Bankless - EthCC #3 | "StarkWare isn't Leaving Ethereum" - Eli Ben-Sasson and Uri Kolodny

Episode Date: July 29, 2022

🇫🇷 Welcome to the Bankless EthCC 2022 Experience 🇫🇷 With fantastic guests from all corners of the ecosystem, this 8-part series is an exploration of crypto culture and the current state of Ethereum. In episode 3, we cover the recent announcement of the StarkWare token launch, the exploding zkEVM ecosystem, and the future of StarkWare. ------ 📣Rhino.Fi | Massive Mystery Airdrop https://bit.ly/3o9trRE ------ 🚀 SUBSCRIBE TO NEWSLETTER:          https://newsletter.banklesshq.com/   🎙️ SUBSCRIBE TO PODCAST:                 http://podcast.banklesshq.com/   ------ BANKLESS SPONSOR TOOLS:  🚀ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool ⚖️ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ❎ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🦁BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 🌴MAKER DAO | DECENTRALIZED LENDING https://bankless.cc/MakerDAO 🔐LEDGER | SECURE STAKING https://bankless.cc/Ledger ------ Topics Covered: 0:00 Intro 2:30 Eli and Uri 4:52 zkEVM Explosion 10:30 The StarkWare Approach 16:20 StarkNet on Ethereum 19:35 The StarkNet Token 24:30 Token Models 26:53 The Future of StarkWare ------ Resources: Eli on Twitter: https://twitter.com/EliBenSasson Uri on Twitter: https://twitter.com/ukolodny StarkWare: https://twitter.com/StarkWareLtd ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

Welcome Bankrupted nation back to this third episode of the ETH-C-C experience. In this episode, we're talking with Uri and Ellie of the Starkware team. And this is coming off of their Starknet token announcement, which is, of course, the subject matter of this particular episode. But not the only subject matter, of course. There are many different things to talk about. I get their perspective on the ZK EVMs that were released, not from the Starkware team, but from three other competitors all happen to get their ZK EVM release in the same week. Scroll, Polygon, and ZK Sing. But since, you know, Starkware is peripheral to this, they are a ZK rollup. I get their perspectives

on this whole role and where they fit into this conversation. Of course, like I said, ask about the Starkware token. And then just really clear the air as to where will Starkware be in the future. Are they ever going to make their own layer one? Are they ever going to use an alternative layer one other than Ethereum? And I'm too good at producing content to tell you that answer here in the intro. So I'm going to wait for you to find that one out in the actual show. So let's go ahead and get to that show. But first, we're going to speed run this sponsors all here right now so we don't have to interrupt the conversation later on. So here that goes. And we're going to start with Rocket Pool. Rocket Pool is Ethereum's decentralized

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Elianurias, Darkware. What's up, guys? How's it going? Hi, hi. Hi, pretty good. Yeah. Exciting. Is this your guys, not your first CTC, certainly? Actually, it is mine, but it has been here a few times. Yeah. Yeah. At least three.

Yeah. How do you like the city? How do you like Paris? Amazing. What's not a lot? I hear they have good food. The current state of the crypto world, we're in this, like, bare market. Whether or not you think ether at $1,500 or Bitcoin at $22,000, wherever it is, is a bear market. is up to be decided. But the current like meta that we've going into is that we need to build our way out of the bear market. We're not going to just like magically come out of it. We have to actually do something to get out of it. And Starkware has certainly been heads down. Guys, of course,

started with Stark X, the proprietary app specific change we would call them. But we are now going into the more generalizable ZK rollups, which is what we're doing with Starknet. So let's talk about Starknet first because that's the thing that's getting everyone super excited. Where would you say? in the grand roadmap of Starknet, where are we and where are we about to be soon? We think about this in terms of three phases, overlapping phases. The first phase is the feature completeness or the feature phase. We're pretty far down the road there. People have been able for a good number of months now to build whatever they want on Starknet. The second phase is what we referred to as the scalability phase, and there the intent is by the end of the year to reach

10 times of Ethereum's throughput at 100th of the transaction cost. And the third phase, which started a long time ago, the decentralization effort, and this is a gradual phase, and we're making sort of incremental progress there day in, day out. This will culminate in the ability of anyone, anywhere, being able to run a prover or a sequencer on Starknet. There was a recent tweet from John Adler, which was pretty funny, because Polygon just announced their ZK EVM and then Skrull announced their TestNet. And then ZK Sync is like, no, we were first. So there's like a lot of hype around a ZK EVM. I'm wondering where does Stocknet fit into this whole story? Okay, we're proud of the actual in-production achievements that we made.

I actually do not want to go into this fight of who did something first. We have been operating in production for now more than two years using what some people call ZK technology. We prefer to use the validity technology because it actually is not ZK. So, you know, our numbers and performance speak for themselves. So we prefer not to enter this fight, or pick who is the real first. We've been added for a pretty long time, and I think the world especially developers knows this. Does Starknet fit into a ZKEVM, or is that something else? So I do want to add that on the ZKEVM front.

I think that the excitement is terrific. I think we're all sort of waiting for the real production systems to be out there with proofs turned on, et cetera. We have yet to see that, and that's a big achievement we're looking forward to. I would add that in the context of Starknet, one of the things that a bunch of people have expressed interest in, and I think we're likely to see, is people deploying an emulation of the EVM as a layer three settling on Starknet, which would be sort of Escheresque in nature, right? Starknet settling over Ethereum with its EVM, and then the EVM being simulated as verifiable computation, layer three on to Starknet. To what extent will that draw the attention and excitement of developers? It's a very

interesting open question in my mind. Okay, so is that where we get the EVM expressivity built on Starknet? It would be a layer three, not a layer two? Yes. Okay. Okay, so the technical details is something that challenges me and my understanding. So Starknet, not a ZK EVM, but you could do a ZKVM as a layer 3 on Starknet? Is that correct? I want to clarify something that getting, emulating the Ethereum virtual machine, which is what is often referred to as ZK EVM, is not Starknet's end goal.

Right. Our end goal is to provide the best scaling solution for Ethereum. And we strongly believe, based on our deep understanding of both EVM and how to build Stark systems, that you are far better off, in terms of scaling if you use a different virtual machine, and ours is Cairo. So I think what's going to happen is that even though you can emulate EVM inside Cairo,

and this will happen, the real scale would be derived from native Starknet, Cairo-written smart contracts. Okay, so a lot of developers talk with very frustrated tones about the EVM. It limits them. there's the it doesn't uh it's not parallel uh i know some of these words uh i just generally know that developers feel very limited by the capacity of the evm if i'm uh tracking correctly tyro is something far more optimal and also more expressive and allows something like like the evm which people are all already familiar with but also much more than the evm to also achieve

scalability while also having the ethereum security i i actually beg to differ in the following First of all, I think EVM, Ethereum, and Solidity are amazing. They are what delivered the gold standard for a general computation blockchain. And Solidity was, and the EVM were built under this set of constraints that says we need a Turing complete programming language that will be best fit for blockchains. And it's an amazing achievement of Vitalik and, you know, anyone who worked on it in the early days and advanced it since then, Gavin Wood and others, who was involved in this. This is amazing. Now, for better or worse, when you build scalability through validity roll-ups and in particular

Starks, you just have a very different set of constraints. And you need, for scaling, you need a different virtual machine model. So Cairo and StarkNet, they are not better than Ethereum. They are built to address a different set of constraints to allow Ethereum to scale. I want to add to that. The question of, say, assuming the existence, of highly performance ZKEVMs, say five years out, the question of whether at that point in time, if you're a new developer building some massive hit, whether specifying,

coding that for the ZKEVM makes sense or not, is an interesting question, meaning that code as such, almost by definition, will not run on a layer one. It will be too computationally intense for a layer one. And so at that point, will that be the optimal tool chain for whatever scaling You know is developers first choice. I don't know. That's an open question. And certainly Stark X, the first implementation of Starkware, has generated some absolute hits. Immutable has blossomed into an ecosystem and just seems like ready to roll into like the world of traditional gamers with traditional gaming companies. And so their BD skills are absolutely insane. We had for ShydX. One of the biggest volume exchanges in all of crypto that's also decentralized

because of Stark X. I'd like to take a peek into the world of BD for Starkware. How do you guys get this done? And why do you guys have so many killer hits? Well, we actually don't think of ourselves in those terms. Meaning we would really like to be the technology developers that we are by nature. And so focus on the research and on the engineering effort and the product effort. But at the end of the day, hopefully leave it to the people building on top of us to blossom and profit.

and, you know, sort of build all sorts of innovative stuff on and bring it out there. And as you mentioned, Immutable is a wonderful example. D-YDX is, of course, they've really built a powerhouse with the help of StarCax. And So Rare is a very interesting sort of real-world application that many people have told us feels like Web 2. I know of no bigger compliment. Someone saying to us that felt like Web 2. I want to add that even though I thank you for the compliment of like doing amazing on

BD and having. so many successful companies deploying on it. And of course, we're very proud of that. Our feeling is that even just the Starkex systems have so much untapped capacity that we would love far more companies and entities to deploy on them. And I don't know if you're out there and you need scale and you like what DiDX or Surereemutable have been doing, then definitely talk to us. There's a lot more room on Starkeyx. I mean, I think Starkeyx is wonderfully useful for the, you know, the use cases that we've envisioned, you know, for example, minting and trading of NFTs and so on. The mind-blowing stuff is, once again, we see that day and day out is the stuff that we never thought of and no one

else thought possible that developers are building on StarkNet. And certainly Starknet and that generalizability and composability is where that serendipity happens between Defi apps, right? We all love the word composability in this industry. But I'm getting a hint that you guys think that the Stark-X side of things, the more like apps specific, chains that are built for one company each one at one time. Also still have a lot of potential left in them. There's no doubt. Can you talk about that a little bit? What's left on the table? Well, I can't announce, we won't go into the announcement of an announcement of an announcement game, but there are a whole bunch of things in the pipeline on the Starkex front that's going to come

online in the coming period, which is very, very interesting. Once again, limited to the use cases supported by Starkeyx. Say a bit about L3. So, you know, StarkX is going to move up to layer 3. So So what is layer three? Ah, right. Which is another Starkware innovation. Yes, is another Starkware innovation. Recursive Starks are coming to main net to support our production systems in a short number of days. But so what is layer three?

So instead of having the Stark X systems that today are proven off-chain and then verified by a smart contract on Ethereum, instead of having that verification done on Ethereum, it could be done on the public Stark net. and by merit of doing it on the public Starknet, you could sort of conceive of these applications as having moved one layer up, and that's why we refer to this as Layer 3. So I think the first things we're going to see at Layer 3 are the Stark X instances,

and for those applications, the benefit is trivial. For one, it's just lower gas spending. So better economics for them and their users. I think we're going to see a lot of excitement on Layer 3 with custom Stark nets. And I think that's where a lot of sort of the app-specific actions,

is going to take place. I think it's going to strike a very interesting balance between offering sort of the best of both worlds, meaning the best of decentralization and censorship resistance and general computation and composability. Yet, at the same time, offering those applications, the certain degrees of control that they deeply care for, which are essentially taken away from them on a public chain. It doesn't matter whether that public chain is Ethereum or the public stark net. This has been growing interest in the cosmos ecosystem lately. For sure. And this starts to look a little bit like Cosmos.

For sure. For sure. This was, yes, yes. This is a vision that Zaki described to us three years ago. And so the strategy is you have the generalized settlement layer, which most people assume I'm talking about Ethereum, but you guys are actually talking about StarkNet, the DK rollup that is the foundation for the layer three's, the more proprietary Stark X's, right? Well, it's a two layer. sort of foundation, right? There is Ethereum providing its security and support at the bottom. That's the massive, those are the shoulders of the giants we're standing on. And on top of that,

we have the public Starknet, on top of which the layer 3s are going to be instantiated. There's a growing conversation in the Ethereum community is like, okay, well, all these Stark X or general layer 3 settling on the Starknet layer 2 makes Starknet its own equal. Its own vibrant ecosystem. And also, you guys released the token details, which we'll talk about in a second. The token had native fees payment in its own token, as opposed to something like Arbitrummer or optimism, which take fees in ether. And so there's a growing conversation in the Ethereum space about is the Starknet layer two

interested in actually becoming its own kind of sovereign chain that disconnects from the Ethereum layer one? The technical details, I'm a little scape me as to how this would work. but is that a future world that we might see where... Absolutely not. We do not foresee this. We're not, we don't have any plans for such a thing. We are relying in so many aspects on Ethereum.

That's our strategic decision from day one. It's a four-year-old strategic decision. There's no plans for the Stark net to become its own layer one. What about settling upon a different layer one, like in addition to Ethereum, setting a link? We've been approached many times by anyone, anyone, you can think of, okay. Our answer is simple and straightforward. We're a layer or two on Ethereum.

That's what we've been building for years now. We're very proud of that. This is where we are, you know, this is where we're at. This is where we exist. What are the properties of Ethereum that really make that true? Like, what about Ethereum keeps you so aligned with it? Well, two things. Fundamentally, culturally, okay, there's this developer,

focus and mindset, and that's a sentiment we share, and that's something that sort of runs in our veins, and we're very happy to see in that regard the fast-growing ecosystem around Starknet, which is really sort of developer-focused and developers first. That's really top of mind for us. At a more technical, or call a technical economic level, the security offered by Ethereum is unmatched, right? There's just cannot be compared with anything else other than, I don't know what, Bitcoin. I want to add to that that everything about our team and our technology and the way we work is about future proofing. So the technology is the most future proof of all the options of proof systems out there. And the most future proof layer one we see today is Ethereum. So it's a very

obvious choice. Yeah, certainly the idea of assurances is very, very important in crypto settlement insurance is, but also just assurances that the ecosystem that you build upon sticks around for the long term. For sure. And so, especially in these very nascent years of crypto, I mean, we're 12 years into it, but, you know, we know that this is a century-long endeavor. Having long-term assurances is super, super important. Of course.

Okay, so let's get into the details of the token because the token was recently announced. And I have to start with this. Suu accidentally leaked, well, not accidentally. He leaked the details of the token. And then the token blogs, which were already, seems like they were already ready to go, released 24 hours later. Was Tuzu anything to do with the timing of when those articles went out? So, yeah. Unfortunately, it had nothing to do with it, meaning that was actually the game plan. And as you indicate from the three-part series, this was well thought out.

Yeah, maybe no one will believe us, but the target date many weeks before was July 13 Wednesday. I'd like to hire anyone who can produce that kind of content in 24 hours. That sort of clarity. of thought and expression. Yeah. And get everyone to sign off on it, you know, inside the team. Did you guys feel like rugs by Suu for... No, no, no. I think, you know, I think they're in a situation of extreme distress.

Sure. In sort of a finance class, you know, that you're taught about the cost of distress. We're seeing this sort of extreme behavior. Unfortunate... A part of the Ethereum community is actually very happy about the things that have gone down with Fero's Capital because... they think that the decentralization of SarkNet is super important. And so they're actually kind of happy to see the tokens that Three Eros Capital owned to be distributed amongst almost anyone

else other than Three hours capital. Is this a sentiment that you guys share or any thoughts on this? I got to say the Shudden Freud is not something that I sort of, I can't sort of. Sure. But on a more like formal and technical level, the whole legal process that is unfolding with three hours is not something that we are, you know, in control of or aware of all its details. Or party to. Yeah. Yeah. Yeah. Yeah. So like we are. So about the actual token launch. So let's run through the next weeks, months of Starknet and the token and the roadmap for that. Can you guys, for people that haven't read the blog post or perhaps they only consume data through video and audio, what's the roadmap? What's the launch process for this token? Okay. So 10,

billion tokens have been minted and their allocation has commenced. Allocation has begun to investors to core contributors, which include Starkware, employees, consultants, and developer partners. In parallel to that, a foundation is being set up that once it is set up, I mean, it is being allocated slightly over 50% of the tokens. And those tokens are going to be used both for user-driven rebates and provisions, around 18% in total of all of the 10 billion tokens. In addition, there are grants and the foundation is going to have a strategic reserve and other things that you also see in other layer 2s and in other chains.

Now, this is being done right now. So the foundation is being set up now. By September, the tokens, which are now off-chain, are going to be placed on-chain in their ERC-20 token. All of the tokens that thus far have been allocated to investors, core contributors, are going to have a four-year schedule of release, one-year cliff, and then gradual release beyond that. Looking a little bit later on, shortly after they are placed on-chain, they will be requested for governance and voting on upgrades to the network. operating system. And then next year, at some point, we will transition to allowing fees and then demanding fees be paid only in the Starknet token. And further down the line within 2023, these tokens will be used for staking for the purpose of participating in consensus and

leader election for operating in a decentralized way of the system. And so the economic model that I've come to like understand generally about layer two tokens like optimism arbitram is not they don't have their token yet but i'm assuming it's going to follow this path to is that you stake the token to validate the chain same thing with ether on the layer one for ethereum but the difference between the stark net token and the other concepts or strategies of the layer two is that layer two's optimism arbitram at least the generalized optimistic rollups pay for the transaction fees in ether but the difference here with stark net is that you pay for the transaction fees in the stark net token What's the thought or strategy behind this? Why this decision?

Well, our focus, as I mentioned earlier, our focus is on developers and developers first. And we believe that this mechanism that we've put in place that would allow people to pay via pay masters to pay eth for transaction fees. But the native token of this layer will be the Starknet token. We think that this creates an economic ecosystem that would give developers the environment that they need to build and thrive in. We think that long term, this is the healthier ecosystem that needs to be built. I want to just add a few more details. So it's really important for us that developers further down the line experience inclusivity, which means, you know, suppose there's probably someone, she's now in college or, you know,

maybe high school and three years down the line, she's going to write some amazing smart contract. It's going to be really important and valuable. And now, how we're going to find a way for her to have a lot? say in the governance for her to participate in operating the network. Well, the mechanism we want to come up with, and we're very proud of trying to innovate on that as well, is one in which a portion of the fees, and these are governance tokens, right, and also used for staking for operating the system, are going to flow automatically to smart contracts as a portion of the fees being paid. So now this imaginary smart contract developer, she will start receiving tokens that allow her to

participate in the governance and in operating the system, which can only be done if you have a native token and demand the fees to be paid in it. That's why we're doing it. Certainly. Certainly. And we're, of course, like I started this interview, in this bear market, which is also a build market, and we need to build our way out of it. And so just lay down the vision for how you hope that StarcNet progresses. Where are we in six months? Where are we in six years? Where are we in six months? I think where we were six months ago, where are we in six years? Same answer. writing code, deploying systems, educating developers,

onboarding more people into the blockchain ecosystem, into the broader Ethereum ecosystem. That's where we want to be. In six years, maybe also hardware. May well be. Not just software. Awesome. Well, I hope you guys have a fantastic rest of your ECC

and enjoy playing. So thank you for coming on. Don't forget the sunscreen, I think it's appropriate. Certainly. Cheers, guys. Okay, thank you. Thank you. Thanks.