Bankless - 99 - Endgame | Vitalik Buterin

Starting point is 00:00:07 Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, we have a fantastic episode today with a Vitalik Buteran. We talk about the future of Ethereum, the rise of alternative layer ones as well. A few things to watch out for as you listen to this episode. The first is we talk about the Ethereum roadmap from the guy who actually, helped create Ethereum, how far we are in the Ethereum roadmap as well. That's number two.

Starting point is 00:00:44 Number three, what will Ethereum look like when it's all said and done? How long will that take? Number four, can centralized alternative layer ones become decentralized in the long term, or will they remain centralized? Number five, what does Vitalik make of the term Ethereum maximalists? Number six, will crypto actually be able to solve the big scale? global problems in the 2020s in this decade that we're in. David, this was a fantastic episode. They're all fantastic with Vitalik. I hope folks listen to each and every single episode with him. What did you think about this episode? I think this is the perfect episode to kick off 2022. This is a hybrid podcast. One side of it is very granular in detail. That's the first half where we talk

Starting point is 00:01:29 about the Ethereum roadmap. Just contextualizing and grounding people in what's left with Ethereum. Some of the obvious stuff comes up first, like the merge and sharding, but then there's a bunch of other things as well. And we talk about those things and why we need them and what they do and what they do for Ethereum, both now and into the long term. And then we actually fold that conversation into the conversation of the growth of the alternative layer ones. And we talk about how the first half of 2021 was more or less Ethereum's show. Ethereum's massive success in the first half of 2021. And then the alternative layer ones came on the scene. And now there's this growing ecosystem of many different chains, all doing more or less similar things with different design structures.

Starting point is 00:02:12 And a lot of them have chosen centralization as their competitive advantage, if you will. And so getting Vitalik's take on that in relation to the Ethereum roadmap, because some of the things we talk about in the roadmap actually lends itself directly towards how some of these centralized layer ones can actually migrate into a long-term sustainable, robust ecosystem. So Vitalik not only is unpacking the Ethereum roadmap, but also proposing a roadmap for alternative layer ones to actually be successful into the long term. And so I really enjoyed that conversation. And then, of course, just zooming out and grounding ourselves, not just inside of the crypto industry, but inside of the world at large. Where are we in the 2020s as humans, as crypto people? What's up with the 2020s and what can we do about it? So just a bunch of great conversations to really kick off this. Hopefully, Ryan, what is another great year of bankless podcasts?

Starting point is 00:03:00 Yeah, I think that's been top of mind for me, David, because like going to this decade, we're just one year into this decade, but we have nine more to go. And I'm a little worried. Like, I'm a little concerned about where this decade might leave us. But crypto is the thing that that keeps me hopeful. And seeing Ethereum's roadmap laid out like this also makes me hopeful and bullish on Ethereum. I've never seen Ethereum's roadmap as clearly articulated and stated. Vitalik gives us a pretty precise definition of like percent complete. You'll have to stay tuned to the episode to catch that listener.

Starting point is 00:03:32 And we get into the details of what Ethereum is going to look like when it's all grown up. And it's very exciting. And this is breakthrough technology. It's one of the greatest social coordination inventions that humanity has ever devised. We talked about this idea of the crypto renaissance. I think Ethereum is a pillar technology to usher us into this crypto renaissance. And we dissect that a little bit with Fidelic too. Having a precise and concrete roadmap is actually a luxury in the Ethereum.

Starting point is 00:03:59 world and this does not something that we could have talked about in this depth and with this much future in mind up until now. So I'm really excited to just unpack all of the Ethereum roadmap with you, the listener. And what I'm also excited for you, the listener, is to do is to like the video, rate and review us on iTunes or wherever you get your podcasts. And if you're watching on YouTube, make sure to subscribe. If you are listening to the podcast, there is visual components on this. It shouldn't be critical, but it might be useful if you just want to pull this up on YouTube, works either way. And of course, while you're there, make sure to like and subscribe. So let's go ahead and get right into the future of the Ethereum roadmap and the rise of the alternative

Starting point is 00:04:35 layer ones right after we get to some of these fantastic sponsors that make the show possible. Hey, Bankless listeners, at the end of this podcast, Ryan and I unpack this whole entire episode in our debrief. This is something that we only give towards our premium subscribers. It's the only bit of podcast content that we reserve for premium subscribers to Bankless. But since it's such a good podcast, and it's also the first episode of 2022, we've decided to release this one for everyone just to allow people to get a taste of what they are missing if they are not subscribed to bank lists. So at the end of the podcast, or if you're watching on YouTube in a separate YouTube video,

Starting point is 00:05:10 there is a 30-minute debrief where Ryan and I unpack the episode, talk about the strategies for alternative layer ones, talk about how we're all getting to this endgame state that we are apparently all converging on and unpack the other, you know, crypto topics that we have seen in the latter half of 2021. So stay tuned for that. It's coming at the end of the podcast, and it's also a separate video on the bankless YouTube. And if you want more of these debriefs, subscribe to bankless because we do one for every single podcast that comes out. Bankless premium subscribers have a private RSS fee that they get these every single week. And so if you like what you hear, go ahead and subscribe to bankless and you will get that every single week,

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Starting point is 00:08:10 Thank you, Uniswap, for sponsoring Bankless. Bankless Nation, we are super excited to introduce our next guest, who requires no introduction, really, been on the podcast multiple times. Vitalik Buterin is on Bankless today. He's the creator of Ethereum writer at Vitalik.ca, a popular bankless guest. We have a number of episodes with Vitalik. Welcome back, Vitalik. How are you doing?

Starting point is 00:08:31 Thank you. It's good to be here. Well, we want to talk about a few things today with you. The Ethereum roadmap, of course, the rise of alt-ones. That was something that happened last year, the end game. This is an article you wrote called The End Game, which Chronicles, I think, or describes maybe an end-game situation for all blockchains, all layer ones. But we also have the privilege of recording this toward the end of the year.

Starting point is 00:08:52 So we can't pass up an opportunity to talk about some reflections for 2021 just to get us kickstarted. So what did you think of 2021 for crypto? Like high level. A lot of people say it was a very good year for crypto. I think they're mainly talking about prices. Maybe they're also talking about adoption and mainstream attention. What are your thoughts on 2021? Was it a good year for crypto?

Starting point is 00:09:14 What did you think about it? I definitely think it was a great year for adoption and for mainstream attention. I mean, the rise of NFTs was definitely something really fascinating to see. And I think it's brought a lot of people into the crypto space that would not have gone into it before. And I think, you know, things like, well, at least to me, like blockchains are about creating these innovative new ways to organize society. And in some ways, to me, like what's happening with artists being able to sell NFTs really, as a realization of that spirit, because we actually are giving people who are creating art and new business models. We're giving the creators of this thing that's very valuable, but that often

Starting point is 00:10:02 has a hard time getting business models a new way to actually get funding. So that's something that's been very interesting and exciting for me. The rise of DAOs is definitely also interesting and exciting and exciting. We've been seeing more and more DAOs that are actually doing lots of interesting things, experimenting with different governance algorithms, projects like Citadel that are actually trying to do things in the physical world. So that has all been fun. The progress that we have seen in layer two scaling, I think, has been really amazing. Like we've actually, I think, over the course of this year, really seen layer two is go from theory to practice. you know, at the beginning of this year, there were only like one or two layer twos on Mainnet,

Starting point is 00:10:54 and they either only support, well, pretty much all only supported a couple of applications. And now we have this thriving ecosystem and people are really experiencing what a layer two Ethereum looks like firsthand. So lots of progress on adoption, lots of progress on tech, definitely lots of happy things to report this year. Vitellup, one thing I've gathered while being in this space for a number of years, I got in in 2017, Ryan got in a little bit before me. But I hear all these crazy cerebral conversations that happened in the Bitcoin space in the very early Ethereum space from 2011 to 2015 and just

Starting point is 00:11:31 about what the possibilities of crypto could be. And from my perspective, my limited perspective, because I've only been here for so long, is that 2021 was a year where so many of these high in the sky, like very, very cerebral possibilities of crypto actually started to happen. Like NFTs and unique tokens were a conversation very, very early, as well as Dow's, even though we didn't call them Dow's way back when. Would you say that 2021 was the year that crypto actually started to unlock some of these early theorized use cases that were only conversations back five years ago? I would definitely say so.

Starting point is 00:12:07 Fantastic. So Vitalik, let's talk about Ethereum for a minute. And, you know, one of these days we're going to have you on bank lists and actually not talk about Ethereum, maybe not talk about crypto, because I know you have. tons of varied interests and a lot of insights on many topics. But today is not that podcast, okay? We want to talk about Ethereum. Going into 2022 in particular, so when listeners hear this, it'll be the first week of January 2022. We want to talk a little bit about the roadmap for Ethereum moving forward. But before we do, let's talk about the progress Ethereum made last year

Starting point is 00:12:42 in 2021. So what were some of the main accomplishments, milestones? I know you mentioned layer two, that's probably chief among them. Are there any others at the protocol level? Yeah. So I think if we focus on layer one, some of the big things are, one is that the beacon chain just proved itself. It's turned from being this very early thing into an increasingly mature ecosystem. It also had its first hard fork, the Altair hard fork, which of course added the kind of basic scaffolding that we need to have like client support. And it was also just the first ever beacon chain heart fork, which is an important trial run for the merge. So the next beacon chain hard fork, and most likely the next execution chain hard fork will actually be the merge.

Starting point is 00:13:33 So that's exciting. Speaking of the merge, we also have test nets for the merge now. The Kinsugi test net launched them a couple of weeks ago. And of course, the Kansugi test, test that was not even the first test set of the merge. There were a couple of other smaller ones. that have been running for a couple of months. But Kinsugi is one that is much bigger than before, many more participants than before, more extensive than before. Anyone could go and participate. And I even got some Kinsugi Eith from the Kinsugi Fawcett a couple of weeks ago.

Starting point is 00:14:06 So that has also been, I think, a lot of great progress. A lot of just interesting infrastructure projects that have been coming of. age. So proof of humanity has matured a lot and it's been seeing a lot of usage. Sign in with Ethereum has been seeing a lot of adoption and that just went from, I think, an idea that a few people were thinking about to something that lots of people are excited about starting to adopt in use over the last few months. What cross-a-year-2 bridging, still in its infancy, but much better than what it was a year ago, which is basically not existing at all.

Starting point is 00:14:50 But account abstraction. There are test net versions of ERC 4337. This is something that hasn't really gotten into the public discourse yet, but it's moving forward quietly, a lot of progress there. So, you know, lots of small things. Lots of progress on, you know, the various spec items that haven't been released yet, but that we're going to talk about through the rest of this episode probably. Just a whole bunch of really meaningful progress on, I think, pretty much all of the big, big things that we care about.

Starting point is 00:15:25 And by the way, for people listening on YouTube, this is the test net you were referring to Vitalik, I believe. So what are we looking at? So this is Kinsugi, which is the newest. Is this the beacon chain plus, like Ethereum 1 sort of, you know, test net? This is basically the merge. Yes, this is a test net of the merge. Okay, test net of the merge. So, like, what can people do here?

Starting point is 00:15:47 mainly for developers, or is there anything? Is there? They can connect notes. They can become stakers. They can, you know, launch contracts and trade coins around. So, yeah, I mean, yeah, it's destined. This is it, though. This is the merge, right?

Starting point is 00:16:03 This is the thing that is going to be put in production. So what has to happen between now and, like, the time the merge goes through? Is it just a lot of testing, a lot of, you know, validation? Yeah, definitely a lot of testing and auditing. all of that. The one piece that I'm aware of that's like still the furthest from being certain is how clients would sink after the merge. Basically, the problem is that the way that proof of work sinks and the way that proof of stake sinks are a bit different from each other. And so there's a bit of engineering that needs to be done to put the two together. But this is

Starting point is 00:16:46 something that people have already been aware of for a while. And so there's a lot of things in progress and being implemented. So I think so far things are going smoothly. Taking another opportunity to zoom out, the Ethereum protocol has developed throughout 2021. But there's also what I like to call meta development, which is defining and understanding the long-term roadmap of Ethereum to an actual concrete specific detail. And sometimes in Ethereum, history, there wasn't all that much with regards to details in the future. I remember in 2017, I didn't really know what was going to be happening next in Ethereum six months out. But it seems to be that the meta development of Ethereum has gotten a lot more robust. And partly that's illustrated

Starting point is 00:17:30 by the infographic that we're going to pull up here in a second. But Vitalik, Ethereum changes every single year, 2015 Ethereum is different than 2016 Ethereum and so on and so forth. How would you contextualize overall with the grand Ethereum vision for what it wants to be and then also where it is in 2021. How far along are we? Are we like 60% of the way there? Are we 40% of the way there? And then if we could just give a grade towards just the progress made so far, how would you evaluate it? I would say around 50. I'd be willing to go past 60 once the merge is fully complete. And I'd be willing to, you know, go past 80 once we have a full sharding implementation. But I think these like those two biggest items are definitely getting closer and closer, but they're not yet in the real rearview mirror.

Starting point is 00:18:20 That's really cool. Over 50%. We're getting close then. Very neat. So let's talk about what's coming. David uses term, you know, I guess meta development, the roadmap. Roadmap to me, at least this year for Ethereum has never been clear, which is super cool. And you put out this infographic on Ethereum's birthday, sorry, not its birthday, the beacon chain,

Starting point is 00:18:41 launch birthday in December 1st. That kind of highlighted progress across a number of different work streams. So I'm going to go through those really quick at the high level. And then let's take some time to talk about each of them. So, and by the way, I love these nicknames that, you know, you used, you christened. They have a nice flow to them. The first is the merge. The second is the surge. The third is the verge, the purge, then the splurge. So these are five different work streams. The merge is really when proof of stake comes about and proof of work finally dies. The surge is about scalability, particularly for roll-ups. We'll talk about that.

Starting point is 00:19:15 The verge is all around stateless clients, making Ethereum nodes easier to run. The purge has a bit of technical debt elimination, but also eliminating historical data. You want to find out more. And the splurge, of course, any good splurge is all about the extras, all about the goodies. And so we got some goodies on the roadmap as well. I'm going to show that infographic as we talk about each of these areas. But like to me, the theorem roadmap has really never been clear. And maybe we could address these things one by one, Vitalik.

Starting point is 00:19:45 So let's talk about it. And I think they're kind of an order maybe of how soon they're going to happen. Is that the case? So the merge is going to happen first. No. So time is left to right. Okay. Time is left to right.

Starting point is 00:19:57 So there's no top up to down top time dimension. Okay. Hence why the time arrow at the top goes left to right. Okay, very good. So everything is parallel. But we should say the merge is probably going to be the thing that's happening first. Right.

Starting point is 00:20:09 Maybe we should start with that. So tell us about the merge. Sure. So the merge is the same thing that the merge has always been. It's the full transition away from proof of work to proof of stake. So there has actually been a lot. There's a lot of stuff that has already been done for proof of stake. That's in the kind of what's already behind us column to the left.

Starting point is 00:20:34 So the beacon chain already exists. There's already been a warm-off work, proof of stake already has light client friendliness, but what's left to actually get to the merge, right? So the most recent thing that was finished is the full specification of the merge process. So the specification, not just of what post-merge Ethereum looks like, but even of how the transition process works. So how the process works of like actually changing from one to the other, what is the final proof of work block going to be, how is the first proof of stake execution block going to point to that proof of work block? What happens during edge cases?

Starting point is 00:21:11 Like what if the chain reorgs right in the middle of that? So all of that, that's the spec. So this exists. So that's what these test sets have been running. That's where Kansuki has been running. So full more specification, test networks in progress, fork choice improvements. So basically there just have been a few bugs that have been discovered in the fork choice rule. this is the EF function that nodes use to determine which block is the head block if there are multiple competing blocks based on all of the votes that all the different validators have made.

Starting point is 00:21:44 And this is just like adding some armor to make it more robust against certain kinds of attacks. So once that's done, then the merge can happen. And once the merge happens, then no more proof of work. And so then that's the merge. After the merge, we have the post-merge hard fork. The most important feature of the post-murge hard fork is just enabling withdrawals, right? So the merge itself, just to keep it simple, does not enable withdrawals. But the post-merge hard fork, there is a spec for enabling withdrawals, but this is something that Will actually needs to be done a little bit later.

Starting point is 00:22:21 Just to be clear, Vitalik, this is about withdrawals for beacon chain ether depositors and validators. Correct. This isn't about tokens or anything. else, right? Exactly. So if you threw your 32 E-than and you're a validator, then once the post-Bridge hard fork happens, you will be able to withdraw the E-Fand-the-rewards and bring it back into the execution layer. Will everyone be able to withdraw all at once, or how is that managed? There's a queue. So if lots of people start withdrawing, then lots of withdrawals will have to wait. Okay. And so to be clear, Vitaic, those are happening in two different hardforks, right? Two different

Starting point is 00:22:54 stages here. Yes. Any idea on how far they will be apart? Will these be like months apart? weeks apart? Realistically, like maybe six months. Okay, six months apart. So that's the merge, and that means proof of work is gone, effectively. We just have proof of stake. What does this mean for the typical user or the typical defy application? Will they have to do anything?

Starting point is 00:23:17 Do they have to click a button in Metamask that says, like, upgrade to merged ETH? I mean, they'll have to upgrade to merged Metamask, but they will not have to upgrade their ether of their applications. So from the point of view of applications, it's just like any of the hard forks that we've already been through. Effectively, users don't have to do anything at all. Okay, so that's the merge. Let's talk about next.

Starting point is 00:23:40 By the way, with the merge, we haven't mentioned, of course, all the proof of work issuance goes away as well, right? So that says something over 4% or so, and that is now gone. No more proof of work issuance. No more miners on Ethereum for the first time. that's going to be an interesting state to be in. That all happens at the time of the first merge.

Starting point is 00:24:01 Is that correct? Yes. Okay. Interesting. Let's talk about the second, which is the surge. What's the surge all about? The surge is scalability increases for roll-ups through sharding. So basically, roll-ups by themselves are a yellow or two scaling solution.

Starting point is 00:24:17 And the way roll-ups work is that computation and storage go off-chain, but data stays on-chain, right? And this allows transactions to happen much more cheaply than they would if everything is done on layer one. But they still inherit the security of layer one, right? So roll-ups are this compromise that basically gives us a lot more efficiency than layer one with all of the security that users are used to. and it's kind of the best combination of properties among all of the different two solutions that have been explored. And it's also, I think, the only one that, like, really properly supports, like, full EVM scripting, right?

Starting point is 00:25:05 Like, state channels, for example, they're, like, they support payments. They can support a few applications, but, like, you can't easily stick uniswap in a channel, for example, but, you know, you can stick uniswap in a roll-up. So about a year and a half ago, I think, there was this document that I published called the roll-up centric roadmap where basically say like, look, roll-ups are realistically

Starting point is 00:25:29 the scaling that's going to come the fastest. And so, and we know that roll-ups work. The theory behind them is extremely well-established. So let's simplify the scaling roadmap by a kind of re-architecting the scaling roadmap around being based around roll-ups as much as possible, right? So the main thing that we get out of that is that instead of the sharding that Ethereum has been planning on having all along,

Starting point is 00:25:56 being sharding of everything, so sharding of execution, charting of accounts, sharding of smart contracts, sharding is just sharding of data, right? So it's this very limited form of sharding that basically says all we're going to do is we're going to have this kind of data layer, this sort of public billboard, that people can stick up to around two megabytes a second worth of data on. and when they do this, then the blockchain guarantees that that data is publicly available. It guarantees that the data actually was published and that nobody is withholding it, but it does not try to interpret the data, right?

Starting point is 00:26:34 Now, who tries to interpret the data? That's the job of the roll-ups, right? So the layer one just handles data, and it's the roll-ups job to kind of convert this highly scalable data plus the little bit of computation that the Ethereum blockchain gives you into a lot of computation. And we've talked about optimistic roll-ups, and we've talked about ZK. Roll-ups before, right? So I think people are going to know roughly how this happens. But, like, the core insight here, right, is basically is that if you sort of lean on roll-ups as this machine for converting data into execution, then shorting just needs to support data,

Starting point is 00:27:08 and sharding can become much simpler. Like, one example way in which sharding becomes simpler is that the sharding design does not need to have any fraud. proofs, right? So the sharding designs that we were thinking about earlier where we actually have execution inside of the shards, like, we had to deal with this question of like, well, what happens if one of the shard blocks is invalid, right? Like, does someone have to submit a fraud proof to show that it's invalid? And what if there is one of these fraud proofs, then does that mean that the entire chain has to get reverted? And there's like all of this complexity that we have to deal with, right? But with data sharding, like, there's no such thing as

Starting point is 00:27:49 invalid block. All the reasons there is an unavailable block. And so we don't need fraud proof. There's just a lot of machinery in terms of managing state to do it cross short transactions, just all of this complexity that can just completely go away. And so the protocol can be really elegant and simple. And it's roll-ups job into actually convert this into this kind of high-performance. I'm very paralyzed but very secure EVM ecosystem. So, So what this actual roadmap is, right? So we have basically four stages here is basically just adding more and more of this data. All right.

Starting point is 00:28:28 So step one, short term call data expansion. This is if something like EIP 4488, could be something like EIP 488, could be something like EIP 490, but just adding more data space in the short term to make Rolex cheaper. Then we have basic sharding. And steps two and three, like actually. you like add on kind of full on the like the full on sharding specification right so they add on this idea that you have these transactions and these transactions that can contain a huge amount of data except at the beginning like we might do a we might compromise a bit and we might say well

Starting point is 00:29:07 you know everyone still has to download all of this data but it's just some dedicated space to store the data and so we're kind of easing into the sharding model and roll-ups can kind of re-architect themselves to actually take advantage of this data. And then when we go from a few shards to many shards, like that's when we actually kind of take off the training rules and we say, like, now, finally, we don't need to have any node downloading everything. Right. Like, we just rely on committees, we rely on data availability sampling. We rely on all of these other technologies to verify that the data exists without requiring any single note to download everything individually. And then the fourth one, data availability sampling, this is this really sophisticated technology that clients can use to basically check that all of the data has been published by randomly checking just random pieces without having to download all of it.

Starting point is 00:30:00 So it's like first add data, then add more data, then add even more data, and then near the end we start adding more and more armor to make sure that we have both the scalability and the security. So more and more data and roll-ups get cheaper and cheaper. And from a user's point of view, like users, once again, they don't really have to notice anything. The only thing we users have to do is they just have to move their activity from layer one to layer two at the point when they're comfortable with it. And then once they've moved everything to layer two, then all that they see is that layer two just keeps on getting cheaper and then it gets cheaper again and then it gets cheaper again. So that's the surge. And so when you say the layer two just get cheaper and cheaper, are they also getting faster at the same time? Are those hand in hand?

Starting point is 00:30:45 Define faster. Faster execution times. So the word faster, like I think there's two kinds of fast, right? There's like latency and there's bandwidth. So latency is like how many seconds do you have to wait for even one transaction to confirm? And then bandwidth is like how many transactions per second. So none of what's happening in the surge improves latency. So so far all of this

Starting point is 00:31:08 You still have your 12 seconds Salat times The slot times might even have to increase a bit To handle sharding So it might have to go up from like 12 to 16 But what's going to go up a lot Is bandwidth, right? So like the Ethereum blockchain today

Starting point is 00:31:24 Can handle 15 to 40 transactions a second Roll-ups today If they add proper compression Can go up to 1,500 to 4,000 transactions a second And then roll-ups with sharding can go up to 100,000. a transaction the second. The reason why they get cheaper is basically supply and demand, right?

Starting point is 00:31:42 If the chain can handle more transactions, then that means that there's more space and you don't have like all of these users competing for the same very small number of slots. And so the transaction fees that every single user has to pay just go down by a huge amount. Like that's basically where the cheaper comes from. So it's, it's cheaper because it's a higher bandwidth. By the way, this bandwidth thing, I think a brilliant site to see this is ETH TPS. I don't if you've seen this before, Vitalik. Mm, I have, yeah. It kind of showcases the bandwidth of Ethereum when you take into account,

Starting point is 00:32:13 this is Polygon, but also all of the other, you know, optimistic roll-ups in roll-up chains as well. Ethereum currently does 65 transactions per second if you add all of that together. And, you know, in this block, it's 87 transactions per second. And what you're saying is basically that number will go up and up and up and up for higher and higher and higher with the surge. Exactly. And what would this mean for?

Starting point is 00:32:35 for anyone who is still living a life on the layer one, with the expansion of the number of shards and also the size of shards, does that mean L1 gas fees are going to come down? Or what's the deal with that? I mean, in the short term, maybe, but I think realistically in the long term, using L1 is just going to keep getting more and more expensive. So, like, as a user, I think, like,

Starting point is 00:32:57 you do need to be prepared for the facts that Ethereum already is transitioning away from being a layer one-centric ecosystem toward being a layer-two-centric ecosystem. Um, like today, the gains that you can make from switching to layer two are like maybe only 5x, but you know, in the future, there'll be 10x and then there'll be 50x and then there'll be a thousand X. Um, so eventually all activity is going to have to transition to being layer two. Eventually, even bridging from one layer two to another layer two is something that will mostly have to happen without layer ones. Um, and this is a change that users will have to get used

Starting point is 00:33:31 to. I think it's a change that some users is starting to get used to already. Um, but, But if they can do it, then everything other than that is going to be fairly under the hood for them. With regards to the shard size and shard count, I want to unpack this one a little bit because we have a couple phases inside of the surge where first we add in charting in the first place and just a few shards and then we add more shards. But from what I've gathered from other people's writings, Polyneas and some other ETH client devs, long term, there actually could be no cap on both the size and the number of shards so long. as the resources that Ethereum has to its availability is sufficient. Is that true? And a couple of questions to follow up on that. How will we know when we're ready to add more shards? And is there an ultimate final number of like we are going for this many shards with this size? Or is this a number that's always going to be dynamic in Ethereum's future? So I actually wrote an article about this

Starting point is 00:34:27 like six months ago. And if you go to the post called The Limits to Blockchain Scalability, I think, So sharding gets around a lot of the limits, the scalability of non-charted blockchains that I talk about above. So the first limit I mentioned is quadratic sharding, right, which basically is this idea that, like, it's, the beacon chain is going to contain headers of shard blocks. And then you're, and then you have the beacon chain block and then you have shard blocks. You only have two levels. It's theoretically possible to make blockchain designs that have three levels or five block, levels. or a dynamic number of levels. And like I think, I remember the ton network, for example, like they were trying to do exponential

Starting point is 00:35:11 sharding and like they had this a dream of going up to two to the power of 92 shards eventually. Like, my opinion is that that stuff is possible in theory, but in practice going beyond two levels is just like too hard and adds too much complexity and so it's not worth it. So theory is staying with quadratic. but there's other reasons why scalability going too high becomes too risky. And like, there we go. So what are these risks? Excellent.

Starting point is 00:35:39 So keep going down. So basically what I talk about here is that as the data capacity of the chain increases, you get this property that because no single user is going to be downloading or processing the entire chain, you get a minimum number of users that you're counting on to ensure that the chain continues to be secure, right? So, like, I guess one analogy of this is that if you imagine, like, a blockchain is one city, and you imagine you start off with a blockchain that's just a small town. How small is the town? The town is so small that if you make one guard tower and you make the guard tower tall enough, then you can have one security guard, and the one security guard can watch the entire border of the town and make sure that no attackers get in, right? So that's like an unscaleable blockchain. Now imagine you start scaling the town up, more and more. Eventually, you get to the point where, like, you can't have one guard tower in the center. You have to switch to having guards on the walls, and you need multiple guards on the walls. Once you get to a town that's, like, let's say, I don't know, like, has 100,000 people,

Starting point is 00:36:46 then, you know, you might have a wall. Your wall might be 10 kilometers long, and, like, you might need, let's say, 50 guards, right? If you have less than 50 guards, then the guards can't see far enough, and so someone might, an attacker might slip through in between two of the guards. If the city expands further and then the city is, like, say, as big as Manhattan, then you're going to need, like, a thousand guards, right? And, you know, if you don't have your thousand guards, then, you know, an attacker might slip through in between two of the guards and, like, the security of the town might break. So the bigger the town gets, the, you start getting, like, you start committing to an assumption about how many security guards are you sure that you can, that you're always going to have. Now, the good news of episode about AACAB blockchain here, right, is that with data availability sampling, every user of a blockchain is one of these guards, right? Every user is kind of randomly watching a random portion of this sort of metaphorical wall, and so every user is helping to check that, like, there aren't any unavailable, like, data chunks that are getting through.

Starting point is 00:37:50 But, like, whatever your scalability level is that you're committing to, you're also committing to saying you were definitely, we guarantee that. that we're definitely going to have at least 100 users or say at least 1,000 users active at all times. Right? So like that is a, yeah, that is an assumption, right? And the higher your scalability gets, the stronger that assumption gets. Like once you start talking about blockchains that have like gigabytes per second, you're basically committing to saying,

Starting point is 00:38:19 we are always going to have hundreds of thousands of active nodes. So if your chain suddenly becomes as much less popular, that suddenly becomes a security risk. If everyone suddenly switches to using more centralized clients, that's a risk not for them. That becomes a security risk for the entire network. So security just becomes more and more uncertain. And also, your ability to guarantee the availability of history also becomes more and

Starting point is 00:38:48 more uncertain. So like, for example, the Ethereum roadmap, right, the parameters that we have right now is I think it was about 2.6 megabytes per second of blockchain data, I think. And 2.6 megabytes per second, there is 31 million seconds in a year. So that's going to be 90 million megabytes a year. So that'll be somewhere around like 85 terabytes per year. So, you know, like there's already, that's like already a lot. lot of terabytes every year that are being added to the blockchain, right? And people have to

Starting point is 00:39:31 store all of that. Now, if you crank that up by another factor of 100, then we're talking about like eight petabytes per year, right? And so the higher and higher you go, the higher and higher the risk there is that just people are going to like get tired of like all of this data and there's just, you're going to have an accident at some point and you're going to realize that like some piece of data from somewhere in history. nobody is storing it anymore. Now, I think 85 terabytes per year is actually, it's totally fine, right? Like, because 85 terabytes per year, like, if you have, if you have even one person

Starting point is 00:40:07 that just keeps buying like a $100 hard drive, like, I think once every month, then they can store it, right? Like, it's something like that. So it's too big for just like a casual user that just wants to run the chain on their laptop. But one dedicated user who cares, like, they can totally afford to afford to store. the chain. So 85 terabytes not a big deal, right? But once you crank that

Starting point is 00:40:29 number higher, there comes a point at which it starts becoming a really big deal. So, I guess that, like, the answer is a little bit unsatisfying in that there isn't some point above which like it's obviously scalable up

Starting point is 00:40:45 to this point, but it's obviously not scalable beyond this point. It's like there are these weird systemic risks and as the scalability goes up, the systemic risks go up. And there just comes some point at which, you know, it becomes harder and harder to argue that this is like a credibly 100% secure and reliable blockchain. But, you know, do we know what that point is? Well, unfortunately, we don't really know until an accident happens.

Starting point is 00:41:08 And so we have to be careful. And so, like, I think, like, I personally am convinced that, you know, the 2.6 megabyte per second number is very safe. I'm, like, I'm even convinced that going up, like, another half order of magnitude, another order of magnitude is very safe. but, you know, realistically, we do want to keep the numbers, like, on, on the lower side so that we can actually set, so that nobody feels uncomfortable. Like, that's basically where the limits are at. But, you know, 2.6 megabytes a second is a lot, right? Like, if we're talking about ZK roll-ups that implement full compression, 2.6 megabytes divided by 16 bytes of transaction, that's like 130K TPS. And if we add a decade of Moore's law, then, you know, we're talking hundreds of, hundreds of thousands of TPS.

Starting point is 00:41:58 So that's just like enough to run most users' transactions. So I basically, I think with quadratic sharding will be fine. So we've gotten through the merge and the surge, right? And we still have three other urges to go through. Okay, so the merge gives us proof of stake, basically. People know what that is. The surge gives us scalability. So we get massive bandwidth, massive throughput, particularly on roll-ups.

Starting point is 00:42:24 Now we have scalability on Ethereum, and now we have proof of stake. What about the verge? That's the next one on the roadmap. So what does that add? The verge is the introduction of verical trees, right? So vergal trees are a replacement for the Merkel Patricia trees that currently store the Ethereum state. So the Ethereum state is this database of all of the first.

Starting point is 00:42:48 the accounts, all of the smart contracts, all of the balances, all of the contracts code, all the contract storage, everything that is remembered by the Ethereum blockchain that contracts and users and applications can access. And that is all hashed into this tree structure, right? And Virgil trees replace that tree structure. They replaced the current hash-based tree with a vertical tree, which is based on vector commitments. Now, you have to ask, well, what's the benefit of switching to vector commitments. The benefit of this has to do with this concept that I think I've talked about many times historically, which is stateless clients. So what is a stainless client? Today, in order to verify block N, you have to have the entire Ethereum state. And how do you get the

Starting point is 00:43:35 entire Ethereum state? Like, you have to, like, either you, like, fast sync and you download everything, or you have to download block N minus one, or you have to verify block N minus one. Or you have to verify block N minus 1, right? So in order to kind of keep verifying Ethereum blocks and stay up to date with the chain, you have to have this entire database locally. This database is big. It's about 40 gigabytes, I think, and it keeps on getting bigger. And if we end up massively increasing the gas limit, then it'll get even more bigger. So it's, so what do stateless clients do? Stailless clients are basically let you say, what if instead of needing this entire database to verify a block, we're going to have this thing called a vertical proof, which gives you only the pieces of the state that are read and written to and accessed in a particular block, along with a proof that proves to you that those pieces actually are correct. And so if you have that proof, then you can verify a block without needing any other information.

Starting point is 00:44:36 So you can imagine this proof as being an extra couple hundred kilobytes. So there is the data. So there are the accounts to code in the contracts that are being read for that particular block. And then there are just these extra intermediate commitments. And this is another few hundred kilobytes. And those proofs basically tell you that the data that is being claimed actually is correct. Now, technically, you can make proofs with Patricia trees. But the problem is that the proofs are incredibly big.

Starting point is 00:45:06 Like we're talking like more than 10 megabytes. In the worst case, we're literally talking about 400 megabytes. So it's a little too much for users to be able to actually verify. But VirgilTrees, they use like some fancier technology. And if you want to learn more about that technology, once again, I wrote an article about it. And the fancier technology of Virgil Trees allows you to have these proofs that are much shorter and that are fast to verify. And so we actually can't afford to have these sailors clients.

Starting point is 00:45:36 Right. So what is the benefit of stateless clients? Stateless clients basically let you just like immediately step in and say, hey, I'm going to verify this block. You don't need to have the state. You don't need to have anything. Like literally a fresh node can just swoop in and say, hey, I want to verify this block. And it can ask the network for the block, asking that work for the proof. And once it has the block or the proof, it just immediately sweeps through and it just verifies the whole thing. So that now, why is that useful? One reason why that's useful is that it allows validators to be much lighter.

Starting point is 00:46:12 Validators would not have to have this big, heavy database. Validators could just only verify blocks that they need to verify in real time. So as a validator, you would not need to have a big hard drive. You would theoretically be able to just do everything in RAM. So it will be scalable, faster, much easier to set up, much more. convenient. So the experience as a validator would be much more decentralized. And all of you would have to do is you would just have to verify these blocks with these extra proofs attached. And that would be all that you need to do to just participate in the network. Does this mean like running a validator,

Starting point is 00:46:57 writing a node becomes much easier on Ethereum. Somebody could run it on a phone, for example? Possibly, yes. This is a design. for the decentralization of Ethereum, right? It's like all of these urges have the same thing in common, which is like scalability without sacrificing decentralization. That's what we're doing with the merge. And so like if more people are running nodes, have the ability to run nodes.

Starting point is 00:47:22 Back to your point when you were talking about the verge, this gives us more defenders of the city, basically. So now we have the ability to add more bandwidth and increase the population of our city because we have more defenders who are able to run nodes to verify that, you know, everything in the city is, it's going okay. Exactly. Like, I guess one analogy might be that, like, instead of having to, like, actually physically

Starting point is 00:47:48 get your armor and weapons and go to the wall to be one of these watch guards, like, you know, you could just sit in the comfort of your home and you could just have a drone. That feels nice. I mean, you just, like, fly out the drone. There's a theme that I'm noticing so far is some of these updates, some of these urges are really about increasing. scalability. And then some of these updates, some of these hard forks, other these urges are also about making sure that those upgrades are secure. So one is upgrading scalability and then the rest are

Starting point is 00:48:15 making sure that that effort is safe. And the verge really seems to be about democratizing access to the broadest number of participants possible to anyone and everyone who wants to verify the validity of the chain. Would you say that's a fair summary? Yeah, I think so. And then, of course, the desire for everyone to be able to verify the chain is that when everyone can verify the chain, you as an individual can't be bullied by someone that can propose blocks when you can only verify blocks. This brings us to the fourth urge. This is The Purge. I think there's a popular movie with that title, but no relation. This is it. Not a popular movie. Anyway, this is not at all related to that. What are we talking about

Starting point is 00:48:55 when we are talking about the purge here on Ethereum's roadmap, Vitalik? Basically, this is about kind of eliminating the dead weight of history from Ethereum. Now, in a very broad sense, right? So there's different kinds of dead weights of history that we have to deal with. One example of that is just like the load of the historical chain. So today, a client joining the Ethereum network has to download all historical blocks. And they have to store all historical blocks. And this is a lot of data.

Starting point is 00:49:28 like hundreds of gigabytes. And post-sharting, it will be even more, like, well, it'll be terabytes. So the history expiry, this is that blue rectangle that's a little bit to the left. And by the way, like in this diagram, time approximately is left to right. So I'm hoping that history expiry actually does happen only a little bit after the merge, right? We see how the history expiry a rectangle is like only a little bit to the right of the merge. So history expiry basically says we stop requiring all nodes to store all of these historical blocks. Instead, clients stop storing history that's more than one year old, and we kind of shift the responsibility of storing and retreating that history to other protocols. So EIP 4444 is probably the most popular history expiry EIP right now.

Starting point is 00:50:23 It's just very simple and dumb, just says clients don't have to store that. stuff anymore. So I think the interesting question there is if all clients nodes do not have to store history anymore than who does, right? There are applications that depend on history that are more than one year old. And even roll-ups do, right? Like a roll-up, like in order to actually sink the state of a roll-up, you like, you do have to get the, like, either you kind of like trust some state route that's say one week old and you have some separate people. to peer network that you down on the state from, or if you want to do it with just a blockchain,

Starting point is 00:51:01 then you do have to basically walk through the entire history of the roll-up, and so you do have to process all these blocks one by one, right? A lot of, like, applications depend on old history to tell you about, like, all instances of when you use that application, so, like, tell you, like, I'm not sure exactly how, like, die and Ryan, all these things work, but, like, maybe you need to scan the history to tell you what all your CDPs are. I know Auger needed to use, like, historical logs to tell you, like, all of the different markets that you've participated in.

Starting point is 00:51:37 So there is a lot of value in history for at least some applications. And so there's this interesting question of, like, well, what are these alternative ways of getting history, right? Now, the good use is that history is the sort of thing that is very self-verifying, right? You can just give someone Mergle proofs and they can verify morgue proofs. So it's not super hard to create protocols that actually that kind of replaced the Ethereum blockchain and actually giving users this data. And the other really nice thing about historical data, right, is that it is a one of n trust model. So I think in one of our previous episodes, right, we talked about trust models.

Starting point is 00:52:14 Like I wrote this post on trust models and like the difference between n out of two of n, one of n, zero of n. And the big difference between consensus and history is that consensus is an end of, and out of two of entrust model, and so we have to worry a lot about it. But history data grabbing is only a one of interest model. And so, you know, it's something where we actually can breathe a little bit easier and we don't need to require everyone to store everything, right? So the main contenders for getting history data, one is obviously the centralized approach, right ether scan ether chain beacon chain beacon scan amber data like all of these lovely folks

Starting point is 00:52:53 they are going to keep storing the entire chain because their users want the chain and so if all else fails there are these like about half a dozen centralized backstops that you can go talking to decentralized protocols the portal network is the ethereum foundation supported kind of protocol for doing this basically every node could would only need to store a small percentage of all the data and you would have a network that would just automatically route users to the subset of nodes that store like one particular piece of data. So one simple mental model for thinking about this might be that like when you start up your node, your node is just going to pick a random number from zero to 100 and let's say your node picks the number 67. And then your node is going

Starting point is 00:53:37 to just agree. It's going to store the entire history for all blocks whose block numbers end in 67. right? And so if a user needs a transaction from a block whose block number ends in 67, it's going to talk to you. But instead, if a user needs a transaction from a block whose block number ends in 45, then it's going to talk to David instead. Right. And you have networks like the Porter Network that just automatically make all of this happen. So that is the roughly what the portal network is going to do. There are also third party protocols, right? So the graph is. is one that I think is very far along in doing this sort of stuff that a lot of people are excited about. The graph is a protocol that a lot of applications are switching to already, right? So a lot of existing applications, they stopped using Ethereum native like history and log grabbing because it was too slow,

Starting point is 00:54:31 and they switch to the graph because it's faster, right? And so the graph already provides a lot of this. Now, the graph is not yet fully decentralized. The graph still has some kind of training wheels, some centralized trust built in. but they do have a roadmap for kind of taking that out over time. So the graph is another option. Another option is also like client protocols, right? So like clients protocols, well, I think eventually they are going to end up kind of

Starting point is 00:54:58 plugging into the portal network, but there's a lot of work happening with like client protocols. So like client of protors, they're going to become much easier as a result of the merge because the merge supports sync committees, which make me of running a like client much easier. And so we'll have a lot more like clients and allow a lot more of this Merkel proof grabbing infrastructure. So the summary, right, is that the Ethereum-based protocol will stop forcing every node to store all of history, but instead there's like this entire array of alternative solutions, centralized solutions like Block Explorers, the portal network, the graph,

Starting point is 00:55:38 and even more protocols that I've forgotten about, all of these different alternative solutions. that clients will have to instead go to if they want to really old history information. Now, remember, most applications don't really even need old history information. So this is like for that subset of the applications that do, there are these solutions. But for users that don't, then, you know, Ethereum will just keep working exactly the way that Ethereum works today. So that's history expiry. The one, the longer term one that we could talk about next is a state expiry, right?

Starting point is 00:56:13 So history is, like the analogy for a history and state that I talk about often is like history is, or the state is like a country's record of who its citizens are. History is like all the birth records and all the death records, right? So it's obvious that history is bigger than state because like when someone dies, they get removed from the state, but they're still part of the history. and then an archive node is like a node that stores, like basically that has a separate page storing like who the citizens were during every possible year in history, right? So now obviously, if you have the history, you can use that to regenerate an archive node. And if you have the history, you can kind of play through the history and you can use that to generate the current state.

Starting point is 00:57:06 But the history is bigger than the state and the archive node data is bigger than the history, much bigger than the history and the state, but you can regenerate it from the history. So the state expiry basically says, well, even though the state is smaller, eventually the state is still going to get really big. And so what we're going to do is, we're going to say objects in the state that have not been touched for the last year are going to go into the separate expired tree. And the Hed Herian Protocol is not responsible for storing the expired tree. The expire tree is part of history. But if you care about some account or some application that got moved into the expire tree, you can go and provide the miracle proofs,

Starting point is 00:57:53 and you can revive it. Right. So state expiry does not impose on anyone like a risk of, you know, their coins getting deleted if they accidentally go into a cave for two years. Like, if you go into a K for two years, then you're just going to have to provide the Merkel proofs to recover, uh, to recover your coins, right? Which is something that you totally can do. But in order to do that, like, you're not going to be able to just go through the regular Ethereum protocol. You're going to have to talk to the portal network or talk to the graph or talk to a block explorer or talk to one of these other people in order to actually get that data. So state expiry is actually something that I think can wait a very long time. So you can see that in this diagram, it's the, the rectangle is like far to the right of

Starting point is 00:58:40 and all of the other rectangles. One of the reasons why it's so far to the right has to do with something that is, we'll skip briefly ahead to the splurge, proposal builder separation. This is this buzzword that I think has become very popular over the last few months. This is basically this idea that the validator that proposes a block and who actually constructs the block do not have to be the same actor, right? And instead of forcing validators to create blocks, we're going to have an auction or we're going to auction off the right to create the blocks. And the reason why we're doing this is because creating a block that like really gives us the highest, gives the creator the highest possible fees, gives them the highest possible MV, gives them the highest possible revenue in the long term is a pretty hard problem.

Starting point is 00:59:29 And we don't want to force validators to have to like figure out the complexities of dealing with that problem because we want anyone to be able to be a validator. And so instead, we're just going to say that there's a separate class of actors that are going to create these blocks and there's going to be an auction. And so proposers can just easily choose the blocks that pay some the most. And we'll add some extra protocol armor to ensure that this whole thing is still censorship resistant. The transactions can still get in. There's like Digrad and DeFran Francisco have been doing a lot of research on that. But one of the really nice side effects of PBS is that validators are no longer involved in the job of creating blocks, right? So validators no longer have to store the state.

Starting point is 01:00:14 This also gets into vertical trees, right? Validators only have to verify blocks. It's the builders that have to create blocks. So the builders have to store the state, but the builders are going to be pretty specialized anyway. And so if the state blows up to 4 terabytes, well, you know, the builders can store 4 terabytes, right? So if we have Virgil trees and we have PBS, technically we don't really ever need state expiry. And so if the can gets kicked down the road 20 years on state expiry, that's actually totally fine. But like I think eventually we do want the Ethereum protocol to be kind of more elegant and to not have this kind of extra junk data that keeps going up and up forever.

Starting point is 01:00:52 And so adding some kind of state expiry does make sense. Right. So that is like a much longer term thing. But if it has to happen and can happen. And then the last part of the purge has to do with technical debt, right? So it has to do with actually simplifying the protocol and actually removing a lot of the complexities from the code that currently make it more difficult to create a node that currently make it more difficult to like actually run a node to debug and like to like just, you know, make it a theory. and mental limitation. So the self-destruct op-code is one of those upcodes that I really hate, and that I have good reasons to hate. I think if you just like a Google search, like Vitalik

Starting point is 01:01:37 Bans or V-Budoran ban self-destruct, you can probably find the post where advocate for why we should ban self-destruct. Oh, no, sorry, it's V-Budoran pragmatic destruction of self-destruct. That's the title. So I talk about why I think that's a good idea. Vergal trees also depend on banning self-destruct. because they change the storage layout in a certain way. Gas stipends are another thing that I want to remove at some point. A lot of the precompiles we can remove, and we can just replace them with EVM implementations. We can remove, we can simplify logs eventually.

Starting point is 01:02:11 We can remove RLP eventually. We can find solutions for dust accounts. So like if someone has like, say, $50 of ether, $50 of ERC 20 tokens today, and they have a hard time paying the gas fees to, remove that, then there are a number of ideas that can make it cheaper for them to deal with all of that stuff. So a lot of little things, right? But the core idea here is to basically kind of like leave the past in the past and create an Ethereum that actually becomes simpler and simpler

Starting point is 01:02:43 over time. So I want to try and summarize that using a metaphor and see how well that lands with you. And so my mind is actually going to the game of Snake. Once upon a time, the game of Snake was played with little squares. And the snake, you would start off really, really short. Maybe it would only be four or five blocks long. And it would move around this green and it would eat a block. And then it would grow one block longer. And that's kind of like a blockchain, right?

Starting point is 01:03:07 Blockchain's grow. People add data to them. The snake gets a little bit longer. And as that snake gets longer, it also gets harder to manage. And sometimes it runs into itself and dies. I actually think this is a really good metaphor for a blockchain. What you're saying with the purge is there. And ultimately, the game of snake ends with you dying because you got too long.

Starting point is 01:03:24 That's the long-term conclusion of the game of snake. And hope maybe also the long-term conclusion of blockchains. Maybe if there's too much data in a blockchain, it just gets too long and then it dies. It crashes. And so what you're saying with the purge is there's a bunch of ways where we can start to trim off the snake and keep it shorter, keep it more agile, keep it more lightweight. And when it's shorter, more people can manage it, more people can use it. And so state expiry, history expiry, and then just eliminating some of these EVM, and some other things are all different ways that we have determined that we can safely trim off

Starting point is 01:04:01 the tail of the snake and leave what you said, the past in the past, so that the snake stays at a manageable length that could be managed by more people. How is that for a metaphor? That is a really fun analogy. Okay. Let's see if I can like take, like, come up with a city analogy for the purge. Like, let's imagine you have a city, right? And let's imagine that because of global warming, every couple of years, you just have to move the city 100 kilometers north, right? Because the earth is warming and so eventually where the city was before, it gets too cold. Now, imagine if, like, you have a, like, for some reason today, we just designed the city kind of security protocol in such a way that even though the city keeps moving and we have to keep building new city

Starting point is 01:04:48 walls, we still have to keep on guarding all of the old city walls forever, right? So every time there's a new city, like, the number of walls that keep that you have to keep guarding just keeps increasing, even if the city's population doesn't go up, right? So the purge basically is about fixing that problem and about saying like, hey, these cities are abandoned. And, you know, if you really want to, like, if you really wants to, like, go and grab stuff from your old home, then, you know, we can, like, provide you for some way to, like, hire some private security so you can go and visit that city. but we're not going to keep maintaining security for that city forever. And then on theme with what's been going on so far is with, you know, first some of these changes are Ethereum expanding and growing into new fields. And then some of these changes are Ethereum protecting that expansion, right?

Starting point is 01:05:37 First we build out and then we harden. And one of the questions I had for you is that eliminating state, eliminating state in Ethereum was part of the purge, which is kind of antithetical to what a blockchain is. Blockchain is you're not supposed to eliminate data. That's not what they do. in fact, it's actually quite the opposite. But what you're saying is with some of these strategies, we can safely prune some of the data

Starting point is 01:05:58 and have strong assurances that that data will still be available somehow, some way, by some manner in ways that it feels still secure to eliminate that data from the current state while still having strong assurances that that data's available somewhere. Exactly. So, like, the way that I think about the blockchain philosophically

Starting point is 01:06:15 is that it becomes this kind of public billboard where the billboard guarantees that, everything that looks like it's on the billboard actually was published in the billboard and it actually was correct. But, like, you don't actually have to have everyone that's responsible for securing the billboard also be responsible for recording the entire history of the billboard, right? Because, like, recording history is an easier problem than securing. And so, you know, we only have a smaller number of people actually record the history of the entire billboard, and that smaller number of people is enough because securing the billboard is an end out of two of end problem, but recording history is a one-out-of-end problem. And so, like, we just don't need to have this incredibly huge number of people recording the history of the billboard forever. There we go, guys.

Starting point is 01:07:07 Isn't blockchain funds, snakes and cities, merges and purges. Here we go with the fifth one is my favorite, at least in title, is the splurge. Let's talk about the splurge. And there's so many things I think we could talk about, because this seems. like a grab bucket category, miscellaneous category, of all sorts of other cool things that Ethereum could do in the future. Maybe some of these things are further out than others. But could you pick like maybe one or two, Vitalik, that you think would be useful to talk about in this catch-all bucket?

Starting point is 01:07:36 Sure. So Proposive Builder Separation we've talked about already. Account abstraction. That's a one that we've talked about, I think, since forever. And I think people have heard about it at a long time, right? Like basically the idea is just like make smart contract wallets more like first class citizens. And so it becomes as easy to like do all of your Ethereuming with a smart contract wallet as it is with a regular account. And today that's not the case because of the way that the Ethereum protocol was just structurally assumes that everyone has what's called an externally owned account.

Starting point is 01:08:12 But account abstraction just fixes those issues. And so things like multi-sig wallets, things like social recovery wallets, just be. become really easy for anyone to use as their primary account. So I think the newest development of this account of in-acabt abstraction is ERC-4337. So this is a layer two sort of approach to account abstraction that says, instead of changing the protocol to support account abstraction, we're just going to create this kind of second transaction layer where we have these user operation objects that directly talk to smart contracts.

Starting point is 01:08:48 And then there does need to be like a wrapper transaction that wraps around all of the user operations that get included in a block. But instead of having the transaction overhead per user operation, you just have it once per block, right? And this and then you have a separate mempool for user operations. Miners can listen to that mempool. You couldn't. And actors that participate in flashbots can listen to that mempool. And so like basically you create this kind of like higher. level ecosystem where users can do everything that they need to do with these smart contract

Starting point is 01:09:22 wallets and with these user operations. And there is this kind of higher level construction consisting of these actors part in the ecosystem that are listening to this MAMPOL that actually make sure that everything gets included on chain. Right. So it's like instead of changing the existing protocol, you create a protocol that sits on top of the existing protocol. So instead of layer two for scaling, it's sort of layer two for account abstraction. But like the difference here, right, is that like this, this isn't creating like a separate universe that's account abstracted. Like account abstracted wallets will be able to interact with all existing applications. They are, they just, they are Ethereum address as they are Ethereum smart contracts, right? So account abstraction and like another really nice thing about ERC 4337 is that the exact same ERC 4337 can work on Ethereum layer one. It'll work on optimist, we can work on Arbitur, we can work on Polygon. You know, I think with some modifications work on StarkNet. So, like, all of this.

Starting point is 01:10:31 So it basically is this kind of path toward an ecosystem-wide upgrade that could bring us toward smart contract while it's actually being a reality. That's very cool. Can I ask the other thing in this grab bucket, maybe there's so many other things we could talk about. but ZK Snark everything. ZK. Snarkifying everything. That might be a bit more on the distant horizon, but that sounds really awesome. What is that? Basically, like, we want to completely move away from this idea of, like, users verifying things by re-executing them, right?

Starting point is 01:11:07 So, like, ZK snark the EVM so that users don't even have to run the EVM. ZK. Snark, the beacon chain transition, so that users, users don't have to run the beacon chain transition. ZK, SNARC, signature verification, so users don't have to verify signatures. Right. So basically get to the point where the only person who needs to actually run the EVM and actually run the beacon chain like state transition function or run any of that stuff is whoever is that whoever is creating the block.

Starting point is 01:11:40 Everyone else just verifies one snark and that one snark lets them verify the entire block. And so what does that give us? Does that provide dividends across all of these things? That makes it extremely easy for anyone to run a note. So it just adds more and more drones, watchtowers of all types to the city so that everyone is participating in the security of the city in an easier fashion. Exactly. It chops the snake's tail off, David. So it's just a little snake again.

Starting point is 01:12:11 So it's a single block snake. Yeah. So like you have, all you have is like the head of the snake. And instead of the body of the snake, you just have like a ZK snark of a body of the snake. And like the snake is happy. It doesn't need the body. It just has a proof that the body exists. Right.

Starting point is 01:12:26 I want to unpack that. So there's just one head of the snake, which is normal. And then the whole rest of the body has been ZK snark. So it's this tiny little tail that's connected to this normal sized head. And that's how Ethereum just becomes super ultra lightweight. Somebody's going to make a ZK snark game in ZK, you know, Stark technology somewhere. after this episode, I think. Yeah.

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Starting point is 01:15:09 So we started this episode. You said you felt like you could be convinced in saying that Ethereum is maybe 50% of the way done. Okay. Does the end of these things after the merge, surge, purge, splurge, are we at 100% at that point in time? Is everything done? I would say so. I mean, there are a couple of these longer term extras that we haven't talked about, but it would probably take too long for us to talk about all of them.

Starting point is 01:15:32 But I feel, and I do think that, like, none of these roadmaps are final, right? Like, these roadmaps are kind of my attempts to reflect the current rough consensus of the research team. So, like, there are new things that did not exist before, right? Like, PBS did not exist a year ago. And so you did not see PBS in last year's roadmap. So there might be a couple of things, but I think once all of these things are done, like, I will say this, if this is all done and then nothing else ever changes after that, then I'll be extremely happy, right? Now, like, I feel like this covers everything that's, like, necessary for Ethereum to not only survive,

Starting point is 01:16:11 but even thrive going into the long term. So Ethereum is six years old. How long is this going to take? Is this going to take another six years? I could definitely see all this happen in six years. Vitalik, if one or a handful of these things doesn't happen, is everything here crucial? Does everything here need to happen in order for? Ethereum to last multi-generations?

Starting point is 01:16:30 I would say if only the merge and the surge happen, then Ethereum can already survive and thrive in last multiple generations. To me, it's possible that PBS is necessary for security. And it's possible that the verge is going to become really important

Starting point is 01:16:52 eventually, but even there, it doesn't need to, right? Because one possible alternative to the verge is that eventually if the merge in the surge finish at some point we just reduce the gas limit all the way back down to $3 million because we don't like later we don't need layer one gas anymore because everything happens on layer two right so aside from the merge in the surge there are alternatives to everything but I think it is still a nice to have and so you know I'm still really excited about all of these things taking place and so what we're looking at guys is for bankless listeners we're breaking into kind of the firmware the machinery of this trust

Starting point is 01:17:28 computer that we call Ethereum here, right? That's what we're doing. We're kind of almost looking at the motherboard with Vitalik, if you will. Once this computer is built, of course, I know you remember Vitalik, the meme of Ethereum, the internet computer that went a little wild in 2017. No, no, the world computer. The internet computer is the affinity. Excuse me, the world's computer that went a little wild in 2017. But like, there's some truth to it, right? This is a world computer that has been built. So once this roadmap comes to fruition, what will we have? like what is at the other side of this? I mean, Bitcoin's vision famously has now become sort of a digital gold, if you will. It's all about Bitcoin, the asset and the scarcity of that asset.

Starting point is 01:18:09 What do we get when this world computer is fully built out? When you'll get a system where if you want to build an application where you want some piece of that application to have execution that's globally trusted, you can just use Ethereum to do it. And that spawns infinite numbers of possible applications, some of the of which we have designed so far and some of which I guess we'll see in the future. So, Vitalik, that was a high-level summary of the Ethereum roadmap thus far and into the future, even though it's a always-changing thing. The crypto industry is always changing. And something that we've seen in the last year is the rise of the alternative layer ones.

Starting point is 01:18:45 And where Ethereum has this goal to get to the state that we've been discussing, alternative layer ones have cropped up, some with different goals and some with other goals. And you've also written an article lately called Endgame that makes the case that all blockchains ultimately converge on the same future. We want to unpack this part of this conversation because other Alt-Layer 1s, alternative layer ones, have their own roadmap. And you think that ultimately long-term blockchains will converge upon the same future. So we want to unpack that. But before we get into the Endgame article, I just kind of want to get your take on 2021 with regards to Ethereum and then all the other smart contract platforms that came about. the first half of 2021 was really just Ethereum show.

Starting point is 01:19:26 NFTs absolutely blew up. Defi was huge. We saw the seedlings of Web3 platforms put cryptography into corners of the world that had never seen it before. So many people got private keys. So many people learned how to use metamask. So many people approached crypto in a positive light rather than just drug dealing internet money, which was really cool.

Starting point is 01:19:47 Ethereum in the first half of 2021 kind of turned into a victim of its own success in my mind. it got so adopted so quickly that it became extremely congested. Massive adoption turned into exclusionary gas fees, expensive NFTs priced out everyone. And Ethereum kind of got this negative branding as like a whale chain, if you will. This turned into a bunch of pushback into alternative newer layer ones and push users into these newer layer ones because crypto people want to do crypto stuff. They want to push buttons on their metamask. They want to push buttons on their ledger. And so we saw the rise of Binance Smart chain, Solana, Avalanche, phantom terra, just a slew of other layer ones to really satisfy the demand of layer one block space.

Starting point is 01:20:28 So I don't really have a specific question here, but what do you make of 2021 and the distribution of where the average crypto user has fallen with regards to all the different new crypto systems that are out there? What do you make of all this? Yeah. And I think there's clearly a lot of demand for scaling. There's a lot of demand for blockchain space that is cheap. And I think, you know, I think. ultimately users are going to gravitate to where that space is provided, right? So, no, actually, this reminds me of fun fact from my recent trip to Argentina. So guess what is the alternate layer one that the people just like using cryptocurrency

Starting point is 01:21:10 on the ground for commerce in Argentina are using most often, as far as I can tell? Bitcoin? No, no, Bitcoin's also expensive. Oh, okay. It's one where transactions are. extremely cheap. Okay. Well, let's go through. Is it, um, is it Maddick? No. Okay. Not Maddo. Is it, uh, Tara? No. Salana? No. Wait, I think you might be right. I think it's Tron. Is it going to be Tron? Tron is probably one of the number two. Like, what's the number one? Um, Binance chain?

Starting point is 01:21:40 It's Binance. Not Binance smart chain. Binance decentralized exchange. Ah, okay. For doing what? What are they doing on Binance? Like, they just like need cryptocurrency for, payments. They, yeah, like, look, one of them was just a coffee shop that accepted crypto. There are a couple of other businesses. Like, when I ask if they can pay with, if I can pay with if I can pay with ETH, they just show me the QR code of a deposit address. And like, it's just obvious that they're used to like finance to finance transfers, which are instant, right? And like my Ethereum to finance transfer has to wait for 12 confirmations in the app. So, yeah, you know, there we go. That's, you know, that's, you know, that.

Starting point is 01:22:21 So far, that's the Ethereum killer. So is, is Binance like an alternate layer one in your mind? Or, like, I've always thought of, like, Binance's... I mean, ultimately, yes, right? Like, sure, it's like a guy's database, but, you know, like, if, like, if we're talking about people who don't care about the level of desaturization, then, like, no way. Just to illustrate this, if you have a Binance address and I have a Binance address, both, Binance knows that it has both of our addresses.

Starting point is 01:22:47 And so if it goes from Binance address A to Binance address B, it just accounts. for that on its internal ledgers and just updates its internal balances and the users are apparently okay with that in Argentina. Exactly. And they should be because like it's better than the existing system, which is what makes them users, right? Yeah. Like I think like in Argentina, I remember that the thing that all of this crypto stuff is competing with is one, like highly inflationary Argentine pesos and two, US dollar cash, which is inconvenient. You have to hide it under your mattress and potentially have it get robbed or you have to put it in some complicated safety deposit box with like some company that you have to maintain.

Starting point is 01:23:28 So like even Binance the centralized exchange is already a big improvement over what these people would be using otherwise. Now obviously, ideally, you know, the Ethereum ecosystem would be able to serve all of these users directly, but scalability is not high enough for that yet, but it is a kind of as I think we've talked about, it's coming quite close to being ready. So are you making the case, Vitalik? I want to make sure I understand. So like, do you think it's true that users don't care about decentralization?

Starting point is 01:24:00 Or like, why should they even care about decentralization? If finance is going to service their needs and provide what they need. And, you know, maybe I, as someone in Argentina, would you trust CZ and finance over my local banking system? And I understand why. Are you making the case that that's true? that therefore is some of these alt-layer ones that trade off decentralization for bandwidth and speed and that sort of thing. That's a good thing. What are your thoughts there? I think a lot of people do care about decentralization, but they're not going to take the decentralization

Starting point is 01:24:33 if the decentralization costs the $8 a transaction. There's this quote that you had in 2017 that says the internet of money should not cost $0.5 per transaction. And I remember when you said that in 2017, I think a lot of people who have been angry at high gas fees on Ethereum have used that quote recently. Yeah. Let me ask you, do you still believe? Of course I do. Yeah.

Starting point is 01:24:55 Talk about that in the context of the Ethereum roadmap. Yeah. I mean, I think, you know, in order for blockchains to be able to actually be something that people are going to adopt for just mainstream applications, like it has to be, it has to be cheap. And it has to be not just cheap by the standards of Wales who bought crypto in 2014. It has to be cheap by the standards of people who are coming into the system today and who are going to be putting, you know, $20 or $40 into crypto if they put in anything at all, right? And so Ethereum, like, you know, yes, Ethereum today is not a, like, the layer one is not a system that's ready for, like, direct mass adoption by users.

Starting point is 01:25:39 But that's exactly why we've been like harping the drum of scalability and layer two is and charting and all of these things. Like since 2014, right? Like the Ethereum's roadmap and kind of vision and strategy is like exactly the same as it was back in 2017 when I talked about the need for the need for fees to be low. And, you know, the layer twos are coming close to providing that, right? like loop ring has been around for a year and it provides, you know, transaction fees that are not quite five cents, but they tends to be like around 15 cents or so today.

Starting point is 01:26:17 And of course, once sharding comes along, then like it will be much less than five cents again. So there's like the layer two ecosystem is definitely, and together with layer one sharding is completely on the way to like bringing us back to the really low fees that we had back in 2004. 14 and 15, and that allowed so much amazing experimentation early on to start happening. But to get there, we do need to actually solve all of these hard technical problems.

Starting point is 01:26:48 There's a line that's going around in the crypto-twitter sphere and the overall conversation of all the crypto people out there about how Ethereum maxis are just Bitcoin Maxis 2.0. It's unknown whether this trope is actually stated by the users or perhaps injected by the VC DeL1 builders out there trying to flood Ethereum. Perhaps the truth is somewhere in the middle. But Vitalik, as somebody who originally forked off of Bitcoin, how do you feel about that line? I definitely think that maximalism is something that's very unhealthy. And there definitely are tendencies, I think, among some people in even the Ethereum community

Starting point is 01:27:27 to try to kind of brand everything outside of the Ethereum ecosystem as being boring and illegitimate, which I don't think is true. Like, I think, you know, there's real, like, interesting stuff happening in Zcash lands. There's real interesting stuff happening in, like, say, Tezos. You know, there's that one of the cities that I talked about in my Crypto Cities article, they're doing everything on Tezos. So, they're, like, I do think that, you know, there are honorable communities that are not just, like, taking the quick book and that actually do care about decentralization.

Starting point is 01:28:03 But at the same time, right, like, it's. it's like it's also there's definitely a lot of people that like basically just to use the word Ethereum Maxi to just refer to someone who supports Ethereum which is just crazy right like there's like this idea that decentralization is really important for example right and I think Ethereum is like one of the really valuable and important things about the Ethereum community is that it does have a core that is that strongly believes in decentralization

Starting point is 01:28:36 It's willing to continue fighting for it. It's, you know, willing to, like, even delegitimize and stop publicly supporting applications that have betrayed those principles. Whereas, you know, on a lot of other ecosystems, like, you have entire gaps that are, like, close source and people just, like, barely blink an eye about it. So that's the... So I think, you know, I guess my view, there is somewhere in the middle. Like, I think it's definitely important to, like, also have our eyes open and look at all and look at what's going on in all of these other ecosystems.

Starting point is 01:29:16 But at the same time, like, we do have to remember because, or that a lot of people do, like, support Ethereum and not just because of, you know, some kind of, like, you know, bias of, you know, like, they got their bags in earlier because, like, ultimately, like, you know, if you have your bags in Ethereum, but you decide Ethereum and. is worse than you can just move all your bags to something else. You know, it's a free market. But I think, you know, people do believe that decentralization is valuable and important. And they see the Ethereum community as being a community that is willing to actually work hard

Starting point is 01:29:54 and take all of the necessary steps to actually build the future where we have scalability and decentralization at the same time. And that's, I think, something that's, you know, really importance to keep. And I know you personally, Vitalik, aren't maximalist about anything, read your article about concave versus convex thinking, right, that sort of thing. But if you had to be ascribed the label of maximalist something, how close are you to being a decentralization maximalist?

Starting point is 01:30:23 Does that describe your philosophy on things, Vitalik? I would not call myself in anything maximalist, but I definitely think the decentralization is extremely important. It was like, ultimately decentralization is what this space is about. And like once you start compromising on that, then there does come a point where you just have to ask, well, like, what is even the difference between what's being built here and centralized systems? And like, I think the more that we can actually get to, like, genuine decentralization and an ecosystem where, you know, in order to make changes to the protocol, like, you actually needs to have buy-in, not just from a couple of protocol elites, but from the entire user community. I think that's a really important and beautiful thing. And it's also an important and beautiful thing for, you know,

Starting point is 01:31:13 ETH the asset to maintain its credibility. It's an important thing for a lot of the applications on Ethereum to maintain their credibility. And it's something that we need to, like, fight for in support. This starts to get into the conversation of the end game paper, which I think we want to transition into now. I do agree with you, Vitalik, that obviously the decentralization is the prime thing that really supports this entire industry.

Starting point is 01:31:35 But a lot of the alternative layer ones that have cropped up in the last half of the year have penetrated into the crypto markets using cheap blocks-based fees, having ample block space supply. And they got that way via centralization. But there's an argument out there that says that while Ethereum sacrifice scalability first in order to achieve scalability later, other centralized layer ones sacrifice decentralization first and can achieve decentralization later. It's just a matter of picking which of the blockchain trilemma systems points do you want to compromise and then work on. I want to get your perspective on if you think that's a fair characterization. Can you compromise on decentralization at the start to achieve it later? And do you think all of these alternative layer ones, all layer ones, all blockchain layer ones, ultimately converge on more or less the same design structure in the very distant long term? I mean, like, first of all, like I think this post is in some ways more about the theory.

Starting point is 01:32:32 than the practice, right? Like, in practice, I think a lot of these communities pay lip service to decentralization, but they don't, like, deeply give much of a crap about it. Like, how many of them even try having multiple clients, for example? Some do, right? But others don't. And I think looking at which ones do and which ones don't, and it tells you a lot about an ecosystem. But the, so the question I asked basically is, like, if you were to, like, say, put me in charge. of one of these centralized big blockchains. And I were to, like, and you were to ask me, like, what would it take to actually turn that chain as it is today into a blockchain that has what I would consider to be acceptable levels of decentralization and stresslessness and censorship resistance, right? And the plausible roadmap that I have here basically has a collection of things that a big blockchain can do, and basically to add what I would call protocol armor that actually adds a censorship resistance and decentralization.

Starting point is 01:33:38 Which was a big part of the conversation of the Ethereum roadmap that we just had. Exactly. So the core ideas here basically say, well, okay, look, we have this chain where block production is very centralized, but what if we can allow block verification to happen in a way that is decentralized, right? So you have all sorts of decentralized actors that can propose transactions where those transactions have to be included, and so you have censorship resistance, and then you have all of these different actors actually do the verification so that a bad block producer or a bad

Starting point is 01:34:11 collusion of block producers can't actually push an invalid block through. So I talk about having a second tier of staking with low resource requirements that does some distributed block validation, and so you can do some committee verification. You can also do verification with ZKSnarx or certification with fraud proofs, to check that block data is available and that blocks aren't being hidden, you can introduce data availability sampling, secondary transaction channels, so different ways for transactions to get seen by these second tier stakers so that the protocol then actually forces the creator of the next block to include them. So all of these kind of pieces of armor that you can add around a protocol so that even if you do

Starting point is 01:34:55 have one big block producer, what they produce is still validated by this highly distributed process that prevents them from actually using their power to do anything terrible. So this is like the best that you can do if you want to start from where these blockchains are today and get to a point that I would consider acceptable. Just to iterate, this is a strategy for crypto systems that have compromised on decentralization And they have centralized, just a small handful, maybe just even one, block producer, some one entity or a very small number of entities that actually produce the blocks. But what you're saying is there's a series of technologies that allows for the individuals, the many of the world, to check the powers of that central party. So while that central party does have a lot of power because they're the only ones proposing blocks or maybe there's just a few of these block proposers, they still have to pass through the many, many, many individuals that are giving.

Starting point is 01:35:52 given power, given sovereignty through some of these cryptographic techniques. Is that what we were saying? And what kind of system do we end up with if they did that, Vitalik? Is this what we mean by decentralization? So like what sorts of things could the block producers have power over and how could the verifiers, the validators, sort of provide a check on that power? Right.

Starting point is 01:36:15 So the worst that they could do, one is they can extract all the MEV. they could probably delay all transactions by a couple of blocks. So we have a lot of this research on these alternative transaction inclusion mechanisms that can force transactions to be included. But those mechanisms aren't perfect and they don't, like they eliminate a lot of the block producers power, but they don't eliminate all of their power. So block producers would still be able to like manipulate ordering of transactions a little bit. you know, if like you have an NFT auction suddenly appear, then like the block producers would still be the ones that will be able to get first dibs on everything. So it's not perfect, but it is still a system where like you can't push invalid blocks through. You can't completely censor transactions.

Starting point is 01:37:05 You can't push unavailable blocks through. And so the core things of what a blockchain needs to be a blockchain, theoretically, you're still there. So one of the questions I have for you, Vitalik, is there are. are some parallels here, and this is next up in your article, there are some parallels between centralized L1s with centralized block producers and layer two roll-ups on Ethereum. Can you elaborate for the listeners as to why so much of these conversations overlap between centralized L-1s and L-2 roll-ups? Sure. So this is the second thought experiment I have here, right? Which is like, imagine if we do layer two scaling and there is one roll-up team that does a really

Starting point is 01:37:45 good job of engineering and they get really high levels of scalability. Right. So like imagine Arbitrum, for example, they have an amazing EVM ZK rollup and they figure out how to do parallelization. They figure out how to do like an amazingly parallel EVM. They have a super high performance node and they have, you know, a rollup that does 10,000 TPS. Right. Now, the techniques for how to do this are actually are pretty well known, right?

Starting point is 01:38:11 Like Daniel Larimer and Eos like has been talking about this stuff since even 2014, right? Now, imagine if you have this system and you have this as a roll-up running on top of Ethereum, what does that world look like, right? So I would argue that that world actually looks extremely similar to the world where you start with a centralized chain and you add the protocol armor. The difference is that in the centralized chain, like you have the centralized chain that does the centralized sequencing, and then it also adds the decentralized validation. In this world, you would have arbitrary.

Starting point is 01:38:45 or the arbitrage sequencer, whoever that is, do the centralized sequencing. But then you would have the arbitram protocol fraud-proof functionality that allows the decentralized validation to happen. And then you would have the Ethereum protocol itself provide all of the protocol armor to keep the rest of the decentralization, right? So like, for example, you would need roll-ups already. They generally have secondary transaction channels. So if the main sequencer is not accepting a transaction. You have an alternative way of getting your transaction included, and the next roll-up block is forced to include that transaction. You also have, data availability verification is done by the Ethereum Protocol. So today everyone downloads everything,

Starting point is 01:39:36 but in the future we have data availability sampling. So the Ethereum Protocol becomes this kind of guarantor of censorship, persistent, and availability, and all of these other things. And then you have, like, in this case, the arbitrum smart contracts that would actually provide

Starting point is 01:39:53 the fraud-proof, like, verification, and a lot of the rest of the armor that makes sure that whoever does create the blocks can't actually abuse their power, right? So even though it's implemented using a very, like, a very different path,

Starting point is 01:40:07 and you have this different kind of division of labor between the Arbitrural Malior 2 protocol and the Ethereum 1 protocol, the result actually still ends up looking fairly similar to what we had in the first section there. That's the second thought experiment, and we get sort of a similar result, similar end game, as the title of the article says. But that's probably not what we expect, or at least most in Ethereum right now expect. We probably aren't going to see one roll-up dominate and win. That's a possibility, but we probably won't see that, given the plethora of different roll-up solutions, implementations, you know, tradeoffs that they're making and your strengths that

Starting point is 01:40:45 they have, what we'll probably see is a multi-roll-up world where we have many different roll-ups from many different teams. But you make the argument in this third thought experiment that even if we have a multi-roll-up kind of world, if we live in that world, we might still end up in the same place. Can you walk us through that piece of things? Sure. So this gets us into this discussion of cross-domain amoevia, right? So the you here basically is, okay, you have many different roll-ups, but even if you have many different roll-ups, there's this argument that there is an incentive to try to be a block producer on all of them at the same time. And the reason why there's an incentive to be a block producer

Starting point is 01:41:25 on all of them at the same time basically has to do with this concept of cross-domain arbitrage, right? Like, if you scroll down to that diagram, like this is an example, no, up, up, the Western Gate one. Yep, the purple, yeah. Like, this is a cross-domain, I'm MEV opportunity discovered by Western Day, right? So you're converting 44 374 USDT into 44 660 USDT, and half of the operation happens on, I think that's Polygon, right? And then the other half of the operation happens on the Ethereum base chain. So as we move to a Layer 2-centric Ethereum, things like this will become normal. It will become normal to see that, like, there are these arbitrage opportunities where one half of the opportunity gets done in a lawyer two.

Starting point is 01:42:10 the other half of the opportunity happens on a different way or two. So, like, it might happen on Stark X, for example, or, you know, it might happen on, like, you know, the, as on D-Y-D-X, or in some exchange running on optimism. You might even have, like, an arb between the copy of Uniswap that's on optimism and the copy of Uniswap that's on Arbitram. So in this world, there are advantages from being the proposer for everything at the same time. And so if, now, it's not certain that things will go in this direction, right? But if things do go in this direction, then, like, we could easily see some kind of protocol take over that basically auctions off kind of the right to be a proposer for these roll-ups as a package deal. And so you end up having the same actor end up proposing on all of them, even if there's, the protocols are designed in such a way that you could have different proposers on them.

Starting point is 01:43:10 Right? So now, if the world does go this way, it's actually not that bad. The reason why it's not that bad is because roll-ups provide all of this protocol armor to make sure that even if there are centralized actors taking over a book proposing, they can't push through invalid things, they can't push through on available things. and because roll-ups all have these censored persistent bypass channels, they can't even censor anyone. So the world of roll-ups where proposing gets concentrated

Starting point is 01:43:43 is still a world that is not that bad. And also, interestingly enough, it's a world that is very similar to the world of one roll-up or to the world of centralized chains, right? So basically, we end up potentially getting to a future that is very similar to the future that we will, get in these other two worlds. I think this all brings up the point to me, then, Vitalik, if all three of these approaches results in the same thing, then why not just take the big block

Starting point is 01:44:13 approach from the get-go and scalability? And are the alt-layer-one's taking the right approach after all? I think the Ethereum approach is more future-proof, right? It's more future-proof because it still leaves agnostic the question of, you know, are we going to be in a single domain world or are we going to be in a multi-domain world? And it doesn't completely surrender on the centralization issue, right? Like if it turns out that the optimal way to organize proposers is some decentralized structure where, like, for example, something like the existing flashbots model where you have a like this internal market consisting of searchers, then the Ethereum, like, system is still friendly to that, right? So, but on the other hand, if you start from a layer one where you make the assumption of a centralized proposing, then like you don't really have a good way of getting out of that, right? So I guess the question is not, like, is about like the more you believe in uncertainty and the more

Starting point is 01:45:17 you believe that like we really wants to have a system that is open to all of the different possibilities, then the more kind of this Ethereum approach that is agnostic toward what the future will be, but tries to be friendly to and have ways to support all of them, the more that approach looks the most attractive. It's funny to me, as much as Ethereum, like maybe Bitcoin Maxblos and others has been criticized in the past for being, I guess, moving fast and breaking things too much. I often see Ethereum from a roadmap perspective taking a very conservative approach.

Starting point is 01:45:49 It's a very conservative approach to decentralization. And in particular, it looks very conservative when you contrasts it with all of these very high throughput big block, Alt-Layer ones that have sprung up recently. I definitely agree with that. One of the dynamics that has really come about in the second half of 2021 is Ethereum just got so successful, so quickly. The ETH price went from like $600 in January of 2021 to $4,300 six months later. Then it took a big crash.

Starting point is 01:46:19 And there's this very, very strong incentive in the world of crypto. For people, obviously, think that crypto is where you get rich really, really quickly. That's kind of what people think of our industry from the outside in. And when people look at this insane success that Ethereum has had, they want to emulate that success. They want to mimic that success. People want to get in on the ground floor of something. And I definitely think that incentive is one of the reasons why there's so many newer layer ones out there, is just because they incentivize so much, just new users to come into their new ecosystem because

Starting point is 01:46:49 it's brand new. And something that concerns me, Vitalik, about the possibility of one single dominant roll-up on Ethereum is that if that happens instead of many, many, many roll-ups on Ethereum, then that concentrates wealth into that one single roll-up, where there could have been five, 10, 15, 20 roll-ups, each with their own token, each with their own ecosystem that allowed so many people to get in on the ground floor of something, that kind of answers to people's desire to, you know, kind of have exposure to the growth of these ecosystems. This has definitely been some of the big themes of the end of 2021 is people, users both want cheap blocks, but they also want to get in on the ground floor of something.

Starting point is 01:47:31 Is that just like a big wrench that gets thrown in the gears of trying to make a decentralized system? Or how do you like tussle with this incentive that users have to always adopt something else? Yeah. I mean, I think like users wants to get on the ground floor, but then users also want stability. Right. Like, if you have a system whose entire legitimacy is based on the idea that this is a system that's where you can come in and still be early, then you're just setting yourself up to be replaced by the next cycle's version of the thing that lets you get in on the ground floor and be early. So, but, and then if you want to build something that lasts, right, then, like, you want to build something on a base layer that has a long history of lasting and that you know is going to last for and be relevant for a long time going into the future.

Starting point is 01:48:16 So this kind of hybrid vision where, like, Ethereum is the thing that lasts a long time and where you just keep having more layer two roll-ups pop-up, it is an interesting hybrid approach, right? Because, like, there is something that you can still get on the ground floor of. And there even is something that might be able to have more activist approaches to token issuance, for example. Like, if you look at, say, optimism's approach of retroactive public goods funding, that they're sending their attention. transaction fees into. That is, like, you basically get both that and you get the base layer that lasts a long time. And I think that is a combination that is really powerful. And you're right, that is not a combination that you get if you have Ethereum with a dominant roll-up. And in the long-term, it's not even a combination that you get inside one of these alternative layer ones whose marketing

Starting point is 01:49:11 pitch is being on the ground floor today, right? Because like 10 years from now, their marketing pitch is not going to be you're on the ground floor. And so looking at what's going to happen 10 years from now, right? Like, what's the ecosystem? It's like, it's not about what is the ecosystem that lets people get on the ground floor today. It's about what is an ecosystem that ensures that there is space for ground floors to appear 10 years from now. And like an ecosystem that allows for some, some kind of room for pluralism is pretty much the only way to do that. Between the two versions of Ethereum's roll-up future where there's one dominant roll-up versus many, many, many roll-ups. In your own opinion, is one more desirable? It feels like the single roll-up one

Starting point is 01:49:54 is more convenient for users, but the second one is like healthier in some important way, right? Like it's more fragile, more future-proof. There's more opportunity for things to, to improve if the existing approach goes bad for some reason. Whereas the first one is like, you know, if you can make something that looks like Ethereum, but it supports 10,000 TPS, then, like, you know, in the short term, that is a huge amount of convenience. Vitalik, we've talked about so much on this podcast. Thank you for spending the time, the Ethereum roadmap, alternative layer ones, and the end game for all of these systems.

Starting point is 01:50:27 And that is incredibly important. I think we want to end the podcast sort of where we started, but on the flip side, where we asked about your reflections on the previous year. Now I find myself kind of reflecting on the next decade and wondering, like, I think you tweeted this meme a year ago or so about the weird 20s, right, 2020s. And now we're 10% of the way through the weird 2020s, 10% of the way through this decade. And like I, for one, I think everyone listening want to avoid wars, global chaos, all of the things that we're seeing in kind of the news cycle as potentials, want to start solving some of the

Starting point is 01:51:03 big problems in our world that just remain unsolved by the existing legacy institutions. also, I feel like this need to make sure we don't just descend into this digital dystopia that appears all around us in various forms. Do you think crypto has a role to play in the 2020s and preventing some of the worst outcomes and maybe helping to usher in some of the best possibilities? I think it really does. I think there definitely is this really important need for some kind of alternative to a central institutions, right? Because, like, we're entering into a world where, like, it's not disintermediation,

Starting point is 01:51:44 it's hyper intermediation, right? Like, every transaction, like, goes up to having lots of different actors that are in the middle. And a hyper-intermediated, centralized world is a world that can easily become dystopian, right? Because if there are, like, five different pressure points that I can lean on to stop a transaction between you and David, then, like, that's really friendly for anyone who wants to stop things from happening because all they have to do is just to lean on any one of those five. But so if we want to have a future with the kind of intermediation that's necessary to get the efficiency and all of the good things that we want out of the 21st century, then like there needs,

Starting point is 01:52:26 there need to be some form of the intermediaries that cannot be corrupted that easily. And that's, I think, is what blockchains provide. It is what decentralized networks provide. And like, it's not just theory, right? Like, this is something that I think in a lot of different ways people do recognize as a reality, right? Like lots of people, you know, they've built startups on top of Twitter and Facebook and then Twitter and Facebook shut down those APIs and their startups are gone in a day. You know, I mentioned Argentina, like people there definitely understand a lot that, you know, sometimes the local fiat currency really can't be trusted. And now, maybe your local fiat currency in your country is fine.

Starting point is 01:53:05 today, but it might not be fine tomorrow. And if it's not, and just in case it's not fine tomorrow, then, you know, you might want to actually have some kind of alternative. If, you know, if you're engaged in international transactions, then, you know, you definitely don't want something that goes through, like, all five intermediaries that, that consist of all five of, you know, the world's major geopolitical, um, actually. because, you know, maybe one or more of those actors have very different ideas about what kind of transactions deserve to be allowed to exist than you do.

Starting point is 01:53:46 So then is basically, you know, moving away from this kind of world where hyper-intermediation turns into like hyper-choke-pointization and toward a world where these, intermediaries can turn into something that is really empowering is something that I think is really necessary. But in order to have that kind of world, you know, blockchains have to actually be decentralized. Blockchains have to actually be credibly neutral. And blockchains have to actually scale, right, so that the blockchain can actually provide those benefits in practice and not just in theory. And I do think that we have a roadmap to make that happen. And I do think that there are a lot of people who are working really hard and doing a better and better job of executing

Starting point is 01:54:40 on making that roadmap happen. So I'm very excited to see what the future is going to bring five or ten years from now. There you go. Crypto has made me more optimistic about the world as well. So is decentralization. And so of you in today's episode, Vitalik, thank you so much for joining us on bankless. Thank you, too. Guys, a few action items for you today. We always leave you with these. The first says you can view that diagram of the Ethereum roadmap that I was referencing in this podcast we discussed with Vitalik. There'll be a link in the show notes. Also, take a look at some of the articles that we mentioned in the podcast as well. The end game article is one. There's a self-destruct article mentioned. Those will be included in the show notes. We also have

Starting point is 01:55:21 some previous podcasts with Vitalik on bankless, an episode on legitimacy, an episode on coin voting, and a few others we will include in the show notes. Guys, as always, Risk and disclaimers. None of this has been financial advice. Ethereum is risky. So is crypto. So is D-Fi. All of it is. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot. Hey, guys, welcome to the debrief. This is our episode after our episode with Vitalik Beteran. David, is that the fifth, sixth time, Vitalik's been on? Oh, gosh. Oh, man. I was not prepared with this trivia. Yeah, sorry. I just popped into my mind.

Starting point is 01:56:24 mind. We've had them on a lot, is what I would say. We've reflections on 2021, coin rolling ups. Oh, God, we've had them on so many times. I want to say five or six, but I'll look at the archive. We'll confirm this. Anyway, unimportance, but it's always awesome when Vitalik comes on because I just feel like he remains one of my favorite people, if not my favorite person in this space. Besides you, of course, David. Likewise. My co-host and partner. He's just, he's, he's very deep, very wise, very considered. I don't think many have the kind of the breadth and depth that he does. Anyway, it was a great podcast.

Starting point is 01:57:05 The degree of specificity with which he is able to articulate Ethereum's roadmap actually blows me away. Like, he can go into the deep, deep details of like, you know, very esoteric EIP. He, like he's very much part of Ethereum's roadmap and very much part of the development of this thing. And he's in the details of this in a way that always surprises me. So, I mean, that first part we covered, maybe we should talk about that first. What are your thoughts on Ethereum's roadmap right now? When you become an expert about something, you can pull in so many different details and relate them to each other in ways that like a beginner or an intermediate person cannot.

Starting point is 01:57:52 And I feel like when I asked about the question of like meta development, which is something I kind of want to unpack further in this year, when I when I talk about meta development, it's really about that like in in 2015, people were talking about the possibility of ZK roll-uping the whole entire chain as a concept in 2015. We also were talking about proof of stake and charting as like ideas and concepts. And like now with this, my answer to where Ethereum's meta development is is, is we have all. these concepts and now we actually have technical details about how all of these things, A, actually get implemented and B, relate to each other. Because I think if you notice that as we progress further in Vitalik's proposed roadmap, there's a lot of like hyperlinking, like this thing relates to this thing, this is a dependency here. In order to do this, we need to do that. And this is a phase of Ethereum development where like, in order to do this, we have to do this. And in order to do that,

Starting point is 01:58:49 we have to be here. And this unlocks this for us. that level of detail was never, ever something we've ever been able to have before now, I would say. And that's a combination of Ethereum development, just getting better. They're being more talented and more developers working on Ethereum and actually also putting progress behind us, actually getting stuff done, which helps us lay out a much more clear and formalized roadmap. And so people that are in this industry, watching this industry be born.

Starting point is 01:59:17 As an industry, we're kind of making it up as we go. and it's really just a matter of like, can we actually concretely project out what our action items are for the next like three years? Crypto has always been a game of like R&D in order to actually like project into the future as far as possible. And the fact that like Vitalik says that we can project three to six years of Ethereum's development roadmap

Starting point is 01:59:42 is the longest foresight we've ever been able to have not only in Ethereum but as an industry. And so and also if there's anyone listening out there it's like, oh, like, you know, well, like, I'm going to find a project or a team that can, that's mapping out a 10-year roadmap. No, no, no, it doesn't work like that because your 10-year roadmap's going to change because all roadmaps in crypto change. They're like the fog of war in crypto is so thick.

Starting point is 02:00:05 Foggy. Yeah. Yeah. And Ethereum's with its cryptographic first roadmap is finally piercing through this fog of war. Do you know what's the vision I had in my head? I know used to, used to build computers at home. right um basically i know you had like GPU farms that sort of thing is how you got into ethereum right um i used to build machines to a little bit like um as a kid um be projects that my dad and i would work on

Starting point is 02:00:31 together and that's kind of the visual i had as we were talking to vitalic about this um the roadmap in particular like kind of the you know just the the visual of the motherboard and all of these various parts that we are like you know snapping into the motherboard right and the idea of that this this world computer is being built, like in the way it's being built, is so incredible to me. Like, completely open source from all corners of the world, at the very beginning of the development of Ethereum, it's like there were some concepts that didn't have clear execution ability, right? It's like, we want scalability while preserving decentralization. Well, how are we going to do that?

Starting point is 02:01:17 Well, we think there's this thing called sharding. In theory, we know we can do it. Yeah. In theory, completely unknown. Yeah. And then, and then like, we want this thing called proof of stake, right? Because we think it's more economically efficient, you know, better way to you essentially provide the same guarantees that Bitcoin does, but we don't exactly know how to do it.

Starting point is 02:01:38 And so, like, how are we going to do it? Well, as an open source community, we're going to build this thing piece by piece. And the concept of assembling a new computer, like a new chip, a new CPU, a new motherboard in that way in this distributed fashion without knowing exactly how you're going to build it, you just know what needs to be built. And, you know, Vitalik has been a brain behind this, but he hasn't been the person pulling all of the strings here, right? it's totally been this massive worldwide community organization, open source project that has brought this as far as it's come. And that to me was just, it's so fascinating. I've never seen a project like this. I've never witnessed it firsthand. And it's like a multi-year thing. Like I've been involved with lots like software development projects, that sort of thing. And usually you have a clear set of

Starting point is 02:02:36 requirements and, you know, the team builds and iterates against this. But like it's, it's still very top down, right? It's not very like bottom up. And just the way this thing is constructed as well is part of the meta development story here. And it's just, it just struck me in talking to Vitalik, it's like, how cool is this that we get to be part of the early stages of this? And like you and I believe that this world computer that's being built is going to be one of the most important institutions, like digital institutions of this century. Like, that's how important institution. It's a meta. Yeah, it's a meta institution too. And that's how important Ethereum is and Bitcoin, some of the other things that we're building. So yeah, I feel very just privileged to be here,

Starting point is 02:03:24 to be honest, and to witness this thing taking shape is truly incredible. Yeah. It's quite immaculate, right? I think immaculate is a great word. There's the, Remember the whole loot phenomenon where people would just, people birthed loot and they're like, all right. Now you guys build it. Now you guys build it. Like the reason why like that doesn't fall flat on his face when it feels like it should is because there's actual, actual precedent behind that strategy.

Starting point is 02:03:50 Yeah. And that precedent is a combination of Bitcoin and Ethereum. Yeah, totally. And Ethereum even more so just because of how much more development Ethereum needed. It's like, all right. Like, Vitalik released this like yellow paper in the world into the world. And he's like, all right, world. like, I need help building this thing.

Starting point is 02:04:06 And the world answered. And that's why that's the Ethereum client teams and Ethereum researchers and all that stuff. It's an incredible story. Should we get into some of the specifics here? So, like, what do you think of? Okay. So I had somebody tweet out recently when I was talking about Ethereum's Layer 2 roadmap and Ethereum Scalability Strategy.

Starting point is 02:04:29 And the tweet said something like, did Vitalik and the Ethereum Foundation just get lucky here. Like was it happenstance that layer two's worked out for them? And that caused me to kind of like, you know, consider. So basically the idea that going in Ethereum really didn't have a scalability strategy, let's say. I mean, there was this concept called sharding, but like how do you actually achieve it? This was some of the main critique of Bitcoiners. And then it almost felt like over the last 18 months or so that, from one vantage point,

Starting point is 02:05:03 Ethereum kind of got lucky with layer twos. Like, it seems like you can build EVM-compatible, general purpose, layer twos on top of Ethereum. And this wasn't obvious at the very beginning when Ethereum promised, you know, massive scalability. So what do you think of that question? Did Vitalik and Crew just get lucky here? I think if we reround back to 2017 and 2018,

Starting point is 02:05:33 And like if you asked me, how is Ethereum going to scale? I would absolutely say sharding. And it's like, oh, yeah, how do we get super fast block times with super low transaction fees? My answer would be sharding. And I think in the back of my mind, I kind of figure that like, you know, maybe that's, I didn't know enough. 2017, 2018, I was a crypto novice, right? And I didn't know enough. So maybe in the back of my mind to be like, well, can that really, can that really go from

Starting point is 02:05:57 just like this small niche blockchain to supporting the whole world just with sharding? And maybe in the back of my mind, I was like, no, maybe I didn't know. But I wouldn't, I didn't really know. I didn't really know. I think if you ask a question, and to your point, what that means is that, like, sharding wasn't ever going to do it. And I think maybe if we asked Vitalik, maybe he wouldn't have known either back in that early. Like, would sharding be able to scale to the whole entire world unknown?

Starting point is 02:06:22 But I think now, when you ask, like, the question, did Ethereum get lucky with layer twos? well, having surface area for luck is also really important. Yes. And so no, I would say, because layer two is a blockchain agnostic construction. They can go anywhere. And all Ethereum has to be is be open to that. And that is what Ethereum is designed for us to be maximally open, maximally expressive, so that any sort of crypto thing that is useful can come and be built on it.

Starting point is 02:06:54 That's what the EVM for. It's a going back to your motherboard thing, the EVM is a universal serial bus, a USB port. It was like, oh, you built the thing, plug it in. And so, no, it didn't get lucky. It's been designed to be able to absorb all good technology. Well, that, that's, that was kind of my insight after, after kind of thinking about this for a bit. It's like, we really create our own serendipity, don't we? I mean, use the term surface area, right, for like, you know, so Vitalik high level sharding

Starting point is 02:07:23 was going to be a path. and high level, that's kind of right. I mean, we're doing sharding, but like all the serendipity, all of the research, like, and kind of the roadmap that has resulted from that could not have been foreseen. But Ethereum kind of embraced a culture

Starting point is 02:07:40 of openness to these sorts of things. I mean, the amount of work that went into the Ethereum research forms, those are like highly active and highly useful forms. Those were built out during the early days. Also the social layer. Let's be open. to this experimentation, this creation. Our high-level goals are a decentralized trust computer for the world.

Starting point is 02:08:03 Now, how do we incorporate the best ideas and build that out? That's all been not luck, but almost designed, yet it creates the conditions for the serendipity for this luck that led to the red map that we have today. So that's been fascinating to see also. And it's, you know, I think that rule can be applied elsewhere. Whereas, like, yeah, there is definitely a concept of luck out there, right? But there's also, like, equally the truth that we oftentimes create our own serendipity. We create our own surface area to sort of attract these lucky events.

Starting point is 02:08:37 That's one thing. That's one thing I love about Twitter is I feel like it's sort of a serendipity creation engine. I mean, at some way, you and I met over Twitter. Didn't we? Like, it was very much like, I saw your writings. Like, it was a Twitter sort of interaction. and the entire bankless podcast, everything like we've done together probably wouldn't have come to be without that surface layer for serendipity. So there's also a meta lesson there that I took away from this.

Starting point is 02:09:05 Yeah, I remember the shout out to Michael Wong who first coined the term or implanted the term in my brain, luck surface area. Yeah, that's good. You can optimize for luck. That is something. Yeah, isn't that weird? Yeah. It's definitely a life lesson. Okay.

Starting point is 02:09:19 So we've got this roadmap. We've got the merge coming, which is awesome. We've got the surge. So this is all related to our modular blockchain thesis, right? It's going to supercharge roll-ups. The merge is coming next year. I think the surge is probably going to be like a 20-23 thing, don't you think? I mean, we might sneak some EIPs in there that sort of start to execute on the early stages of the surge,

Starting point is 02:09:48 but I don't think we'll see sharding, data sharding. until 2023. I didn't want to ask Vitalik about dates because that's just a... He wouldn't want to, he wouldn't have wanted you to. Yeah, it's kind of a gotcha question. If you noticed on his roadmap, there were zero, there were zero dates. There was zero dates. There were very...

Starting point is 02:10:05 It was just percentage completion, if you will. Yeah. So we get the surge, and then we've got some of these other things like the verge and the purge that, you know, some of these things are developing in tandem, I suppose. But Vitalik's take was, I thought this. was interesting. We're 50% done now. And if we got the merge and the search stuff together, you know, not calling it a day with Ethereum, but like he feels like that would be enough to like keep Ethereum as a trust compute player for the entire world. Like even just two of these

Starting point is 02:10:41 things on the roadmap would be enough to kind of call it a success. Not fully successful, but do you know what I mean? And I thought that was an interesting observation. Like we don't maybe actually need the verge and the purge and the splurge and some of these other things in order to have Ethereum do what it needs to do for the world. What are your thoughts on that? Yeah, no, I think that is pretty interesting. Having the merge and the surge happen and Vatac saying like, all right, that could be enough. That could do it. That might be the history of crypto. If Ethereum calcifies after that, it wouldn't be the worst case in the world. And obviously Vatelica has way more insight than I do.

Starting point is 02:11:21 But when I see all of these urges, these one through five urges, merge, surge, verge, purge, the theme that I'm seeing is this is Ethereum or Crypto-Economics, really, cryptography scaling more and more and more to the whole world. This is a scalability plan. And it's not just transaction scalability. It's not just throughput. It's not just cheapness of transactions. That's one version of scalability.

Starting point is 02:11:47 that's the more like obvious and more like, you know, socially referred version of scalability. But these other ones, stateless clients eliminating historical data and then all the extras in the splurge, that's social scalability. That is how do you scale the blockchain in order to replicate itself and put it on as many computers as possible, as easily as possible, and as securely as possible, which is a different kind of scalability. but in my mind it's actually the much more important version of scalability. And Bitcoiners lean into this a lot where like Bitcoin, the blockchain, doesn't scale very well. It's got very slow block times with very limited data caps.

Starting point is 02:12:27 But it is socially scalable. Bitcoin can replicate itself. It's easy to copy. It's secure to download. And so there's this other component of scalability. And so every single one of these things in my mind is increasing Ethereum's social scalability. It can, as a blockchain, as an ecosystem, as an organism, it is more scaled to envelop more of the world with every one of these steps. One of those steps includes actual data scalability, actual data throughput, but that is just only one of the many components that make a blockchain a scaled blockchain.

Starting point is 02:13:00 And I think especially with these last ones, the verge, the purge and the splurge, these are things that like all the other alternative layer one chains, I don't think that they will put attention towards. them until they become problems. And that's kind of the big difference between like Ethereum meta development and the development on any other chain. We've noticed that like a lot of the other chains are short term thinking and that they need to gain traction right here right now because they are in the Alt Layer 1 competition. They are in in that that crucible of competition. And so they don't have the luxury of being able to look out into long term and like thinking about eliminating historical debt or granted they might actually have less because they're newer. but it's still like stateless clients is something that is not again Ethereum specific it's for

Starting point is 02:13:45 everyone right and also pruning and state expiry and all that stuff these are not things these are things that only Ethereum is as an ecosystem is looking at from from far as far as I can tell and it's really just optimizing Ethereum to be far more scalable in ways that and because Ethereum has that luxury of being in the lead with regards to development because it has that foresight and it has that developer attention to be able to expand. over their horizons of the short term. That's kind of my take there. Well, let's talk about that a little bit more with the Alt Layer 1's conversation,

Starting point is 02:14:17 because I thought that was a very interesting point in the conversation. And it strikes me as you were talking, David, like Alt Layer 1s need Ethereum a lot. Like much more than Ethereum needs Alt Layer 1s. Ethereum wrote their roadmap. Half of this podcast was a roadmap for alternative layer ones, whichever ones want to take it. Well, and it's interesting to me that many of the Allstate, all layer ones to actually use Ethereum technology.

Starting point is 02:14:42 Right? So like, you know, Avalanche, you know, finance chain, they're all using Geth under the hood for a lot of this and making their own tweaks. So, but like a success, it's funny because oftentimes these are painted as like very competitive, but they need a successful Ethereum, right? Even like, think about the roll-up technology that exists right now.

Starting point is 02:15:03 So like if they want a Starkware to start deploying on a, you know, Arbitrum or Salon or something like, the reason Starkware is. is what it is today is because of Ethereum. It's mainly that ecosystem that is, anyway. So let's talk a little bit about Alt Layer 1s, though, because this was an interesting point in the conversation. And maybe I want to just dig into the heart of it,

Starting point is 02:15:25 which is Vitalik's Endgame blog post, which basically states that it's possible that big blockchain, so the high performance layer 1 chains, and Ethereum long-term might end up in a similar place, right? At least the ones that decide to you, you know, revert back and build in some decentralization into their protocols to the extent that they can. Vatat called this protocol fortification, which I think of itself is an interesting term. Protocol armor is a—

Starting point is 02:16:00 Critical armor, that's right. I said fortification, but critical armor, yes. And so like these Alt Layer 1s like might be on the same path in a way. And this is similar to I guess an insight maybe you could say or an argument that Suzu from Three R's Capital makes, right? You know, which is basically like, hey, all of these chains will converge. And I think you made the point in the podcast. You just said like big block chains are choosing a different point in the scalability

Starting point is 02:16:33 Trilemma, and they're starting from that point. And some will stay there. Some will just fake decentralization. And ultimately, I'm going to use the term very broadly. I don't like this term, but ultimately kind of exit scam, not achieve the vision of what a blockchain is supposed to do. It's just going to remain a centralized. Successful in the short and measure.

Starting point is 02:16:52 Yeah. Exactly. But some might be able to pivot and start moving more towards the other angle in the, in the triangle here, towards decentralization. And in fact, Vitalik kind of put together, like, if I was, you know, king of these chains, here's what I would do. Here's sort of an approach I would take to make them more decentralized. But the interesting outcome is all of these chains could end up in the same place where you have block production that is centralized and block validation, block verification that is decentralized.

Starting point is 02:17:24 That could be a possible outcome. In which case, sort of asked the question to Vitalik, like, well, then what? What of it? Like, are these better paths to take? Why not start with the big bat, you know, block approach. We're trying to onboard the world and you just trade off decentralization for performance and then double back and try to build in more decentralization and more protocol armor later. What was your take on that part of the conversation? Yeah, Vitellic said that he's skeptical that some of these chains even actually do care about decentralization. He said they just pay lip service to decentralization. And so my take on this is that that could be a very valid outcome where Ethereum and these alt-layer ones are all in a race to get to the same end zone into the same end game, which is what Vitalik's article was more or less about if you read through the lines.

Starting point is 02:18:13 But what that would require is that some of these chains actually do care about decentralization. Like they actually do have to care about that. And Fatalik said that in this podcast, and we've said it a number of times before, is this whole entire space is built on decentralization. And I think that's the only belief that I hold in crypto that I will not ever budge on. That's your maxi belief? That's my maxi belief, right? Like this whole thing is based on decentralization. And if you disagree with me, then we cannot see ever eye to eye and I will die on that hill.

Starting point is 02:18:43 That hill does not belong to Ethereum. Ethereum does not control or own or co-opt the concept of decentralization. That is a concept. Decentralization is a concept for everyone to uphold if they so choose. But in order to actually get to this end state, these alt layer ones that have compromised on decentralization have to uncompromise on it. That's the hard part, isn't it? That's the hard part.

Starting point is 02:19:06 And then it turns into a story of like, say we have three different layer ones, one is Ethereum and two other alt-layer ones, and they all got to this end-game state in different ways. Now at that point, it's a competition of how fast did they get there and the story of how they got there, how they navigated the waters to design their blockchain to maximize for all three points on the blockchain trilemma. And the story of how it got there, I think it's really crucially important. And I think that is still what will always separate Ethereum from everything else, because

Starting point is 02:19:38 Ethereum started by compromising on scale and not decentralization and others compromised on decentralization and not scale. And I think when we exist inside of an ecosystem that is built entirely on decentralization, of all the three points on the blockchain trilemma, decentralization is the one. that you do not compromise on at all. I do totally agree. I think decentralization is the hard part, right? You're kind of asking like a big government to get smaller,

Starting point is 02:20:08 which is always very difficult. It doesn't work like that, yeah. It doesn't work like that unless there's some kind of a revolution or an authoritarian regime to like convert to democracy, right? Like that generally doesn't happen. Decentralization is political. Yes. Whereas scalability.

Starting point is 02:20:26 and throughput and data throughput is technical. Totally agree. Political fights are way harder than technical fights. Yeah. And so that's why there's like this very much kind of this like, it's very strong rejection of centralization in Ethereum because it's like this slippery slope thing and people and Ethereum people kind of know it. Right.

Starting point is 02:20:43 Like no, no, no, no. We can't compromise on decentralization because then it turns into a bunch of political fights left and right. We can compromise on scalability because that is a technical argument that we can reason about without having to worry about. politics. And that's why compromising on scalability is so much easier than compromising on decentralization. Right. Which is why I think many of the alt-layer ones eventually just won't. They won't try to follow Ethereum towards that corner of the trilemma towards decentralization, you know,

Starting point is 02:21:13 because one, it's politically infeasible. It's very difficult to do and also requires like a deep culture shift at the layer zero. And then number two, like, why do that? Ethereum already has that market cornered, what I think will probably be easier for many of these alt-layer ones is to use the other tactic, which is like basically, why does decentralization matter that much? And that- Decentralization? Right. But there's also a case for that, too, right?

Starting point is 02:21:41 So when we asked the question about decentralization, Alt-Layer ones, Metallic said, what do you think when I was in Argentina, what do you think is the most popular crypto tool, crypto-solution that average citizens are using? He used the term out one. Yeah. Yeah, he did. And it was like Binance. Not Binance chain.

Starting point is 02:21:59 It was like actual. It was the Binance the exchange. And so that is the argument from a centralization perspective. It's just like, you know, basically like users don't care about decentralization. They just care about some features that will make their lives better. And I totally understand that. And I totally get that. But it strikes me as like, okay, then we're building very different things.

Starting point is 02:22:23 Like categorically, these are different. different end-state games. And in bankless terminology, phraseology, it'd be more like, you're building a fintech thing, okay? You're building a new bank, a neobank. What we're trying to build is a decentralized bankless system for the world. And these are separate categories of things. But what do you make at that point? Like high level, users don't care about decentralization. That is often the other Alt-Layer 1 argument. Right. It kind of begs the question. A lot of people will say, shout out Tasha, will say that users don't care about decentralization.

Starting point is 02:23:02 And so then why use a crypto system at all? Just go to finance. Like we actually don't need crypto to do all the things that exist on crypto. You can just fake it on a centralized platform. So why even bother with any amount of decentralization then? Maybe that's the slippery slope fallacy of like, you know, like, no, no, no, no. layer is a Goldilocks zone of decentralization centralization.

Starting point is 02:23:27 And rather than having one entity, it's best that we have 20 entities. That's the optimum level. I just don't agree with that Goldilocks zone, though. Right. And I just, I think people are mistaking real layer ones. They're conflating real layer ones with applications, right? So finance would not have even been possible without real layer ones, without Bitcoin and Ethereum is, you know, token.

Starting point is 02:23:53 economy is basically, right? And so the fact that finance exists as an app is because of these decentralized systems that, that, you know, came before it and that underpin it, you can't build Ethereum on finance, but you can build Binance as an app on Ethereum. And I think of which it is, right? And I think sometimes some of these alternative layer ones, like, for instance, to me, Tara comes to mind. Tara, to me, looks a lot more like a

Starting point is 02:24:20 fintech type of solution, then it does a layer one, right? I mean, it has like DPS style validators, the cosmos chain, right? It's like maybe it's across the spectrum, somewhere between, you know, fully fintech and centralized and a layer one. But it's not in the same category as something like a Bitcoin is trying to be and something like an Ethereum is trying to be. And I think they're often and conflated. And the reason they're conflated is because you kind of want to be valued. You want the performance, the scalability performance of an application, but you want to be valued like a layer one. You want to be valued as a percentage of Ethereum. So the narratives get conflated in that way. But yeah, that's an interesting discussion. What else you got?

Starting point is 02:25:11 One thought I have is like a possible, a very possible 20-20s decade is one of increased strictness, three-letter agencies coming after crypto protocols. We already saw this with Tara and Doquan. Imagine just a more hostile regulatory environment for all of crypto. Ethereum has this maximally decentralized settlement layer and also talking about the concept of protocol armor. One of the best protocol armors for some of these centralized layer ones ones that look and feel like apps, like you said, if they start getting attacked by the nation state, by regulators, and say, hey, you got to shut down your stuff.

Starting point is 02:25:50 And that actually does work because they're weak towards that kind of attack because they are centralized. The best protocol armor for these things is to turn into a rollup. A roll up is protocol armor for anything that's centralized. And so, hey, are like, is for Terra. Terra is like a synthetic asset platform. That's a layer one. But if it's weak to external political attacks, it can use an Ethereum rollup as protocol

Starting point is 02:26:16 armor to shield its state. from anything, right? And so it just settles on Ethereum. It rolls up its state and puts it in a bundle and settles it on the L1. And like Ethereum is this like safe zone. Did you ever play like tag in when you were young? Yeah, yeah, yeah, yeah.

Starting point is 02:26:29 Yeah, it's like once you put the state on Ethereum, it's safe. Like it's safe. Can't touch it. You can't go. And so like the only thing that's actually at risk is the next block, which is only one block.

Starting point is 02:26:41 And everything else is safe. And so that is protocol armor. If we do get into a very hostile regulatory environment, I would imagine it would make sense a logical conclusion for all of these at-risk centralized platforms to use Ethereum as protocol armor. I agree with that. And I also think in general we have kind of bull market goggles on with all of these alternative layer ones.

Starting point is 02:27:04 So I think what could also happen, another driver to convert all layer ones into roll-ups is a bear market, to be honest, right? So one advantage that, I don't know why, but people often overlook of a, a layer two is it doesn't have to pay for network security. It doesn't have to fund its military budget. Which is so expensive. It's so expensive. Every L1 is to fund security is the most expensive thing you can do.

Starting point is 02:27:31 I just look today. Solana pays $18 million a day on issuance on its security budget, basically, right? $18 million a day, okay? On Ethereum, there's no maintenance costs. You basically pay per usage, and that's based on users actually paying the economic fees, the taxes to Ethereum, as it were. So none of this is obvious when we have our bull market goggles. But like during the bare market, when token prices go down and people are like, oh, my God, we're inflating so much money. Remember this happened with Ethereum?

Starting point is 02:28:07 Look at how much we're paying miners. Look at how much we're paying our validators for this system. that could convert some to take a roll-up-based approach where you basically get the military budget from Ethereum for free at cost. There's no cost to that. So that's something that's been in the back of my mind too. Anything else?

Starting point is 02:28:27 Any other takeaways from this episode, David? I think just a really great episode to kick off the year. Yeah, man. It's going to be a good year. Really excited about it. We'll have Vitalik on a few more times, I'm sure. He just always writes great things. And then we're like, hey, you know,

Starting point is 02:28:41 you should come on and talk about it. talk on him. Yeah. And he's like, yes, I will. Yeah. So this is no exception. First episode of the year, guys, first debrief of the year. Thanks for hanging with us. Bankless subscribers. We appreciate you. We'll talk to you soon.

Bankless - 99 - Endgame | Vitalik Buterin

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