Grayscale’s Ethereum Trust Premium Follows Bitcoin Sibling Into Flipping Negative

Grayscale’s Ethereum Trust Premium Follows Bitcoin Sibling Into Flipping Negative

Bloomberg

(Bloomberg) – Warren Buffett’s 15-page annual letter to shareholders on Saturday made mention of the pandemic that ravaged the globe in 2020 exactly once: One of his furniture companies had to close for a time because of the virus, the billionaire noted on page nine.Buffett likewise steered clear of politics, despite the contested presidential election and riots at the U.S. Capitol, and never touched on race or inequality even after protests and unrest broke out in cities across the nation last year. He also avoided delving into the competitive deal-making pressures faced by his conglomerate, Berkshire Hathaway Inc., a topic routinely dissected in past year’s letters.“Here you have a company with such a revered leader who’s held in such high regard – whose opinion matters, who has businesses that were directly impacted by the pandemic, insurance companies that were influenced by global warming and social inflation – and there was not one word about the pandemic,” Cathy Seifert, an analyst at CFRA Research, said in a phone interview. “That to me was striking. It was tone deaf and it was disappointing.”Buffett, 90, has been unusually quiet since last year’s annual meeting in May amid a multitude of issues facing Americans. His annual letters are often seen as a chance to offer investors help in understanding his thinking on broad topics and market trends, in addition to details on how his conglomerate is faring.But the Berkshire chief executive officer carefully weighs his words, and some topics, such as the pandemic, risk veering into highly controversial political territory, Jim Shanahan, an analyst at Edward D. Jones & Co., said in an interview.“There’s been a lot of comments about the pandemic and the impact on the businesses, but by not saying something in the letter, I think it’s just a way to try and avoid saying something that could be perceived as a political statement, which he’s been less willing to do in recent years,” Shanahan said.A representative for Buffett didn’t immediately respond to a request for comment placed outside routine office hours.Buffett also stayed quiet on topics that are key to his conglomerate, such as the market environment amid a tumultuous year – and the work of key investing deputies like Todd Combs and Ted Weschler, according to Cole Smead, whose Smead Capital Management oversees investments in Berkshire.“There’s more found by what’s not in the letter,” said Smead, the firm’s president and portfolio manager. “I think just time and time again in this letter were sins of omission.”Here are other key takeaways from Buffett’s letter and Berkshire’s annual report:1. Buffett Relies on Buybacks Instead of DealsBerkshire repurchased a record $24.7 billion of its own stock as Buffett struggled to find better ways to invest his enormous pile of cash.And there’s more where that came from: The conglomerate has continued to buy its own stock since the end of last year, and is likely to keep at it, Buffett said Saturday in his annual letter.“That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet,” Buffett said in the letter, which pointed out that the company “made no sizable acquisitions” in 2020.Berkshire did make a small amount of progress in paring the cash pile, which fell 5% in the fourth quarter to $138.3 billion. Buffett has struggled to keep pace with the flow in recent years as Berkshire threw off cash faster than he could find higher-returning assets to snap up, leading to the surge in share repurchases.2. Apple Is as Valuable to Berkshire as BNSF RailroadBerkshire’s $120 billion investment in Apple Inc. stock has become so valuable that Buffett places it in the same category as the sprawling railroad business he spent a decade building.He began building a stake in the iPhone maker in 2016, and spent just $31.1 billion acquiring it all. The surge in value since then places it among the company’s top three assets, alongside his insurers and BNSF, the U.S. railroad purchase completed in 2010, according to the annual letter.“In certain respects, it’s his kind of business,” said James Armstrong, who manages assets including Berkshire shares as president of Henry H. Armstrong Associates. “It’s very much brand name, it’s global, it’s an absolutely addictive product.”Buffett had always balked at technology investments, saying he didn’t understand the companies well enough. But the rise of deputies including Combs and Weschler has brought Berkshire deep into the sector. In addition to Apple, the conglomerate has built up stakes in Amazon.com Inc., cloud-computing company Snowflake Inc., and Verizon Communications Inc.3. Buffett Concedes Error in $37.2 Billion DealBuffett admitted he made a mistake when he bought Precision Castparts Corp. five years ago for $37.2 billion.“I paid too much for the company,” the billionaire investor said Saturday in his annual letter. “No one misled me in any way – I was simply too optimistic about PCC’s normalized profit potential.”Berkshire took an almost $11 billion writedown last year that was largely tied to Precision Castparts, the maker of equipment for aerospace and energy industries based in Portland, Oregon.The pandemic was the main culprit. Precision Castparts struggled as demand for flights plummeted, prompting airlines to park their jets and slash their schedules. Less flying means lower demand for replacement parts and new aircraft. Precision slashed its workforce by about 40% last year, according to Berkshire’s annual report.4. Profit Gains Thanks to Railroad, ManufacturersDespite the pandemic’s effects continuing to hit Berkshire’s collection of businesses, the conglomerate posted a near 14% gain in operating earnings in the fourth quarter compared to the same period a year earlier.That was helped by a record quarter for railroad BNSF since its 2010 purchase and one of the best quarters for the manufacturing operations since mid-2019.5. Good-bye Omaha, Hello Los AngelesBerkshire’s annual meeting has for years drawn throngs of Buffett fans to Omaha, Nebraska, where the conglomerate is based. This year, the show is moving to the West Coast.While still virtual because of the pandemic, the annual meeting will be filmed in Los Angeles, the company said Saturday.That will bring the event closer to the home of Buffett’s longtime business partner, Charlie Munger. Buffett and Munger will be joined by two key deputies, Greg Abel and Ajit Jain, who will also field questions.Buffett and Abel, who lives closer to Berkshire’s headquarters, last year faced “a dark arena, 18,000 empty seats and a camera” at the annual meeting, Buffett said in his letter. The 90-year-old billionaire said he expects to do an in-person meeting in 2022.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Latest Ethereum price and analysis (ETH to USD)

Bloomberg

(Bloomberg) – Warren Buffett’s 15-page annual letter to shareholders on Saturday made mention of the pandemic that ravaged the globe in 2020 exactly once: One of his furniture companies had to close for a time because of the virus, the billionaire noted on page nine.Buffett likewise steered clear of politics, despite the contested presidential election and riots at the U.S. Capitol, and never touched on race or inequality even after protests and unrest broke out in cities across the nation last year. He also avoided delving into the competitive deal-making pressures faced by his conglomerate, Berkshire Hathaway Inc., a topic routinely dissected in past year’s letters.“Here you have a company with such a revered leader who’s held in such high regard – whose opinion matters, who has businesses that were directly impacted by the pandemic, insurance companies that were influenced by global warming and social inflation – and there was not one word about the pandemic,” Cathy Seifert, an analyst at CFRA Research, said in a phone interview. “That to me was striking. It was tone deaf and it was disappointing.”Buffett, 90, has been unusually quiet since last year’s annual meeting in May amid a multitude of issues facing Americans. His annual letters are often seen as a chance to offer investors help in understanding his thinking on broad topics and market trends, in addition to details on how his conglomerate is faring.But the Berkshire chief executive officer carefully weighs his words, and some topics, such as the pandemic, risk veering into highly controversial political territory, Jim Shanahan, an analyst at Edward D. Jones & Co., said in an interview.“There’s been a lot of comments about the pandemic and the impact on the businesses, but by not saying something in the letter, I think it’s just a way to try and avoid saying something that could be perceived as a political statement, which he’s been less willing to do in recent years,” Shanahan said.A representative for Buffett didn’t immediately respond to a request for comment placed outside routine office hours.Buffett also stayed quiet on topics that are key to his conglomerate, such as the market environment amid a tumultuous year – and the work of key investing deputies like Todd Combs and Ted Weschler, according to Cole Smead, whose Smead Capital Management oversees investments in Berkshire.“There’s more found by what’s not in the letter,” said Smead, the firm’s president and portfolio manager. “I think just time and time again in this letter were sins of omission.”Here are other key takeaways from Buffett’s letter and Berkshire’s annual report:1. Buffett Relies on Buybacks Instead of DealsBerkshire repurchased a record $24.7 billion of its own stock as Buffett struggled to find better ways to invest his enormous pile of cash.And there’s more where that came from: The conglomerate has continued to buy its own stock since the end of last year, and is likely to keep at it, Buffett said Saturday in his annual letter.“That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet,” Buffett said in the letter, which pointed out that the company “made no sizable acquisitions” in 2020.Berkshire did make a small amount of progress in paring the cash pile, which fell 5% in the fourth quarter to $138.3 billion. Buffett has struggled to keep pace with the flow in recent years as Berkshire threw off cash faster than he could find higher-returning assets to snap up, leading to the surge in share repurchases.2. Apple Is as Valuable to Berkshire as BNSF RailroadBerkshire’s $120 billion investment in Apple Inc. stock has become so valuable that Buffett places it in the same category as the sprawling railroad business he spent a decade building.He began building a stake in the iPhone maker in 2016, and spent just $31.1 billion acquiring it all. The surge in value since then places it among the company’s top three assets, alongside his insurers and BNSF, the U.S. railroad purchase completed in 2010, according to the annual letter.“In certain respects, it’s his kind of business,” said James Armstrong, who manages assets including Berkshire shares as president of Henry H. Armstrong Associates. “It’s very much brand name, it’s global, it’s an absolutely addictive product.”Buffett had always balked at technology investments, saying he didn’t understand the companies well enough. But the rise of deputies including Combs and Weschler has brought Berkshire deep into the sector. In addition to Apple, the conglomerate has built up stakes in Amazon.com Inc., cloud-computing company Snowflake Inc., and Verizon Communications Inc.3. Buffett Concedes Error in $37.2 Billion DealBuffett admitted he made a mistake when he bought Precision Castparts Corp. five years ago for $37.2 billion.“I paid too much for the company,” the billionaire investor said Saturday in his annual letter. “No one misled me in any way – I was simply too optimistic about PCC’s normalized profit potential.”Berkshire took an almost $11 billion writedown last year that was largely tied to Precision Castparts, the maker of equipment for aerospace and energy industries based in Portland, Oregon.The pandemic was the main culprit. Precision Castparts struggled as demand for flights plummeted, prompting airlines to park their jets and slash their schedules. Less flying means lower demand for replacement parts and new aircraft. Precision slashed its workforce by about 40% last year, according to Berkshire’s annual report.4. Profit Gains Thanks to Railroad, ManufacturersDespite the pandemic’s effects continuing to hit Berkshire’s collection of businesses, the conglomerate posted a near 14% gain in operating earnings in the fourth quarter compared to the same period a year earlier.That was helped by a record quarter for railroad BNSF since its 2010 purchase and one of the best quarters for the manufacturing operations since mid-2019.5. Good-bye Omaha, Hello Los AngelesBerkshire’s annual meeting has for years drawn throngs of Buffett fans to Omaha, Nebraska, where the conglomerate is based. This year, the show is moving to the West Coast.While still virtual because of the pandemic, the annual meeting will be filmed in Los Angeles, the company said Saturday.That will bring the event closer to the home of Buffett’s longtime business partner, Charlie Munger. Buffett and Munger will be joined by two key deputies, Greg Abel and Ajit Jain, who will also field questions.Buffett and Abel, who lives closer to Berkshire’s headquarters, last year faced “a dark arena, 18,000 empty seats and a camera” at the annual meeting, Buffett said in his letter. The 90-year-old billionaire said he expects to do an in-person meeting in 2022.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

The state of the state of Ethereum - CityAM

Last week saw record transaction costs on Ethereum, peaking at around $7,000,000 per hour in fees.

Although this was abnormally high, even at the quietest times fees are approaching $1,000,000 per hour.

These high fees are one result of the fact that block space is limited. Blocks in Ethereum have room for around 500 transactions, although the exact number is dependent on the complexity of those transactions. The transactions chosen to go into those blocks are generally chosen on a very simple criterion: who pays most gets in.

A common request is to increase the size of blocks. Clearly, more space in blocks for transactions leads to lower competitive pressure, thus lower fees, and a higher number of transactions per second to boot. Although this is all true in theory, in practice it isn’t so simple. What, then, is the problem, and what is being done about it?

State is the problem

The root cause of the problem is ‘state’. State is information held about an Ethereum address or smart contract.

For example the amount of Ether held by an address or the ownership of a non-fungible token. A major difference between Ethereum’s state and Bitcoin’s “who-holds-what” UTXOs is that the former allows for the creation and operation of smart contracts of arbitrary complexity.

This feature has been the primary reason for Ethereum’s success over the past five years with ERC-20 tokens, NFTs, and more recently DeFi.

However, Ethereum is currently a victim of its own success.

The more that people use Ethereum, the more state there is. Did you send 0.01 Ether to a different address a couple of years back to see how it worked? The information about that balance is held in state.

Do you have various airdrops of random tokens in your wallet? Each of those require state. Every NFT, every ERC-20, every DeFi project (alive or slumbering) takes up state, and it adds up to a large and increasing problem.

State is growing

As state becomes larger, the time to access any piece of that state increases. Although data access methods in computers continue to improve, the sheer size of the state and unpredictability of access to it means that state access is by far the slowest piece of carrying out Ethereum transactions.

This matters because every transaction on Ethereum does, in some way shape or form, access (and usually update) state. If the time taken to process the transactions in a block becomes too high it results in destabilisation of the chain: more alternative branches, more resources are required to hold a local copy of the chain, and significantly higher risk of denial of service attacks.

There is an on-going battle between the growth of state on one side and the efficiency increases to access that state via faster hardware, optimised algorithms and the like on the other, but state growth is winning. So the focus is shifting from being able to manage the entire state to reducing it.

State must be reduced

There are many ideas around how best to reduce the size of the Ethereum state, but there are three main options.

The first solution is introducing the concept of “state rent”, where state is paid for on an on-going basis. If a payment is not made the state is removed, resulting in a smaller and more manageable state. Removed state can be reintroduced if required with a suitable payment.

This has the benefit of being an economic solution, in that once implemented it is down to Ethereum users as to which state they care enough about to pay for. It is, however, only a partial solution because even with rent in place there are no guarantees on the size or growth of state.

The second solution is providing a two-tier state. “Active” state continues as-is, however if state is not accessed after a while it is considered “inactive” and moved to a second area of storage.

The costs for accessing inactive state are made significantly higher, representing the cost to move data back to the “active” state. This is similar to the first solution but is more automated.

It does, however, make gas usage highly variable from one transaction to the next, and the technical challenges of moving state between active and inactive stores adds significant complexity to clients.

The third solution is removing state entirely.

In its place a single small value called the “state root” is held on Ethereum, and all actual state is kept off-chain. Whenever a transaction is submitted to the Ethereum network the pieces of the state that will be read by the transaction are provided alongside it in a structure known as a “witness”.

This increases the size of transactions but, crucially, massively reduces the time taken to process the transaction as there is no requirement to fetch state any more. This option also has the highest technical requirements, because the state root needs to be updated with each block in a trustless and decentralised fashion, and transactions themselves need access to state to be able to build the appropriate witness.

This does, however, fix the entire issue of state growth as far as Ethereum nodes are concerned so a lot of effort is going into this option.

State must remain decentralised

Regardless of the solution or solutions used, they must not impact Ethereum’s fundamental premise of providing a decentralised blockchain.

This takes time, and the lack of it today is felt especially painfully during times of high network congestion and astronomical fees.

However, progress continues towards the ultimate goal of a highly scalable solution without compromise. When additional work such as layer 2 and sharding are added to the mix, that goal is starting to look very close indeed.

Where can I learn more?

A good introduction to Ethereum can be found on the official Ethereum Foundation website.

For more detailed information, please read our technical posts on Ethereum 2 staking.

About the author

Jim McDonald – Chief Technology Officer Attestant Limited

Jim has worked on internet infrastructure for nearly 30 years, including running one of the first public access internet services. He has worked on hardware and software, in start-ups and multinationals, in technical, management and leadership roles. His current focus is on Ethereum 2, decentralized infrastructure, and advanced validator strategies.

This article was written by Attestant.io. Founded in 2019, Attestant has designed, developed, tested, and -since the 1st of December 2020- deployed a non-custodial, institutional-grade, staking service for banks, exchanges, family offices, financial institutions, and HNW individuals with a minimum of 1,000 Ether.

Attestant Limited is registered in England and Wales under company number 12540798 at 7 Albert Buildings, 49 Queen Victoria Street, City of London, EC4N 4SA, Great Britain.