Filip Cybula

What do Canadian VCs say about @bdc_ca when they're allowed to stay anonymous? BetaKit's @madisonmcla obtained a copy of a 2023 government report full of candid #VC feedback about the bank. The report was never actioned, but here's what the VCs said: betakit.com/the-feds-asked…

🔔 Moments before the bell 🔔 Our CEO @MatCybula and COO @FilipCybula on the @tsx_tsxv floor as TenX rang the opening bell as a public company. 🚀 Built on years of operating infrastructure-first across high-throughput blockchains and shared with partners from the @bonk_inu ecosystem. ❗️❗️❗️ TSXV: $TNX

We’re expanding our participation in the Solana ecosystem. 🚀 As part of a broader relationship with BONK Contributors, we’ve added @bonk_inu to our digital asset treasury to support ongoing validator operations, staking activities, and broader ecosystem participation. #BONK has developed into a revenue-generating ecosystem with growing utility across #Solana. This addition reflects our focus on assets backed by real network activity and active participation rather than passive exposure. This step aligns with our strategy of engaging directly in high-throughput blockchain ecosystems through infrastructure, staking, and disciplined digital asset treasury management. Read the full announcement here: 👉newsfilecorp.com/release/279677… TSX-V: $TNX

"L2s will make Ethereum deflationary again" No they won't - and we already have examples of why that's true. A report on L2s, blobs and why the Ultrasound Money meme is dead without mainnet users TLDR 🔹L2s will only make ETH deflationary if they saturate both the blob and regular fee markets 🔹L2s, largely, aren't beholden to a specific batch posting cadence to L1 🔹The combination of the above means L2s will constantly maneuver around each other to avoid creating a high fee environment for themselves -------------------------------------------------- BACKGROUND First, a brief reminder of how Ethereum looks post-Dencun (the update from March that made L2s ~10x cheaper for user). Dencun introduced the concept of blobspace, which is an expansion of blockspace on Ethereum meant for Layer 2s to post their batch data to. A visual: This new area has a few properties worth noting: 🟦"Blobspace" is currently limited to 6 max individual blobs within it per block 🟦It's a separate fee market from regular blockspace, but uses a similar mechanism 🔹Blockspace: If the current block is >50% utilized, increase the base fee in the next block 🔹Blobspace: If 4 (i.e. >50%) or more blobs are in the current block, increase base fee for the next block by ~12% NOTE: L2s can use either blockspace or blobspace for their purpose, at their discretion. LOOKING FORWARD Given the above, we can predict a few things about expected behavioral flow of these L2s that will lead to burn: 🔹L2s will first saturate blobspace to the point where it stops being ~free (3 blob/block) 🔹Once it hits this level, they will begin doing the calculus of posting costs/reputational savings and opt to either: a.) Use calldata b.) Slow their posting frequency / spread out / coordinate to cool the fee market That is all to say that L2s modus operandi will be to constantly adjust their behaviors to avoid creating a high fee environment for themselves, despite the top L2s already making millions per month in profit (w/ near-100% margins). The ETH vampire death loop: 🔹Prolong low-fee environment 🔹Wait for Ethereum to scale, resetting market 🔹Prolong low-fee environment 🔹Wait for Ethereum to scale, resetting market... "When does Eth plan to scale?" you ask As early as next year with Pectra update, which may expand blob capacity ~2-3x. -------------------------------------------------- WE'RE SEEING IT ALREADY The market hasn't presented this opportunity a ton, but we have two examples of L2s intentionally modifying behavior to save costs and avoid fees (as you would for any business or rational actor). Ex 1: Blobscriptions Craze 🔹In late March blobs saw "price discovery" from a blobscription phase and despite that: L2s and builders on average limited their blobs to the non-price-increasing level of 3 blobs/block: h/t @hildobby_ for the Dune They had no obligation to go beyond the fee-increasing level and so they didn't. Ex. 2: LayerZero Airdrop 🔹On 6/20 we saw the $ZRO airdod, which created a substantial increase in transactions on Arbitrum and led them to flood the blob market. TLDR -> More blobs from ARB -> higher blob costs for all L2s -> ~$800k in ETH burned by L2s that didn't have the infra in place to switch to regular blockspace I covered it when it happened if you want to read more: x.com/0xBreadguy/sta… The big takeaway from the event was how the teams reacted to the high-fee environment: h/t @blocknative for the article 🔹Scroll, a zk rollup with no obligation to post, stopped posting altogether (lol). 🔹Taiko, a based rollup with a strict cadence, slowed their batch pace. Both market participants acted in a rational way to reduce their overhead. Going forward, you bet your ass they're going to have automated processes in place to avoid burning hundreds of thousands of dollars before they switch. All L2s will, which brings me to... -------------------------------------------------- CONCLUSION, WHAT CAN WE DO When I set out to write this report it was to simply calculate something like "It would take another 4 Base-level L2s to make ETH Ultrasound Money™️ again" but the more I dug the more realized the goalpost would never be hit. L2s will constantly adjust their behavior to avoid heavy costs (read: ETH burn). They're business - of course they will. So, what do we do given the above? We make mainnet cool again, attracting both users and builders. No more of this: x.com/0xBreadguy/sta… More of this: x.com/0xMert_/status… You have to balance scaling through L2s with keeping your powerusers on mainnet - not pushing them off indiscriminately to one of a dozen ecosystems of various constructions that give minimal economic nod back to Ethereum. Star by adjusting the messaging > Fill to capacity > Scale to your comfort level > Tell users and apps to gtfo (skip this step) > Scale through L2s You also implement things like EIP-7623 (x.com/0xBreadguy/sta…) which defend L1 users blockspace from being used as L2 cost-saving failover space. Relying solely on L2s as actors and mainnet as purely settlement isn't it. Not with the current incentives. Thanks for coming to my Bread Talks.