is that they want to change The services of pledgers, these are not withdrawals due to selling pressure.
0x Todd：To discuss whether these people will sell, you should first refer to their approximate cost price. All data on the Ethereum chain is transparent. From 2020 to the present, the three intervals with the highest average cost of participating in Ethereum Staking, and the current situation of relatively poor liquidity determines the final amount of Ethereum. The average cost is determined by the lowest reserve price in mind. Second, due to the relatively poor liquidity of exchange holders and the mentality of retail investors, these users will also be potential withdrawal targets. Third, the core idea of Ethereum is not to save as much as possible. The interest scanning mechanism of Ethereum automatically withdraws cash to your withdrawal address. mentioned in your account. Finally, there is the issue of cashing out. Converting Ethereum into a stable currency is the most direct way to cash out. There is also an indirect cash out, such as buying some LSD. Although there is no direct cash out, it will be cashed out in the next link. To sum up, after the upgrade in Shanghai, there will be a period of time, and Ethereum itself will face a relatively large pressure.
Q3: Teachers, please share the advantages of some projects after the subdivision of this track, or some opportunities, or whether there will be some projects with high market value. What progress has been made?
Yuuki：A detailed technical analysis and supplement is made for the definition and calculation of selling pressure, ETH profit and pledge rate. Regarding the new development and opportunities of the LSD track, the LSD product itself has a relatively complex product structure. At the same time, it also corresponds to a relatively complex risk structure. At present, if there is no innovation in the ecology of LSD in the entire chain, it is difficult to have a relatively large development; it introduces in detail the three mainstream operating modes on the current LSD track characteristics of the situation. At present, Lido and Rocket Pool are relatively innovative and progressing, and the growth of Frax itself is very fast. We can see whether there will be higher development after the upgrade in Shanghai.
RJ：When the entire pledge pool becomes larger, which direction will the newly increased funds most likely flow to? This is an angle of judgment. In addition to the projects directly related to LSD, regarding this distributed verification technology, DVT-related verification technology is such a direction that the entire ether layer pledge will be more infrastructure. Regarding the DVT-related level, how to De-fragmentation, and improving the degree of decentralization of the network while ensuring the stability of Ethereum verification block generation, I personally agree with this aspect.
Yuuki：The SSV has been supplemented, how much ETH can be stored in SSV, 67% of ETH will participate in the operation of the network through the DVT solution, and you can use this data to judge the value of the SSV protocol.
Q4: This year is a big year for Layer 2. After the Shanghai upgrade, what kind of impact will there be between the ETH mainnet and Layer 2? What kind of development will there be?
Mindao：Layer 2's extension and capture of the overall value of Ethereum will play a great role in strengthening. The LSD asset itself is also an expansion of Ethereum. After the upgrade of the LSD track, there will be two relatively large changes. One is that all LSDs will gradually simplify the node verification level at the back end. The second point is that after the upgrade of ETH, it has changed from equity assets to debt assets.
After the upgrade in Shanghai, every node, no matter how big or small, can basically obtain liquidity through zero-coupon bond transactions in the market. Ethereum Layer 2 is more optimistic about the large application level, whether it can attract some large applications to build itself, this is the most important structure of ETH as a dominant public chain.
RJ：The reduction of gas fees is the most direct benefit of layer 2 after the upgrade. The MEV track is also worthy of everyone's attention. When the currency price fluctuates sharply, MEV can capture most of the profits. Lido's pledge return rate doubles. As the leading project on the LSD track, Lido is very advantageous in capturing MEVs. In addition, some content around DeFi on the LSD track is also worthy of everyone's attention, such as decentralized exchanges, new lending agreements, etc.
Joy Lou：The most noteworthy thing about LSD is Lido. The growth rate of Frax business is very high, so it must be configured in the long run. The links of DVT and FYI services are not yet closed-loop, but if the link is closed-loop, USH and LSDX, a revenue-aggregating LSD protocol such as LSDX, will also be in demand.
Add three track directions, the first is income aggregation, the second is lending + stable currency, and the third is multi-chain plus new innovative models. According to the current performance of the market, we do think that the LSD track and the price of Ether itself have a certain room for correction.
Q 5: How much will the exchange rate of Ethereum to BTC be exchanged in the next bull market? How much can ETH see in the future?
0x Todd：The overall view will be somewhat pessimistic, and there may be a partial correction in April. Before the Shanghai upgrade, the trend of ETH was relatively healthy. Many indicators of the current market and the market in April-May 2019 are similar.
RJ, Mindao, Joy Lou: hold a relatively optimistic view, and are more optimistic about the future direction of Ethereum.
Founded in 2018, Bitget is the world's leading encrypted asset trading platform, providing services to more than 8 million users in more than 100 countries and regions. Bitget has many trusted partners around the world, including the legendary Argentine football player Lionel Messi, the well-known Italian football team Juventus and the official e-sports event organizer PGL, etc.
Note: There are risks in the market, investment needs to be cautious. This article does not constitute investment advice, but only for the discussion and exchange of opinions of guests.
