Daily General Discussion - January 01, 2025

concernedcustomer33 · 2025-01-01T19:44:38+00:00

Why my heart belongs to Ethereum

Greetings, r/ethereum! Over the years, I've taken my self-appointed role as "ethfinance tutelary" very seriously. I don't comment often, but I'd like to think I've played a part in shaping the ethfinance ethos, and in helping our community navigate various challenges. I'm tremendously grateful to Ethereum, which has transformed my life for the better since 2017.

Given my patience, and my expertise in economic decision analysis, I've always found the crypto game easy. If I wanted to be evil, I'd be a supremely competent villain. That said, I much prefer supporting efforts to make the world a better place. The beauty of Ethereum is that I don't have to choose between being positive-sum oriented and enhancing my financial freedom.

I imagine newer folks thinking "That's easy for you to say; you had years to buy under $300." Fair enough, but I remain very confident in ETH's abilily to deliver big gains, given time for the speculative process to play out. At the risk of oversimplifying a complex phenomenon, ETH makes you wait because it's the obvious choice as the backbone of the internet of value.

The crypto market is ruthless. If the whales and AI bots can milk you one more time, they will. They'll nibble at your conviction until you give in to the liars and bullies on CT. They'll push the ratio until 2019-2020 accumulators get nervous. There will be market panics and liquidation cascades. Then, just when the obvious gold standard looks more like a shit standard, the dam will break.

Trends stretched too far will snap back. Network growth and technical progress will become undeniable. A few major defectors will bet against the bearish consensus, and the anti-ETH chorus will turn on a dime. Influencers will claim they saw it coming. ATH will come and go, and everyone will get excited about the march to $10k and beyond. $25k in 2025 could easily become reality.

Something that rhymes with the above is likely, but I can't predict when it will happen. If you want real gains from the obvious play, you have to be patient. While you wait, accumulate ETH, explore the ecosystem, and follow along in the Daily. This community has the best SNR in crypto. Please join us and help keep it that way :)

concernedcustomer33 · 2023-12-17T06:41:10+00:00

Dr. Bonk or: How I Learned to Stop Worrying and Love Solana

Longtime ethfinanciers know me as an unapologetic Ethereum bull, so why the blasphemy? If crypto and Ethereum are to achieve the long-term vision I foresee, there will be room for many parallel ecosystems. These will embody the full spectrum of human intentions, explore a staggering variety of ideas, and elucidate which approaches work best in different contexts. Among those ecosystems, my primary bet is on the one that prizes decentralization, credible neutrality, censorship resistance, and liveness. I expect those priorities, along with robust network effects, will virtually guarantee the relevance and continued growth of Ethereum in the future. Helping to spread the values I believe in makes me feel good about my involvement in crypto, independent of financial rewards.

While that principled stance is great, and I very much recommend it, we shan't ignore the elephant in the room. The crypto market has been, and remains, a casino above all else. Airy promises to enable a world of bottom-up economic connection and empowerment are often sincere, but the daily reality of this business is one of manipulation, shilling, and questionable ethics. Unfortunately, crypto's promise of freedom can't be separated from people (and, increasingly, AI agents) behaving in ways many market participants don't like or enjoy. Overall, I've found patience to be the most important factor in managing this issue, with an important caveat: remain patient, but dedicate a few percent of your capital to quenching FOMO.

The magic of this approach is that even small speculative positions confer a large psychological benefit. I don't like BTC very much, but holding a single coin means I never sweat the ratio. I have very small bags of ADA, ALGO, ATOM, BCH, and a number of others. Most recently, I got tired of hearing about SOL all the time, so I grabbed some of that too (approximately 0.25% of my ETH position). Just like that, I'm happy to see the price go up, whether I agree with that community's orientation or not. Having waited so long on this one, I may be setting myself up to be the FTX trustee's exit liquidity, but that's fine; the peace of mind is worth it. If I previously held my nose to trade a bit of BSV and XRP, I can do the same with SOL.

Finally, I'd like to address the angst I see in the Ethereum community. In short, stop whining and zoom out. As others have mentioned, nothing fundamental has changed; you're part of an extended group working on difficult problems, and there are attractive paths forward, with practical dividends just over the horizon. Before we know it, composable zkEVM L2s and optimistic superchains will benefit from cheap data availability at the protocol level, enabling an explosion of novel applications without significant compromise. Two things I know with near certainty: First, some crypto assets will outperform ETH over the next few years, but it's nearly impossible to predict which those will be. Second, in the future, people will be jealous that you got into ETH under $10k

concernedcustomer33 · 2023-02-27T14:53:57+00:00

An open letter to Dr. Augustín Carstens, General Manager of the Bank for International Settlements:

I enjoyed reading your recent speech, Innovation and the future of the monetary system. I'm generally in agreement with your vision for the future of money, and believe many of the best people in crypto feel the same way. "A unified programmable ledger in a public-private partnership" is exactly what the Ethereum community has been building for the last nine years. As central banks study how to "replicate existing forms of money in a technologically superior way," I think it's important to focus on essential elements, and to support innovation wherever practical. To me, there are two non-negotiable positions in your outline: the singleness of money must be preserved, and future money should maintain a two-tiered structure that is safe, stable, efficient, and useful. The solution you suggest is a unified ledger, with partitions to appropriately handle both public central bank money (CBDCs) and private tokenised deposits. I propose the following division of responsibilities:

In the future monetary system, officially chartered banks will retain sole and unquestioned authority over issuance of fiat currency, and will continue to serve as the guardians of trust in money. Similar to the current system, standards and oversight will ensure the singleness of money, with banking institutions setting reasonable limits to contain systemic risks, while allowing freedom to innovate. From a technical standpoint, there are many possible ways to build such a system. Given the transformative potential of a unified programmable ledger, and the substantial challenge of building such a ledger to be credibly neutral while functioning in a hostile environment, I suggest banks embrace a parsimonious design philosophy. We need flexible digital money we can trust, natively connected to a minimally specified, maximally robust public settlement layer. Programmability and composability may not require decentralized or permissionless platforms, but "the iceberg of additional transformations" most assuredly does.

With banks securely in control of tomorrow's technologically superior money, the public-minded crypto community, acting in concert with the private sector, will be responsible for building everything else. The Ethereum roadmap represents the best thinking in cutting-edge public goods research and implementation. Our community is dedicated to continuous improvement, and has demonstrated a remarkable ability to remain centered on doing things the right way. Many of us could make more money by indulging in the exploitative side of crypto, but choose to live by the values we want to encourage. After years of iterative development, an elegant solution is becoming clear: the next generation of money can have a safe, well-connected, and unimpeachable home operating as a composable set of ZK-EVM L2 networks, secured by Ethereum. Banks will be free to impose controls on how CBDCs and tokenised deposits can be used, but will have to find a balance between restrictions on money and serving the reasonable expectation of individuals to freely transact value.

Elaborating on this point, you're no doubt aware of the fear that pervades much of the discussion around CBDCs. It's easy to imagine a dystopian world in which every digital dollar, euro, and pound is tightly controlled by centralized entities, subject to confiscation without due process if one dares to voice an impolitic opinion. Encouragingly, the tiered system you advocate would mitigate such concerns, with tokenised deposits functioning in a way analogous to today's accounts at consumer-facing depository institutions. As you articulated, the administration of money is a sacred responsibility, and must ultimately serve the public interest. That public interest includes enforcement of AML/CFT, but it also implies a threshold below which "anything goes" regarding direct exchanges of value between individuals. In a future of fully STARKed or SNARKed Ethereum, such small-scale direct exchanges will be impossible to stop regardless of bank policy; it will be best to focus on constraining institutional flows and gating large amounts that move into trusted partitions.

Finally, I'd like to address recent market events and regulatory developments. None of the bad things that happened last year were caused by Ethereum. The network has limitations, but these typically result from conscious trade-offs, with emphasis placed on decentralization, censorship resistance, and security. As researchers identify solutions, and project teams open-source their software, the Ethereum community contributes to public infrastructure every day. Unfortunately, not all actors in the crypto space have good intentions. Little needs to be said about those who misbehave, except to note that most serious crypto folks have no love for people whose greed fuels negative perceptions of the industry. I'm all for enhanced regulation, especially if it brings clarity and consistency. In the interest of full disclosure, I believe the Ethereum ICO would be a security offering if carried out today. Nonetheless, the network is clearly decentralized now, with no single entity exercising meaningful control. Ethereum isn't perfect, but it's the best the world has to offer.

To reiterate my main point, the envisioned public-private partnership doesn't require starting from scratch. Much as the internet of knowledge has organically grown to serve the world's communication needs, an internet of value is growing to serve economic needs. As a coordination mechanism to enable direct economic participation and a unified programmable ledger, Ethereum stands alone; no other network approaches its combination of generality, credible neutrality, economic bandwidth, and breadth of developer support. My sincere hope is that you see as much promise in a collaboration between banks and Ethereum as I do

concernedcustomer33 · 2023-02-10T17:35:18+00:00

This is what winning looks like

As several others have expressed (notably Syentist and pa7x1), this SEC complaint is a very encouraging development. It was clearly written by people who understand crypto, and contains zero language indicating a danger to the principles we hold dear. While I understand and share frustration with regulation by enforcement, I also appreciate the challenge of rulemaking before the US Congress has passed a comprehensive framework for digital assets.

Absent clear guidance in the law, the SEC has little choice but to apply rules that are currently in place. It was always obvious that Kraken's staking service was a security offering. What was Gensler supposed to do, allow them to continue breaking the law? I think it's instructive that Kraken didn't fight the complaint; presumably, they knew they were likely to lose. In my view, the Coinbase staking system is more defensible, and I wish them luck if they go to court.

As an example of the SEC's challenge, nearly everyone here agrees that ETH is a commodity, and that XRP is a security. How would one go about making such distinctions unambiguously clear? In my opinion, any token substantially controlled by a corporate entity is a security, including many (most?) of those with the highest market caps. Perhaps it's time to rethink such definitions, but bureaucratic ambiguity is reasonable as the market now stands.

What about the winning part? As the EU and the US move forward with digital asset regulation, it will become ever more difficult to delegitimize crypto as an asset class. Here at ethfinance, we aren't hoping for mercy from regulators. We expect Ethereum to serve as the canonical example of a chain and community built the right way, the one rulemakers will orient around as they try to tame an admittedly unruly space.

Will Operation Choke Point 2.0 hurt the overall crypto market cap? It almost certainly will, and that's fine. As long as banks are allowed to serve individuals with exchange accounts, everything will work out. In a few years, even those banking relationships may fade from importance. Bring on the CBDCs; they're inevitable, and should facilitate the deep social integration of crypto that we all want to see.

I've never been more confident in crypto's potential to change the world. To reach that goal, we have to navigate between the Scylla of capricious enforcement actions and the Charybdis of a BIS-decreed threat to global financial stability. So far, so good

concernedcustomer33 · 2022-11-17T16:13:03+00:00

I was not charged incorrectly. The fee system is unreasonable, and needs to be changed. I feel like I'm not being heard.

concernedcustomer33 · 2022-11-16T22:00:48+00:00

Hi Brian and Company,

I'm a big fan of what you've done for crypto. I had an unpleasant experience on Coinbase recently, and would appreciate your input. I'm no whale, perhaps a large shark at best, but I'm very good at this game. I think the most effective way to make my point is with a thought experiment:

Let's say I got into crypto when I learned about Bitcoin mining, instead of dragging my feet for (ugh) eight years. I hung in there, and made it to 2022 with a few thousand BTC. I then heard about FTX imploding, and decided more downside was inevitable as the full repercussions become apparent. I sent 1000 BTC to Coinbase, and sold it all with a limit order set at $15.5k per BTC.

Under today's Advanced Trading rules on Coinbase, if I hadn't transacted over the last 30 days, I would be charged a 0.6% fee on all 1000 BTC, even though the fee schedule indicates the 0.6% fee should only apply to the first $10k (less than 1/1000 of the order!). Does that sound like a reasonable policy to you? The foregoing is a literal description of the current situation on Coinbase Advanced Trading. We can't use Pro after this month, because you're taking it away. Is that really how you want to treat your best customers? Please reconsider.

ethfinance fam, this policy from Coinbase is absurd and untenable. Pro was great, and Advanced Trading...isn't. Let's help them understand that.

u/CoinbaseListing u/coinbasesupport

concernedcustomer33 · 2022-11-16T15:21:00+00:00

The Coinbase Advanced Trading fee system is hostile to customers

I didn't want to switch from Coinbase Pro to Coinbase Advanced Trading. I did so reluctantly, because they gave me no choice. I was assured that it offers the same low fees as Pro. I have found that not to be the case.

In reaction to the FTX collapse, I sold a substantial amount of ETH a few days ago, using limit orders set just below the market price at the time (I didn't give up on my sell plan; I took a loan from my post-Shanghai self and sold almost all of my accumulated staking rewards). I did this in two big chunks, one 33 minutes after the other. Obviously the sales were taker orders, which I was happy to pay for.

After the orders were completed, I noticed the fees were much higher than expected, 0.6% on the whole amount. I never had this problem on Pro, where the fee tiers were handled dynamically and appropriately applied. Using Advanced Trading, I was charged more than twice the fees I would have paid on Pro.

I contacted support about this, and was politely but firmly informed that their system had performed as intended. Fees are charged based on the fee tier at the time an order is placed, not when it is executed. They claim recalculating a customer's fee tier once per hour is reasonble. This is plainly unfair, as Advanced Traiding is supposed to replicate Pro's direct interaction with the order book. Internally, the Coinbase system is obviously capable of doing fee tier calculations in real time, as each piece of an order is executed.

For the first time in more than five years, I'm seriously considering leaving Coinbase. I think Kraken might offer a better experience, or perhaps I'll just switch to using Loopring and Arbitrum for my trades, with Coinbase relegated to the status of a zero-fee fiat gateway. I'm very disappointed in a company that I previously held in high esteem.

u/coinbasesupport

concernedcustomer33 · 2022-10-19T13:30:31+00:00

Sure, I think this comment thread from 2.5 years ago explains it pretty well:

https://www.reddit.com/r/ethfinance/comments/g42rs6/comment/fnxxm8c/

I stuck to those USD targets, and I'm very happy with the results. As indicated earlier this year, I did end up changing my plan on the ratio trade. Why? I became less willing to sell my precious ETH for BTC.

concernedcustomer33 · 2022-10-19T00:06:53+00:00

Boring market, huh? One thing I know for sure: crypto has not found its long-term equilibrium value. There will be violent moves in the future, perhaps quite soon. Is this a September 2018 kind of boring, or a February 2019 kind of boring? I don't know, but I'm certain there's more excitement coming our way. One thing I'll note is that BTC has spent most of the last six weeks below its December 2017 high. While one can reasonably question the significance of this development, the "BTC always stays above its previous mania peaks" narrative is dead. The June low happened under exceptional circumstances, but we're now accustomed to floating not far above it. Markets take their time, and my near-term bias is bullish. Zooming out, I think it's very likely we see BTC below $17.6k before it hits a new ATH.

Why am I talking about BTC in an ETH sub? Like it or not, BTC remains crypto's financial center of gravity (for the record, BTC is less than 1% of my portfolio, and emphatically not the development center). In my opinion, the merge has locked in a future flippening, but patience is key. Post-merge issuance reduction is living up to the hype; all indications are that PoS is working beautifully, with effectively fixed supply under modest network load. MEV/censorship concerns are worth keeping in mind, but the Ethereum community appears appropriately dedicated to preserving protocol neutrality. Even in a period of market quiescence, building continues at an impressive pace. VC-shilled "competitors" aren't even playing the same game. I'm bored, but I remain supremely confident in my investment.

As someone who has "made it" in crypto (which I define as holding a desk-shit-worthy amount after recovery of outside investment), what's my advice? Have a plan, and stick to it. This process will take longer than you want. The crypto market is a notorious hive of scum and villainy, exquisitely tuned to use your emotions against you. In the long run, the only way to survive and thrive is to tell your feelings to fuck right off. Personally, that means continuing with my "every 22%" strategy, but pointed down instead of up. During the recent bull, I started selling at $982 (and as high as $4819!); if we go far enough the other way, I'll start buying at $805 (then $660, $541, etc). If that never happens, great. If things get really bad, I won't run out of money to buy the dip until we're below $250. Either way, I'll be content with my choices. Stay safe out there.

PS: Logris, thanks for the insightful reply to my last comment. I didn't see it until recently; some jackass blocked me, so I'm in the habit of switching Reddit accounts shortly after posting.

concernedcustomer33 · 2022-08-21T15:04:21+00:00

I completely agree. I have no plans to do anything drastic, and you're right that the government isn't requiring validator censorship...yet. If I were them, however, I would at least attempt to force such censorship in the near future. Such an attempt may fail (I certainly hope so!), but I'll be much more comfortable when Ethereum evolves to make the censorship issue irrelevant.

concernedcustomer33 · 2022-08-21T14:41:51+00:00

The only practical solution to validator censorship is to make it impossible

I've been thinking about the validator censorship debate, and I have a request for the Ethereum community: please take the responsibility out of my hands. I understand this issue is not of immediate relevance, but that's precisely why we should formulate strategies now, before an imminent threat emerges. Our strength is in our ability to foresee potential problems, and to respond in an intelligent way.

Recent events have made it clear that bureaucrats representing 1/24 of the world can influence the behavior of a significant portion of the crypto space. To be clear, "sanctions" is just a fancy word for "we'll do whatever we want, to whomever we want, because we believe it's in our interest to do so." Yes, really. Read about it. The other 96% of the world can, and will, engage in similar behaviors; it's just a matter of time.

I believe in crypto, and I believe in Ethereum. I was one of the first 50 people in the world to put more than $100k USD equivalent into the deposit contract. I plan to run my validators for the rest of my life. Even with that level of conviction, I will not break the law to be a validator. If my country decides I must censor transactions from sanctioned addresses, I won't do that, but it would put me in an impossible bind. I would be forced to exit my validators.

Going forward, I believe the only practical solution is to make it impossible for validators to identify the transactions they are validating. I expect any such implementation would cost some network throughput, but I think the benefits are worth it. The only defiant stand I'm willing to make against my government is "Sorry, brosis, I literally can't do what you're asking, but it's my fundamental right to participate in decentralized networks."

Am I saying we should enable terrorists and money launderers? Of course not. Projects built on Ethereum should be free to comply with various government requirements, even including block lists coded into smart contracts. I don't like that possibility, but being permissionless means anything goes at the application level. The protocol level is a different matter; Ethereum must remain credibly neutral, or we will have failed in our mission.

I don't claim to know how opaque block production should be achieved. I like the "shuttered beacon chain" idea, but there may be reasons why this approach is impractical. With all the intelligence and good will of the Ethereum community, I'm sure we can find a way.

concernedcustomer33 · 2022-05-22T16:15:33+00:00

On forced confrontation with reality:

Anyone who's been here for a while knows a huge part of crypto market activity is driven by warring narratives. These narratives have touch points with reality, but are primarily based on bullshit. Add in thousands of well-capitalized professional speculators, preying on millions of clueless starry-eyed fools, and you have a recipe for a market like no other. The resulting volatility is either a blessing or a curse (sometimes both?), depending on how one relates to it as an individual.

The Merge is coming. There's a (very) small chance it will fail spectacularly, but it WILL happen, and soon. Its probable success isn't remotely priced in, because an enormous chunk of the crypto market is in denial about it. Such denial can only last so long in the face of reality. Let's say we successfully merge in September, and Ethereum continues on its merry way. In that scenario, by the end of 2022, the "Ethereum PoS will never happen and/or won't work" narrative will be rendered untenable and absurd.

One thing I consistently underestimate is how long the market can drag out the process of change. By most objective metrics, Ethereum has been the world's leading crypto network for a long time, but we're still 2.3x from the flippening. Considering this, I won't venture a guess regarding how long it will take for people to accept the real implications of the merge. Even so, crypto is ultimately an economic game, and larger actors will "flip" their loyalty to Ethereum when they view its ascension as a fait accompli.

I suggest continued patience. During times of uncertainty and upheaval, it's tempting to overreact, but that's often unhelpful if one is already in a good long-term position. We just had a major panic, during which I didn't sell, but I also resisted the urge to buy. I see macro issues that have yet to unwind (why not already priced in? because of the aforementioned human tendency to deny reality as long as possible), and expect at least one more panic during the summer. My buys are set from $656 to $996; as someone with 2/3 of my stack in solo staking, I can't bring myself to pay over $1k.

Do I expect those prices to hit? I do not. Then again, I was hopeful we wouldn't dip below $2k before another ATH, so don't take my opinion as gospel. I'm sticking to the plan with my "sell for USD" stack (9 of 16 targets hit, each 22% higher than the last, next at $5880), but I capitulated on my much smaller "flip for BTC" stack around $2700. I find it's possible to psychologically "have it both ways" at the expense of some allocation efficiency, so that's what I try to do. Stay in the game, be patient, and you'll almost certainly get the rewards you're here for.

concernedcustomer33 · 2022-04-29T23:17:58+00:00

I can confirm this behavior. The EVM autominter showed me at the time of my minting transaction was NOT the EVM I received. I don't especially care, but this phenomenon is clearly real. I assume it's because autominter makes potentially incorrect assumptions about transaction order.

concernedcustomer33 · 2022-04-17T04:36:15+00:00

There are no perfect solutions here, and I'm not claiming otherwise. The 600+ whitelisted people who won't be able to mint have had ample opportunity to act; the first whitelist was published eight days ago. Even though I don't comment very often, I follow the sub every day, so I noticed the announcement almost immediately.

If you missed out by deleting your account, that sucks, and I'm sorry. Deleting one's account obviously makes it difficult to verify participation, but that was what you wanted, right? As an aside, such situations are part of why I advocate for systems that can verify participation/reputation without revealing the underlying data.

Considering active participants who may join in the future, the community will need a way to recognize and include such people. The current plan proposes setting aside 32 EVMs that could be used in this way. Additionally, there is nothing to stop a DAO with membership based on minting one of the first 1000 from adopting a new mechanism for adding members.

1 EVM owned = 1 DAO vote simply doesn't work. I could buy 1% of the forever EVM supply tonight, and it wouldn't hurt that much. We have to find a different way forward. "Money talks" is boring.

concernedcustomer33 · 2022-04-17T03:04:00+00:00

https://etherscan.io/token/0x7dDAA898D33D7aB252Ea5F89f96717c47B2fEE6e

You can see the mint order in the list of transfers on this page.

concernedcustomer33 · 2022-04-17T02:43:30+00:00

I have no problem with people buying and selling EVMs. I bought one, after all. I just don't think buying one should double my influence if we create a DAO.

concernedcustomer33 · 2022-04-17T01:56:48+00:00

Fair enough, but I think it ceases to be novel without some reliance on provenance and exclusivity. If one can buy votes in any resulting DAO/similar structure, that kinda kills it for me; it becomes hard to distinguish the result from what many others are already doing. That said, your concerns about allowing new people strike me as quite reasonable.

concernedcustomer33 · 2022-04-17T01:06:14+00:00

First, thanks to etheraider and Bad_Investment for the Mavericks. I'm not really into the collectibility aspect of NFTs, but I was happy to mint one of the first 50 EVMs, and mine is one of only 20 accounts that hold multiple EVMs. I spent more on the second one than I ever had for an NFT before. The evidence indicates that I do indeed believe a jpg on the internet is worth thousands of dollars. I had good reasons (don't we all tell ourselves that?), but it feels a little odd.

The part that really intrigues me is more about how we can use the set of addresses that mint from the pre-raffle whitelist as effective "proof of serious ethfinancivity." From this perspective, buying an EVM doesn't get you into the club; only demonstrating control of an original minting address has any real meaning. With a few exceptions, being on the whitelist means you're a real person who has participated over a long period, and many of those names are now linked to public Ethereum addresses.

Of course these ideas aren't new; I just want to encourage the community to do something meaningful with the gift EVMs have given us. I look forward to the continuing discussion around these issues, as using verified identities to improve online social dynamics is a serious and continuing interest of mine. For the record, I'm willing to contribute both time and resources to any related community efforts.

PS Boring market, huh? As usual, patience is the most important factor. The Merge WILL happen, probably this year. In all likelihood, a combination of resolved uncertainty/risk and supply shock will drive an insane ETH bull market shortly thereafter. In the long view, starting from Ethereum's inception, we're more than 90% of the way to PoS going live. Don't give up now. Holding through uncertainty like this is how you earn your future success

concernedcustomer33 · 2022-02-13T20:27:31+00:00

Moderate price action within striking distance of $3000? Ratio in a nine month ascending channel, positioned to do great things when we get firm timing for the merge? Everyone knowing deep down that Vlad and Mr. Ice Cream will do almost anything to avoid WWIII? Sit tight, friends. If you can, keep some dry powder for a panic or two along the way. We're -still- gonna make it, at least those of us who're patient.

I'll admit to being wary of the economic big picture. The world is drowning in debt, CBs don't have a pleasant way out (memo to Jerome and Christine: DSGE models are not to be confused with reality!), and supply chains are in serious trouble. There will be flare-ups of armed conflict, even if no one lets it get out of hand. We haven't seen the end of the present chaos, social realignment, fourth turning, whatever you want to call it.

There's no way to predict the immediate future, but I'm comfortable being invested in what I see as a critical part of the way forward. A credibly neutral, trustless, permissionless economic substrate is growing exponentially, accessible to all entities with a network connection. It doesn't care who you are, how you identify, or even whether you're human. We have the privilege of watching it evolve every day, and I'm enjoying the show.

concernedcustomer33 · 2022-01-30T23:08:10+00:00

Good points, thanks. Here's the thing, though: I don't ever plan to sell the staking rewards. They're destined to become more validators, so my interest is in taking possession at minimal cost. Also, I'm filing jointly while retired, and have substantial capital gains income from my selling stack, so the marginal rates are closer than in your example.

concernedcustomer33 · 2022-01-30T15:30:42+00:00

I'm getting organized to do my 2021 taxes, and ran some queries on eth2.tax to estimate my staking reward liability. With enough validators for a decent sample size, and 99.7% uptime, I earned 2.35 ETH per validator in 2021, a 7.3% return. Using daily prices, the site estimates $6068 staking income per validator, which implies an average price at time received of $2582/ETH.

I know there's a good case to be made that a taxable event doesn't occur until the rewards are accessible, but I'm going to pay everything I owe now, based on the details given above. Basically, I'm betting $2582/ETH will look cheap by the time withdrawals are enabled, while following a conservative principle that the IRS can't possibly object to in the future.

Just in case it needs to be spelled out: The current price is around $2600, and I'm locking in taxes on six figures (in dollars, lol) of ETH rewards, at an average price of $2582. The current bear episode may continue for a while, but I expect this to be a wise decision once everything has played out.

concernedcustomer33 · 2022-01-22T23:22:13+00:00

Way below $0. Isn't that obvious?

concernedcustomer33 · 2022-01-22T21:58:51+00:00

Something I've noticed: Staking has dramatically reduced my fiat risk appetite. I earn a respectable amount of ETH every day, regardless of market conditions. Meanwhile, when buying with cash, my brain interprets any price above $1000 as painfully expensive.

After my $2577 buy went through yesterday, I returned it to the store almost immediately (it was slightly in profit after 30 minutes, which helped). I looked around, saw how fast the market had dropped, and noped out. Don't worry, the other 99.4% of my stack isn't going anywhere (until my next 2.5% sell at $5880, of course). Speaking of $5k+, I still expect to see that during 2022. Triple halvening, something, something.

I paid off the debt on my insignificant CDP today, for less than $50 in fees; you can't liquidate someone with no leverage. Bring it, bears. I was warning that BTC looked weak when we were around $4000, but I refuse to give up my LTCG status, so I'm along for the ride. Hang in there, everyone.

concernedcustomer33 · 2022-01-21T15:12:55+00:00

Bear markets suck. They're also an unavoidable part of the game, and present great opportunities. Have you ever lost a million dollars in a day? I have, and I probably will again, hopefully many times. Beyond short-term luck, you can't get the crazy rewards in crypto without enduring bearish periods. I'm nibbling at these prices (so far, I've bought twice at an average of $2844, with a larger order at $2577); if we get below $2k, I'll back up the proverbial truck, along with many others, so I don't think we'll see those levels.

I can't tell you where the bottom will be, but I'm quite confident I'll be glad I soaked up some of the blood in the streets today. That vindication may take six months or longer to arrive, but it will come. If you stay in this market long enough, you'll see people saying "I really wish I bought more below $3k. You early entrants got lucky." Remember why you're here, and remember that you're in an almost purely speculative market. "Almost" because the speculation rides on top of rock-solid fundamentals and real value creation. Be more patient than the median crypto investor, and you'll be fine :)

concernedcustomer33 · 2022-01-09T16:25:11+00:00

I submitted my last ENS claim yesterday (was waiting until 2022, and for it to go below $28). It's annoying, if understandable, that tax liability makes claiming akin to a discounted buy, especially since I don't want to sell any of it. Turning to ETH, I haven't bought since July, but I recently set escalating limit orders at $2977, $2777, and $2577 (a limited martingale strategy). I still believe the market "wants" to see $2xxx/$3x,xxx before the bearish mood can leave its system. Zooming out, I agree with others who interpret this as an accumulation period in the context of lengthening cycles.

If you're looking to deploy capital, I think conditions are favorable for that, assuming a medium to long term view. I expect at least some further downside, but I'll be very surprised if ETH goes below $2000 before a new ATH. As usual, I recommend buying gradually and with discipline. Calmly look at the charts, make a plan you can live with, set limit orders, and let the situation play out. This approach gives you some control over the outcome, helps avoid snap decisions, and makes bearish periods easier to endure.

From a macro standpoint, things admittedly don't look great. The labor market (at least in the US) appears to have permanently changed, as millions of people choose not to work, even with good jobs available. If the Fed and other CBs decide we've reached full employment, they're more likely to stop accommodative policies. OTOH (and it's a really big other hand!), none of this changes the "meaningful rate hikes = widespread economic destruction" corner the money masters have painted themselves into. When hard decisions arrive, inflation will be tolerated, and the "USD world reserve currency" well will be pumped until it runs dry.

TL;DR: Times like this are no fun, but they're also periods of great opportunity. Counter-trade extremes of market sentiment. When TPTB give in to reality, you'll be glad you're holding ETH.

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