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DeFi user pays $36K for one Uniswap transaction, as EIP-1559 draws closer

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Ethereum fees are at record level but even so, one Uniswap user paid well over the going rate with a gas fee of $36,000 for a single transaction.

Crypto twitter has been flooded with complaints about the unsustainable fees for using the Ethereum network but the rates only exacerbated one DeFi user’s fat fingered mistake.

The exorbitant transaction was tweeted by co-founder and CTO of Groundhog Network, Andrew Redden, who confirmed it was Uniswap related.

The ludicrous fee turned out to be a typing error as the user manually entered two prices in gwei together. The fee of 500,801 gwei should have been one (500 gwei) or the other (801 gwei) but not both.

It came to a whopping 24.94 ETH, or approximately $36,000 at the time it was made.

Average transaction fees have skyrocketed to an all-time high of around $40 according to Bitinfocharts.com, after surging more than 1,000% since the beginning of the year. Etherscan’s gas tracker is reporting an average of $23.85 for an ERC-20 transfer and $73.79 for a Uniswap swap at the moment.

An Ethereum improvement proposal called EIP-1559 may help to alleviate some of these fee problems and developers hint that it could be rolled into the Ethereum ‘London’ upgrade scheduled for July, 2021.

On Feb. 23, Ethereum lead developer Tim Beiko posted an update on EIP-1559 in which he said “large state testing is 99% done.” A developer call on March 5 will confirm whether the EIP will be included in the London upgrade, he added.

The current system of gas calculations involves a bidding system for transactions where the miners naturally prioritize the highest bids, and the lower ones take much longer. EIP-1559 will modify this auction system by dynamically adjusting the fees so users will pay the lowest bid for the block. This enables automated market makers and wallets to accurately calculate fees and provide better estimations. Beiko elaborated;

“Another way of looking at this is that 1559 makes the inclusion price of transactions explicit in the protocol, rather than implicit, as it is right now.”

The proposal will also burn gas fees which are paid in ETH and this will have a longer-term impact on Ethereum issuance and supply. Naturally, the miners have voiced disapproval at this though network co-founder Vitalik Buterin has commented (in Chinese) that any opposing action they take may simply accelerate the move to PoS.





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Ethereum

Puff, puff, pump on 4/20! April 16-21st

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Loyal Finance Redefined readers:

Hi, I’m Andrew. My inestimable colleague Andrey, the previous compiler of this newsletter, is stepping away from Cointelegraph in order to build [REDACTED], leaving me to take over lettering the news. While I’m thrilled he’ll be keeping around the DeFi ecosystem, I’m also infuriated that there’ll be yet another gigabrain trading against me. 

Also: journalists quitting their jobs to do DeFi stuff. Talk about top signals. While DeFi tokens and ETH prices in particular have largely rebounded from dispepsia-inducing lows, I remain antsy.

Nonetheless, the highlights of the week:

4/20 Haze It

In the 4/21 hangover today, a new crop of crypto investors are discovering some cruel market realities. Hopefully, they’ll learn to laugh about them. 

Yesterday, the Dogecoin community cashed in on some of their growing (if likely destined to be short-lived) cultural capital, attempting a hostile “unofficial holiday” takeover of 4/20 — a social media push to snatch the date away from stoners and rebrand it as “Doge Day.”

To some degree, it worked: Elon Musk, the meme superstar who happens to run a few tech companies, ratioed some disbelieving Boomers, and noted celebrity sex tape participant Dave Portnoy himself bought a bag that prompty tanked in price. DeFi-ers shouldn’t care too much about the meme currency aside from its utility in predicting wider altcoin runs, but Dogecoin day did feature a few other pump-and-dump absurdities.

Self-styled DeFi tokens like $SAFEMOON and $SHIB hit the zenith of multiweek pumps on 4/20, along with projects like $ASS following suit. The moonshots led to some remarkable on-chain stories of guppies growing into whales essentially overnight on paltry initial investments: 

Then, as it always does, the other shoe dropped. At the time of writing, $SAFEMOON is down a whopping 41.95% on the day, $SHIB in the red 38.48%, and $ASS looks like ass.

These pump-and-dumps stand out for two reasons: how little effort went into them, and how much interest they managed to attract anyway. SAFEMOON features a token burn and redistribution on every sale; classic pumpanomics with little by way of novelty. SHIB’s utility is still in the formation stages, with a DEX and an “artist incubator” in the works (though they are donating… something? Somehow? To animal rescue organizations), and features a companion coin, LEASH, a synthetic rebasing DOGE that no one needs or asked for. I don’t know what ASS does and refuse to find out. 

SAFEMOON in particular bears superficial similarities to the Bill Drummond money experiments like $XAMP and bonding curve ponzis like $TRIB that dominated late last year. I remember those for being fun; everyone knew that it was musical chairs that you played with real money, but dived into games with the zeal of kindergarteners anyway (XAMP’s case, the project emerged from a pseudonymous dev whose namesake is famous for literally burning piles of money — no one was trying to fool anyone else). It was a string of absurd schticks acted out in what often feels like a fundamentally absurd space.

Safemoon, by contrast, has a slick marketing campaign underway that likely includes considerable PR heft (a journalist can spot organic narratives; Google Safemoon’s news coverage and tell me what you see). Likewise, the sums of money made and lost in the bygone era of Drummond all of six months ago are anodyne compared to the sea of cash that lifted these shittokens on 4/20. It’s still fun and games — all a big joke, really — but the investors don’t seem to totally understand that.

At my most idealistic, I believe mass adoption of DeFi could be as beneficial to the advancement of the human species as mass literacy; on days like 4/20, however, I think it’s an unusually efficient mechanism for parting fools of their money.

From chapter 49 of Moby-Dick, “The Hyena”: 

“There are certain queer times and occasions in this strange mixed affair we call life when a man takes this whole universe for a vast practical joke […] And as for small difficulties and worryings, prospects of sudden disaster, peril of life and limb; all these, and death itself, seem to him only sly, good-natured hits, and jolly punches in the side bestowed by the unseen and unaccountable old joker.”

I have endured pump-and-dumps. I have learned that, like Ishmael’s god, the market often acts as predator cackling as it tenderizes your ribs. The best — and maybe only — way to stick around is to cackle right back, smile at the sea of red in your portfolio, and carry on. 

I’d like to welcome the new crop of investors who have taken (or are still taking, as SAFEMOON rebounds-and-dumps) their first ride on the euthanasia rollercoaster. To you, my stimulus check-investing, Tik-Tokking friends! You’ve been hazed, you got through it, and I hope you hang in there. Avoid rebase games and remember that boring old 10% APY stablecoin farming is always an option.

DeFi is better when you can laugh about it.

What’s going on with Aave?

Perhaps the biggest story of the week somehow went largely unnoticed: money market and lending giant Aave is considering a move into social media. 

The bizarre shift was first teased by Aave’s official Twitter account on Saturday:

I followed up immediately with Aave co-founder Stani Kulechov to confirm that the Tweet wasn’t the work of a ponderous intern celebrating 4/20 early. He gave me a short statement, one whose visionary heft raised more questions than it answered: 

“At Aave we believe in a thesis that eventually interactions in web3 realm will become finance, whether its likes, sharing pictures or moments, everything will become user-owned value that can be empowered with Aave Protocol.” 

I’m reminded of that tortured plotline in The Office where Dunder-Mifflin’s paper company sales website introduces social media features. How would it work, what synergy if at all does it have with decentralized lending, and, really, why? 

Aave’s head of integrations, Bily Zeller, gave some additional background, implying that there would be a pay-per-post model in which interest on deposits could be used to post:

This doesn’t necessarily translate to the “posts-as-value” model that Stani laid out, however. At the moment, I’m skeptical: if Stani ever responds to my DMs I’ll be interviewing him to get more background. I look forward to being convinced.

Pivots to entirely new industries aside, the protocol is firing on all cylinders.

Yesterday, Stani teased an image of the money market with bolstered yields from Aave token distributions, part of testing for a liquidity mining program currently live on the Kovan testnet:

Aave is already a core layer in many retail and protocol-level farming strategies; adding AAVE token rewards for lending and borrowing would supercharge TVL metrics. I’m somewhat concerned for token price (look at what governance token rewards did to CRV last year), but suspect the program could bolster the ecosystem considerably. 

Bright, if sometimes puzzling days ahead for the protocol.

Other big headlines:

Pancakeswap on the rise

Uniswap v3 hits testnets

CRV’s rise could mean bumper crops for yield farmers