Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Epicenter Hosts – Is the Ethereum Roadmap the Right Path for Eth Holders?

Episode Date: July 29, 2022

An interesting question that has sparked debate in the Twittersphere and amongst our hosts. Hear as Meher, Friederike and Brian discuss scaling visions currently in the ecosystem, with particular focus on Ethereum Layer 2s and whether or not this is a good path forward for holders of Eth.Topics covered in this episode:Introduction to the hostsMeher's opinions and recent twitter thread on EthereumHow Layer 1s and Layer 2s work togetherSmart contract shardingBitcoin vs EthereumSolanaThe Ethereum roadmap from hereEpisode links: Meher's twitter threadEpicenter - About UsBrian on TwitterFriederike on TwitterSponsors: Steakwallet: Steakwallet is your new favorite multi-chain, mobile wallet. Tired of having a different wallet for every chain? Get Steakwallet today and get the power of Web 3 across all chains right at your fingertips: https://steakwallet.fi/ -This episode is hosted by Brian Fabian Crain, Friederike Ernst & Meher Roy. Show notes and listening options: epicenter.tv/454

This is Epicenter, episode 454, with all hosts, or some hosts, Meher, Brian and myself. Welcome to Epacenter, the show which talks about the technologies, projects, and people driving decentralization and the blockchain revolution. I'm Brian Crane. I'm here with Meher Roy and Frederica Ernst. So before we get started, we'd like to tell you about our sponsor for this week. So this is Stake Wallet. Stake Wallet is your new favorite multi-chain mobile wallet that puts the power of. or Web 3 at your fingertips. In just three taps, you can stake and manage your assets in over 22 built-in protocols, including all the major EVM chains, L2s, and non-EVM chains like Cosmos, Salon,

near and more. Stakewallet abstracts away all the complexity while being fully self-custodials, meaning getting yield on your crypto has never been this easy and secure. Stakewallad also has multi-chain NFT support so you can view all of your NFTs in one place and you can flex your cleanest NFT by setting it up as your app background. And they're continuing to make lots of upgrades and to highlight this transformation stake wallet is being renamed to Omni, the next generation super wallet. So join thousands of users of this next generation wallet by downloading it today on iOS or Android. You can go to state. Wallet.Fi, that steak, spelled like the meat, and check it out. And with that, let's go to our host

discussion, right? I think it's the first time we've been doing that for a while. We were just going through some, you know, potential topics before and ended up getting kind of bulked out into an extended discussion about Ethereum and scaling. And then we were like, let's just get started it and we'll figure it out sort of as we go. But maybe before that, how are you both doing? I'm doing well. I just got back from Paris and ECC is always such a wonderful event. So yeah, I feel very energized.

What was the highlight of the conference for you? Somehow at ECC I end up missing all talks. So I literally went to like three talks, my own and two others. And I still talked with people 24-7. It's very much felt like being at a conference. And ECC kind of manages to keep that community feel while also having everyone attend. So, yeah, no, it's nice. It kind of feels like Ethereum a couple of years ago. so hi everyone maybe so i'm here i haven't been hosting episodes epizenter episodes for a while it's mostly because of some health issues i had but i'm i'm doing quite well right now yeah getting

back into into the crypto scene these days one of the one of the questions i'm grappling with is the intriguing question of whether the Ethereum roadmap makes sense for the ether holder like me. So I've been like this long time ether holders, I don't know, seven or eight years. It's this position that I never sell except to build the one company, the company Brian and I run called KORUS.

And the question these days I'm grappling with is, Does the Ethereum roadmap make sense narrowly for the Etherholder? Not the Ethereum ecosystem, but the ether holder. Yeah, you had a Twitter thread recently that got some attention. What was the kind of the gist of the argument of your Twitter thread? Yeah, I mean, I'm kind of like realizing that the Twitter thread got very popular, but maybe I should have approached it differently. I should have written it differently.

So maybe I can tell you the gist of my argument, right? And for a moment, like, for a moment, like, let's think not of crypto, but of, I don't know, the traditional corporate world, right? So imagine like Amazon, right? So imagine Amazon in 2005. It's been 10 years in the book business, selling books online, massive success. And then it realizes that in building the book business, it has ended up building data centers, and other startups also need data centers.

And so it decides to build another business, which is AWS, right? Okay, it's going to rent out some of this computational resources it has to other startups so that they can build their other products. What does Amazon do when it makes such a decision? Well, it structures AWS as a subsidiary. And the parent Amazon continues selling books and building its logistics chain. The parent Amazon doesn't say, I will stop selling books,

and I will only now be building data centers. It says, OK, I'll do both of them. And the way we will structure ourselves is the AWS work will be as a subsidiary, and the parent thing will continue as the parent. So that's that's one way corporate transitions play out. Another way corporate transitions play out, you can take the example of Elon Musk where he's building these Tesla cars and he realizes, oh, in a world with lots of Tesla cars, people are going to want solar panels on their houses to charge Tesla cars and be emissions free. And so on this inside, he realizes that people

that he's selling Tesla cars too will want solar panels. So they end up starting solar city, ultimately integrating solar city. But to build solar city, Elon Musk never says, I will stop building electric cars so that I can build solar panels. So now when you come to Ethereum, the interesting, so what's happening in the Ethereum space? In Ethereum, I think like something weird is happening in this roadmap, actually.

So historically, the way I've kind of viewed Ethereum is, Ethereum is a place where people can come and write their smart contracts, deploy them, and they can get customers. And that's the major thing that Ethereum has succeeded in over the last eight years. And actually, Ethereum has enormous traction. Like no matter by what metric you read, it is usually like 10 times ahead of any nearest competitor

you can think of. in whatever metric you can think of. And historically, historically, Ethereum's roadmap has been that people love hosting their smart contracts on our network, and we are going to create more capacity for them through the sharding roadmap, where the more capacity will also be run

in infrastructure, which is controlled by the ether token holders. That's been the traditional sharding roadmap. Now, now Ethereum is shifting, has shifted to a very different vision. And that vision is that Ethereum, this main chain is going to transition to being a chain that specializes in settlement and data availability. And maybe we can define those terms later on in this in our chat. And the job of actually hosting smart contracts and running them and providing huge throughput to these smart contracts will fall on networks that Ethereum calls L2s. And these networks are by and large run by other people's coins. So you have a network like Starkware that has its own coin, like Arbitrum, it has its own coin, etc.

And so Ethereum is like saying that, okay, we will specialize in the role of settlement and data availability and leave the job of hosting smart contract daps to these other coins. And so in a way, you can read Ethereum's roadmap as in hosting smart contracts, like just like Amazon realized it needed data centers, Ethereum realize it needs a settlement layer, but Ethereum's decision is that it is stop, it is going to stop investing in bringing more capacity online for the smart contracts that do run on Ethereum, and it is rather going to specialize only in the business of data availability and settlement,

and it's going to leave the business it has won so enormously in, to other coins. And the thing I'm trying to think of is like, is that a smart decision? Is it a smart decision to sort of abandon the winning horse that you have and bet on this sort of new business line, which is kind of like an R&D business line entirely, to the detriment of your main business line altogether?

And so, you know, like this is, this is, the crux of my inner doubts about the Ether roadmap for the Ether holder. Yeah, I guess one of the core questions around this is, if you have these L2s, and if these L2s then get a lot of adoption and get a lot of traction, you know, to what extent does this sort of drive value for Ethereum? and I think it's definitely unclear, right? I think for sure you're right, that there's no evidence that that happens. And of course, the incentives are not aligned, right?

Because to the extent that there is like value to be captured, you know, all of these L2s, they will want their token to kind of capture that value. And I think right now, of course, you have a big incentive to be kind of, Ethereum aligned and to be, you know, connected to Ethereum and kind of work with these Ethereum DAPs. But over time, that may become less relevant. Can we talk about how the L1s and L2s work together? So basically, I mean, the L2s currently need Ethereum as a layer for fault proofs, right? I mean, basically I think a lot of the of the so-called So-called L2s have done really good marketing and that basically we all know them as L2s.

And as far as I know, the only L2 that actually currently has fault proofs is arbitrum, right? So that's currently technically the only L2 or the other ones are side chains, right? Like, you know, using like the correct terminology, I guess, the less aspirational terminology. So basically, your point would kind of reframe basically what would actually argue that most of the value that they accrue they accrue as side chains anyways they don't actually need the fault proofs right is that correct mayor so there are like arguments at like different different like scales but my biggest question my my central question would be uh Ethereum could have could play this whole game the same layered architecture very differently. How? Well, Ethereum could say that, okay,

we are succeeding enormously at hosting DAPs. Uniswap is a major blockbuster running on our chain. We need a data availability and settlement layer. We don't have one. We need it to scale. Ethereum could have said this. Let's build our own data availability and settlement layer. we will basically create a fork of the ether token.

So we'll call it by some other name. And this other coin, 20% of the supply can go to some set of developers that will build a settlement and data availability layer for us. And then the main ether chain would continue rolling along, building extra capacity and use that settlement layer to actually function as a roll-up and scale and deliver more capacity to a winning DAP-like uniswap. It could have done that.

It could have done the opposite way around, which is the current Ethereum chain. It becomes the settlement chain, but then a fork of the ether token itself becomes a roll-up layer that continues hosting uniswap and delivering it capacity. That could have been possible. Or there was also an alternative to,

to say that actually maybe they don't want this brand confusion of two tokens. I bet to you it is possible to create two chains powered by the same ether token, one focusing on settlement and data availability and the other on delivering high throughput to a winning application like UNISWRW. So these are all parts of the branch, like of the tree of choices that are available in front of the Ethereum community. And my central question is not about whether L2s are good or not, but why are these other branches not being chosen

and rather the main ether coin is abandoning this successful business in pursuit of an experimental business like data availability? So that's the central question, right? Now because it is making this odd choice to abandon this winning horse, this amazing business that it has today in pursuit of this experimental business.

And I find that it a baffling and frankly, even stupid choice to abandon that business. I am forced in a position where I have to critique this L1 and L2 system. I don't naturally want to critique L2s. I think this is the cool architecture, but because the Ether token is making this choice to pursue this experimental line and abandon the successful line,

I'm forced to critique the experimental line. So now we can go into like critique understanding this experimental product line and actually maybe even critiquing it a little later in the show. Yeah, I mean one one thing. So I've also been kind of like thinking a bit about it. I'm not as as knowledgeable as others about L2s, but you know, and then I want to give credit here to Irwin, who's, you know, our theorem team lead at course one. And we've had like a whole bunch of discussions there about L2s. And I feel like I'm more, more coming around to his argument, which is basically, and this is also one of the things that stood out to me when we did the arbitrarum podcast sort of like in retrospective, right? Because you have the sequencer. And,

you know, right now the sequences run by, you know, one. party. And I think everyone recognizes that this may be like maybe they can't steal your money, but one, uh, you have a kind of risk that they may have downtime, but I think more important is the risk around regulation, around censorship, okay, now someone can subpoena them, shut down the chain, you know, like, so it's always it doesn't work to have one party that ones, an L2. I mean, maybe it works in the case. It's like an application-specific L-2 and the gaming L2 or something, right?

But I think for a generalized smart contract scaling solution, you have to kind of decentralize and then how do you decentralize, right? Then it becomes something where you have to decentralize the sequencing. And now you have to have these different sequences. you have to worry about who is a sequencer at what time you have to worry about malicious sequencer you have to have some sort of civil mechanism and a lot of that stuff is exactly the thing that like an L1 solves right through staking and through those things and then of course the D-Y the X choice was very interesting in that context as well right where they're basically

okay, they are being an Ethereum L2 on Star-Ware, and they were basically moved to building their own cosmos chain, and it was exactly around that point of decentralization, right? That they felt that as an L2, they just can't get the same level of decentralization, right? so they chose to, you know, build their own L1. And I think that seems very sensible to me. It seems like a very coherent argument. And I haven't so far, I think, heard a strong argument against it. And then I guess the other thing, the other point Irvin also made, or the other point around that is that, okay, so the L to the Ethereum, you know, you have this exit mechanism.

And so you have some guarantees, but the guarantees only extend so far as to the assets that were like moved over from there. So now you start having, I don't know, interoperability or like you start having things that are natively deployed on the L2, right, because you don't want to deploy it natively on Ethereum because it's going to be too expensive, right? And then the kind of Ethereum doesn't really provide you security for that, right? because you can't exit that to Ethereum. So I think all of those, like, I do, I do think the argument that, like, okay, any L2 that, like,

succeeds ends up becoming kind of like an L1. One, because of decentralization, and two, because of economic incentives as well, I think it's very convincing. And then I guess if that ends up happening, then you really just have Ethereum with a bunch of side chains, with bridges to Ethereum. And yeah, maybe Ethereum provides some other services to those side chains, like the settlement and data availability. And like, I don't understand those things enough.

And I don't have enough of an opinion whether, you know, this is a really valuable service or not. So I think one of the weird things I feel is that the reason that L2s will have a tendency to become independent L1s is that it isn't clear what Ethereum gives to some categories of L2s, not all L2s, some categories of L2. So, okay, maybe we can take an example. So one of the most popular, you know, upcoming L2s is this Star Quares chain, right? This is the one that D-Y-D-X wanted to be on and then they moved away to Cosmos.

So when you think of like this L2, today it's very clear what Ethereum provides this L2. So today it's it's abundantly clear that the main thing that the L2 gets from Ethereum is a whole community of developers that would want to build stuff on their budding chain. Okay. So imagine today Ethereum is at 150 billion market cap and then Starkware their token debt debuts in December of this year at a billion dollar market cap. Small coin needs the community. It makes sense.

Now what does the small coin get on a security level, right? Because Ethereum is trying to sell security and settlement to this small coin. Now when you look at the architecture of Starkware, it's a stunning project. Like it is like, this is like the sci-fi future realized. Why is this the sci-fi future realized? This is like the first chain, or not the first chain, actually like the second chain, the first being Mina, but this is the second chain that actually balances the, that strikes a very interesting power balance between professional validators on one side and normal day-to-day users on the other side. Now, what is this professional balance?

So when you think of like Ethereum and Solana, right? What's like many people like, oh, Solana is not decentralized. Solana is not decentralized. And Ethereum is decentralized. Why do people say that? There is truth behind it, actually. So in Ethereum, in Ethereum proof of stake, you can run a validator for Ethereum proof of stake in your own home.

You can run a node for Ethereum proof of stake in your own home, which means if you are extremely motivated, you can verify all of the accounting of Ethereum, starting from the Genesis block on your computer without needing some fancy servers in a data center. Solana is not like that. So in Solana, it's a bunch of professional validators that run the chain and KORUS, my firm is like one of them.

And the chain is so massive that you can't run, you can't run a full note for that chain at your home. You can't verify its accounting. sitting at home. Whereas in Ethereum, you can. And so there's these two families of architectures, one which goes for scale and it abandons home users being able to validate the chain.

And then there's the Ethereum which says lower transactions per second, but home users can validate the chain. And so two different universes, right? And like that's often the decentralization debate happening in our ecosystem. Now, something like stock chain comes along, stockware chain comes along, it's mind-blowing.

Because what stockware chain can do is, it can be a Solana, I mean, it's designed this year to be 500 transactions per second, which is by the way, exactly the amount of load Solana handles today. So the stockware chain can do like 500 transactions a second, but what the stockware chain can do, is it can compress all of the history of its chain into a set of small proofs.

And you can verify these proofs in any small computer on your home, in your mobile. And by reading these proofs, you can be sure that the accounting in that main stockware chain, processing 500 transactions a second, is correct. So this kind of chain strikes a power balance between home users and professional validators. The professional validators can use their fancy data centers

to crank out the transactions per second on the chain. But the home users are not left behind on this journey, like in Solana. They can actually run their full loads and be sure that the accounting is correct. That's the value prop of a stock chain. The stock chain has a second value prop, which is when you have two stock chains,

A and B, let's say Starkware and Minna, If there's a bridge between those two chains, that bridge is ultra secure, meaning that chain A and chain B are bridging to each other. If chain A gets hacked completely by the validator's set running chain A, chain B is completely protected from that hack. It will never process any odd transaction, even if the chain on the other side is hacked.

This is such an ultra secure bridge, and there is no custodial set of signers. So this is like the Starkware magic. Now the thing is like, okay, now today is like Ethereum 150 billion, Starkware 1 billion, Starkware is an L2. Okay, it goes to all of these conferences, it gets a community, make sure marriage made in heaven today. But imagine now Uniswap moves to Starkware

or the big daps moves to Starkware in like five years. Starkway is a, I don't know, $50 billion, 100 billion dollar chain, which has more D5 than Ethereum because, well, Ethereum doesn't want to be an execution layer, so people naturally have moved to Starkware. And then what is Starkware doing? Starkware is sending these proofs to Ethereum, and then Ethereum is verifying that proofs and saying, oh, the accounting on Starkware is correct. But then Starkware has an army of 10,000 nodes running in people's homes, also saying that

the accounting is correct. Well, my question is, what does Ethereum provide Starkware? What is the value prop Ethereum is providing if it is not providing a community of developers in the future, because it's no longer an execution layer. It's not providing security, because security comes from their amazing mathematics and the fact that there's 10,000 full nodes running in the while.

So when you see this relationship, you realize that in this L1 and L2 relationship, relationship, the L1 is not providing something of major value, which means like that this L2 can really be thought of as an independent chain, a side chain. And like that's, I think, Erwin's argument, like that these things are actually like sovereign. And so the Ethereum vision is actually like the cosmos vision of horizontal scaling by lots of different tokens. Now, I think this. argument doesn't work so well for arbitram and optimism. I think that's, but it works very well for any ZK roll-up. So star chain, the book bars, and these loop rings of the world, this argument will work very well there. So, Meha, I mean, these are these um, Elthus are currently positioning themselves as Ethereum altus. Do you think this is just in interim strategic positioning so they can benefit from the developer community around Ethereum?

Yes, yes. I think I think like that is that is that is like I mean there are many things humans do. without thinking through the mechanics of why they are doing it, but their actions are optimal. But I think that this is really what's happening. So I think when Ethereum goes to the world and broadcasts, we are doing 50 transactions a second and we are not going to grow this capacity. Instead, we are going to grow into a data availability direction.

People realize that, oh, all, All of these successful projects on Ethereum, they are going to have to migrate somewhere. And the main thing that any budding chain needs in the ecosystem is developers to come and build on the chain. There are so many ghost chains in the world. And so if you are faced with this problem, what would you do naturally? You would go and you would become an L2. perfect place where you can see this is in a dark horse project again in the zK world which is

called uqbar uqbar you know you realize that okay they are positioned as an ethereum l2 when you start reading their blogs you're like their roadmap is like oh in the future we are going to be an l1 but it's optimal to position yourself as an ethereum l2 today because That's how the developer flow is, right? People that are unable to scale their thing on Ethereum need a house. Like, you can be that house and you can find a community of developers. I think this is the odd thing about the, I feel like this is the odd thing about the Ethereum roadmap, honestly. And I find myself sometimes, with the exception of Airwain, I find myself also like a lone voice.

This kind of thinking breaks down for a game theory. The game theory L2s actually need Ethereum, even when they are big. I mean, if they're massively successful, they won't need Ethereum. But if they are, you know, like going to be 2% the market gap of Ethereum, I think they better stick around with Ethereum. But, I mean, but like, I don't know, look at Polygon or. as an example, do they need Ethereum? I mean, that is a game theoretical, too, in essence. So today, Polygon is like a side-chink.

I think, like, I mean, I'm not very up-to-date on Polygon, which, by the way, it's like major project out of India, major respect to you guys. Like, I grew up in India, I know how hard it is to build a crypto thing there. but so as far as my understanding goes it's a side chain today with an ambition to be an l2 and actively working on a technology to be to be an l2 Friderica would know more and I actually I want to hear Friderica because like she probably has a different very different view on all of this I agree I agree with a lot of what you're saying so I feel like

Back in the day when basically sharding and proof of stake was merged together as the next upgrade to the Ethereum roadmap or the Ethereum project. And this has changed over the years, right? So basically in the last two years or a year and a half or so, it's become apparent that basically we won't have smart contract charts for quite a while. And the shards have kind of been reduced to a data availability layer that I also have forms with. So basically, just become a data availability layer. I think this is not ambitious enough and also not the best value for money for Ethereum investors. I'm 100% with you on that.

So basically my question is this has never, I mean, maybe on East Research and so on, but out in the open, it's never really been discussed. Should we kind of, should we kind of leave the smart contract charting for now and kind of just go to data availability, it kind of, it was just, it was like sneakily changed the roadmaps without really communicating about it. So there wasn't really an open discussion in the Ethereum community

because by the time that most people understood that smart charts were no longer in the immediate roadmap, basically all the specs had been written and basically there was an understanding that basically would be data availability only. and so on. Do you think this was failing on behalf of the Ethereum research community? How do you see that? So actually, I don't know because for me, my subjective experience is I was in crypto,

crypto, crypto, sharding, sharding, sharding, sharding, sharding, sharding, sharding, sharding. I'm hit by cancer. I'm out of the game for 15 months. I return and now it's like Ethereum's a data, the Ethereum specializing in data availability, right? So it strikes me like that, like, it's like that thing. It's probably, it's like normal Ethereum community is like frog in slowly boiling water.

I am the person who's like sitting in hospital, comes out and like put deep into the water. Oh, you're a data availability, your future is a data availability change. The coin you're holding is for a data availability play, no longer a smart contract hosting play. So I feel the jerk, immediately, right? So I don't know how this happened. And to be honest, I'm actually like an

outsider to much of the, much of the discussion in the, in the, in, in the, in the, in the, in the, in the, in the, in the, in the, in the, in the, in the, in the, in the, I'm also like, I've never contributed there. Why should they listen to me also? I can, I can, I can, I can also understand that. But if I had to guess, if I had to guess what Ethereum's roadmap should be. One way to maybe look at it is to think, we had an amazing, we had a major like world computer roadmap where the idea was, okay, every decentralized application would run on Ethereum and we were building towards that vision and it proved hard.

It proved hard to build and it was also the case that a lot of other architecture emerged and it's kind of become clear that for many things people will prefer the other architecture. So the world computer vision doesn't make sense. So we want to scale down our vision to something smaller that is also very strong, right, in some way. And is this process of scaling down that has happened. And we have scaled it down right now, at least for the next two years, to be data availability chain. I think there is this danger hiding in scaling it down this way. I think if scaling down has to happen,

and I think it has to happen, then paradoxically the good scaling down is to rather say that Ethereum will hold the biggest decks in the crypto ecosystem. This would be my proposal. That Ethereum makes sure that uniswap becomes the biggest, continues to be the biggest tax of the crypto ecosystem. And maybe I can kind of explain some of my thinking here, right? By the way, this thinking is not related to what I've said earlier.

You can believe in one while not believing in the other. So one of the very, one of the, one of the, one of the, one of the curiosities that strikes me every time I, so, you know, like as a validator, I am active in so many different ecosystems. Cosmos, Solana, Avalanche, near, I even look at Zillica and Tesos also, some I follow Tesos and I follow Ethereum. One of the very curious things about all of these ecosystems is the decks is the center of the smart contract map in every ecosystem. So what do I mean when I say that? You can actually see this in action very clearly in cosmos where in cosmos what happens is every DAB gets its own chain. And then when DAPs want to interact with each other, they send cross-chain packets to each other.

These are called IBC packets. And basically you can inspect all of these IBC packets and you can know what DAP is being called the most frequently by other DAPs. And you can build graphs based on such data. And some of these graphs are available in Cosmos blockchain explorers. When you go and see those graphs, you realize what is at the center,

what DAP is being called most actively by users and other applications, it's DECS, osmosis. And it's like 10 times bigger than the second performance DAB. OK, that's Cosmos. Now, when you go to Ethereum, you're like, in Ethereum, this kind of data isn't available easily. So you can go to actually the data about what that produces the most fees.

Well, actually in Ethereum, it's Uniswap, Unisov V3. And it's probably five or six times bigger than the next thing, which is, by the way, curve. And if you think of like what is the first non-dex smart contract, it's probably going to be 10 times smaller than Uniswap. This pattern repeats in Solana again, where radium is the biggest. And radium and serum, they have two different decks architectures.

So one is a clob and the other is this, traditional uniswop like saying they are the biggest and then the next thing is actually smaller same pattern repeats in even zillica it repeats in avalanche trader joes is the biggest so you always realize though the dex is like always the damn center and then and then i was like i started to think okay the dex is the center in crypto and then i had the realization oh the decks and oh i realize the exchange is always the center in a financial city so I mean, when you think of like New York or Frankfurt or London or Mumbai, you're like, these are the financial centers of the world.

What is common to all of them? They have the winning exchange. So the New York Stock Exchange, NASDAQ, New York, and Frankfurt. London will have the foot seas, you know, London Stock Exchange, New York will have the Lal Street. So you realize actually like, okay, whenever you look at like a financial center city, the exchange is still there prominent. And the major thing DAPS need often is a great DECS. So if you're building, for example, year you're going to have portfolios and you want to

change portfolios from one to another. You're going to need a Dex. If you're building Maker, your CDP users are using your CDPs to get leverage on a dex. If you are building an Oracle, you need a Dex because that's where price discovery happens. every particular DAP you can imagine, you have building an NFT where you are like, you need a Dex to trade your NFT.

So every DAP you build, you realize it needs the Dex is the center. And so actually I feel the optimal way to scale down the Ethereum vision is to rather say, we should, we already have the winning decks of the crypto ecosystem, that's UNISWOP. Let's understand its value. And in the future, let's just like make sure UNISOP wins. And that's it.

And if you do that, every chain of the world is going to connect to you as a side chain. They are going to send tokens to you to trade at your winning decks. And you will be the center of the world. That's my hypothesis. I mean, just maybe I want to very briefly respond on that UNISB point. I mean, I don't think the Ethereum is like well positioned to do that. And I actually, I am personally pretty sold on sort of like the, I don't know, osmosis idea that like having the entire chain that's like optimized around the decks

is going to be able to like outperform what you can do running a decks on top of a smart contract chain. But I want to sort of talk about like, I don't know, a very different way of looking at Ethereum. And that's like looking at Bitcoin, right? So if you look at Bitcoin, right, today is still the biggest market cap by far. And if you look at Bitcoin, you can ask like, what are some of the things that are like not great about Bitcoin or some of the things that, you know, some of the limitations and flaws of Bitcoin? I mean, I think we can go through them, right? So one is like energy, right? It has this high energy footprint. Right. This bothers a lot of people. you know, it's an environmental concern justified or not, but, you know, has a very large energy footprint.

It pays a lot for securing the blockchain, right? So it has a, that's basically money flowing out of people owning Bitcoin. There's no smart contracts, right? There's no good bridges to other chains, right? So you want to move Bitcoin over, you have all these kind of trusted bridges. The game theoretic problem, is a proof of work are not that great, right? So if you think of like the amount of money, it would take you to like attack Bitcoin's consensus relative to the value, you know, it's not that high. And if somebody did that, bought a lot of mining power,

attacks it, you can't, the network can't like destroy people's mining hardware, right? So from a game theory perspective, proof of work is like so, so. And getting worse, right, as the blog, block rewards are going down. The finality is only like probabilistic. The blocks are pretty slow. The throughput's too low. And still Bitcoin is pretty, you know, fantastic, right? Has a lot of usage extremely valuable. But if you look at Ethereum, you know, proof of stake Ethereum, well, the energy for print, that's gone, right? That's going to be very small. The cost for

securing the chain, again, is going to be pretty small. Smart contracts, obviously, you have smart contracts. Maybe they're not that scalable, not that throughput limited, but you have smart contracts, right? Bridges, well, you have lots of great bridges, right? Like, and you can build great bridges. Game theoretically, proof of stake is going to be, you know, it's very strong, right? I think, I don't doubt that Ethereum's design is good in that sense. finality is going to be better, right?

Block times are faster, throughput, you know, not amazing, but better than Bitcoin, right? So actually on all of those dimensions, in a way, Ethereum has like some significant advantages over Bitcoin. And now there has maybe some disadvantages too, right? You could maybe say it's less decentralized. I think that's probably true. and I think maybe in other disadvantages, you know, it's more risky, right? More experimental tech choices.

And then, of course, the messaging and the brand is also confusing, right? Because the messaging and brand is like, kind of like, oh, well, computer, but now data availability starting, like, this is, I think, confusing for a lot of people. But just if you look at these fundamental properties, in a way, I think, Ethereum has, and you know, the distribution is very wide of Ethereum. Lots of people have Ethereum exchange integration. Liquidity is great. You know, like a lot of things are there. So I think if you just look at it in terms of if you want, you know, decentralized store value that can really function as this like foundational financial asset in, you know,

like a crypto economy, I think Ethereum looks like really good. And if you, if you sort of look at it in terms of, you know, the size of that opportunity, I think that's pretty large. So I think that that feels like, you know, another way of looking at the theorem. Of course, that position has also been articulated before. I think this is ultrasound money, Eiff, and I think the bankless guy spent a lot of time kind of articulating some of these points. But it's of course not the sort of main Ethereum message, right? And it's not the thing that.

But yeah, I mean, I think that's another way of looking at it. And I think if you sort of look at it in that contrast, it looks pretty good. And then the upgrade looks pretty good too, right? Now, the proof of sake upgrade. So I agree in many ways. I actually think Ethereum with like validation at home, the ability to run full nodes at home, it's going to be more decentralized than Bitcoin.

Someday in the future, those numbers will be so. And yeah, I mean, if the future of Ethereum is to be in this digital gold market, store of value coin, I think, I think it has a very competitive position. And maybe it should pursue that, pursue that market. And it should, yeah, it may be flipping Bitcoin on, on that market to all that can happen. And if that happens, it doesn't matter that it, that is data availability roadmap isn't, isn't so good. It's, it's really immaterial, right? It can, it can actually play around with any R&D market and abandon its main thing.

It doesn't matter because it's going to win at digital gold. I think that's a fair way of looking at Ethereum. And out here, I don't have a rational, I don't like this path for Ethereum. And it's not a rational argument I have. It's like an irrational argument I have. I think becoming digital gold is how grandpa chains go to die. Yeah, the next ossified chain.

Yeah, it's like Bitcoin, you know, it's like, started out like, okay, like a financial system for the world, unbanked, whatever, banked, the unbanked, whatever. And progressively it became older and older and older. It became a grandpa and it became digital gold. And it's not dead yet. But I think Bitcoin will be below the top, top 10 in coin market cap by the end of this decade. Yeah, maybe the world needs digital gold. And maybe, maybe it's not true maybe it's this is the actually the largest market but i suspect i suspect this is just a way to politely age and die in the crypto world but who knows it's irrational it's like it's very hard to have a rational discussion about this because uh because there are no numbers out here right

Yeah, maybe this is the bright future. Maybe this is how I need to look at Ethereum to be happy about its roadmap. Mayha, can I ask you something? So, I mean, all of the layer to fake competitors, future competitors to Ethiopia that we just talked about, do you think part of the problem is that they are all somewhat more close to? organized like a company because Ethereum basically, Ethereum is very decentralized, right? So basically it doesn't really have one strong driving force behind it.

And I mean, basically, sure, there's the Ethereum Foundation, but that's nowhere near as powerful with respect to the chains compared to, say, the Solanas and avalanches of the world. Do you think this is part of the problem? that not enough of the brain time spent on Ethereum, spend on furthering the Ethereum proper roadmap? I hold Ether, I follow, but I'm not, I'm not like an insider. I'm not a deep, deep insider, right?

So from my perspective, actually, from my perspective, Ethereum has enormous, like, from my perspective, when you think of, like, leadership, right like leadership and roadmap. I think Ethereum is quite centralized. Ethereum is as centralized as Solana. And I think it's a great thing for both Ethereum and Solana. Because when you look at Ethereum,

when you look at Vitalik, he will give four presentations in a year, like roadmap presentations and I'll be on Twitter. And like the entire Ethereum community is going to follow that roadmap. Yes, there are my money. multiple clients. Yes, there are many development teams, but ultimately the entire vision of the chain is very much centralized. And that's a good thing. And Solana, when I see Solana, I see exactly the same thing. It's like it's, it's Anatoli's vision. Anatoly is just like Vitalik that's hounding validators to make regular upgrades to their nodes. In terms of vision, both of them do set the vision.

So I don't think, like, Ethereum lacks a vision-setting force. And I also, and I actually also believe all these crypto networks need one or two great leaders that will set the vision for it. Because without vision, communities end up in, like, debates and squabbles. I've seen that end in the cosmos hub also. So yeah, I actually don't, I actually don't tend to see Ethereum as very decentralized when it comes to vision. At some level, I just feel like I want to reach Vitalik some way. It's like I want to write something that like Vitalik leads and like it's like he even reconsiders the Ethereum roadmap for like 15 minutes. I mean like that would be probably like the greatest thing I can do in in this short life I have.

So I'm like, no, no, Ethereum has exactly the right structure. There should be vision. There should be leadership. Ethereum may not look like a corporate, but it has everything in the right place. I just think it's like making this, I don't know, some kind of like structural error here. Is that very controversial? Do you think differently that, like, Ethereum is way more decentralized when it comes the vision and Solana is not.

No, I think the vision part is not so much. The problem, it's more the size of the R&D department with respect to the economic force of the chain. I feel like currently the R&D arm of Ethereum is small compared with... Yeah, I mean, like, maybe one way to state your objection would, like what you're saying. is it's not an objection what you're saying is in tesla when when tesla stock goes up 10x it he'llon musk makes like 50 billion dollars but out here like ether token even if it goes to 10 000 the ethereum researchers well they got their grant of ethereum tokens maybe eight years ago

maybe vitalik got his grant of tokens eight years ago it's not going to make a difference to to their stats so maybe maybe like that's kind of of that kind of incentivization of Ethereum R&D from the Ether token holders. Maybe that is the thing that's actually broken. I don't think that I think I would object to that. So basically, I think over the last couple of years, my experience is that money is an extremely bad motivator. So I mean, obviously, once you have like enough money, obviously, like more money.

like more money is nice, but it's not something that really makes people work harder, that makes most people work hard or think harder, whatever. It's kind of, it's more the sense of being valued in the community and basically being seen and, yeah, I, and maybe we don't, maybe as an ecosystem, we don't place enough value on, researches. Maybe we don't. I don't know. What do you think? I mean, I think this is in general, like, a challenge in, like, how do you get, like, a large group of people to work on, you know, on this kind of common goal without having a framework

of, you know, like an enterprise and the kind of traditional corporate structure. or even a foundation of something, right? And I think that's really, that's just very hard to scale. And I don't think anybody has figured that out. I don't think any crypto project has really figured out, okay, how can we now have, you know, a hundred companies or how can we have, you know, a thousand people like all, you know, driving this chain forward and working on this? I mean, it kind of, I mean, they can be part of this ecosystem.

They can be kind of like aligned in the vision, do things about it. But when it comes to the actual core technical development, I think all of them, there's like small teams. When you have, okay, some like cosmos is actually pretty decentralized in that there's a lot of companies doing core development. But I mean, I guess like Ethereum, although maybe Ethereum is probably. we even more decentralized, I think. But then it comes with a big cost, right? It comes with a big coordination cost and it slows things down in some way. And I think that's just a very important problem that is crucial to figure out.

And I think ideally then you'd have that some percentage of, you know, the inflation goes towards, you know, core development. And, you know, then if the market cap goes up. up the budget increases and it accelerates progress, more gets invested. Now, Ethereum, of course, doesn't have that kind of treasury mechanism. But I think even chains that have some kind of treasury mechanisms, I think the mechanisms to deploy that effectively, to monitor that, to have accountability.

I think this doesn't really work well anywhere right now. Now, of course, I think it's an experiment worth doing. I mean, I think if, let's say, I was to start a blockchain, definitely I think I would be like there should be an on-chain treasury, some kind of governance, you know, deploying funds to like drive the ecosystem forward. Now, lithium doesn't have that. Probably is never going to have that. And I think that's also a disadvantage.

But I also think it's, you know, it's an unsolved. problem that other chains aren't necessarily doing uh i mean they're doing it but they're not doing it particularly well so so conclusion we need uh meher to have uh like four of an hour time with vite no no no no maybe maybe i'm maybe i'm wrong and but yeah like it's it's really interesting how these different ecosystems are pursuing the scaling vision, right? Like it's Solana, Cosmos, Ethereum, Avalanche, and actually which one's going to be the best vision?

I think that's like one of the most interesting questions of these years. Yeah, I mean, so basically when you say the vision, you mean vision and the execution, right? Because they kind of, they're like one pack, right? So I'll give you an example. It's like when you see Solana, so the interesting thing about Solana is that,

first of all, Solana accepts that people won't be running full nodes to Solana on their homes, right? Now when you accept that trade-off, when you look at Solana's technical roadmap, you're like actually without making major changes to any of the engines, any of the code basis they have. Like this network, today actually processes 500 transactions a second, a genuine user transactions,

not like votes or anything like that, genuine user transactions. This network on their core technology can go from 500 to 50,000 to 100,000. And in fact, like, way three years ago when I met Anatoli, he was like, we'll do it. a million their sacrifices no nodes at home so solana is kind of like this network where division is set and it's like it's like about execute execution like there are like i don't think there are like major pivots that are that are needed or coming to coming to solana so i think like

That's how I understand the Solana vision. It's like, it's like the path to a million TPS is like just so set at right, the in this, so much in the early DNA that it's like just about like executing that path. Ethereum's different. Ethereum's like actually we don't know and Ethereum is like pivot after pivot after pivot is needed to actually scale transaction like transaction capacity. But on the other hand, so. I mean, weren't there a couple of chain halts on Solana recently?

And I mean, we've never had that on Ethereum, right? Right. We have had a few chain halts in Ethereum on Solana. And every time there's a chain halt, it's a big shock for me because, like, okay. Because actually, like, we are running one of the big validators there. It's like sometimes number two by stake or number three by stake or something like that. And so now we have to play a major role in starting. this chain up. So I, so these episodes, they are not like media events for me. They're like,

you know, six hours of my life burned through each of these episodes. So I think with Solana, the thing is that at least like when they published the root cause analysis of these three downtimes that happened in April, May, and June. And from the root cause analysis and the, and the, and the patches that they have, these look like they are, you know, like fixable errors, errors that are fixed, designs that are fixed.

There's a transaction fee market coming to Solana in the next release. And I think Anatoly already announced the upgrade. So I think like these will go away. But yeah, Sometimes like deep down I do wonder whether like some core design decision, especially in the consensus algorithm is like, is all of it solid, right? Like so so even I like I have some some measure of doubt about the about like the core consensus algorithm. But like these three downtimes that happened this year, they appear to be like programming errors or economic logic errors.

that will be fixed as per the root cause analysis. So I think for Solana, like the best hope is, you know, like that's actually true. And this network will have a measure of stability in the future. But in Solana, the thing I would say to Solana is, I think in Solana, nobody's kind of actually prove that that consensus algorithm is highly sound. This is different to Tendermint, where Tendermint is like a 20-year-old studied algorithm. Solana is a little different. I mean, I would hope that in the future, I see,

I want to see like a proof that Solana's consensus algorithm is like, it's like, you know, battle, like, is like sound under like the academic sense. I think like this is what I feel is kind of missing from Solana for me. And whenever Solana goes down, this is what I ought to worry. Oh, did the consensus algorithm break, or is it like some coding error?

And this year, the things were like coding errors. And like those are like less dangerous. And I think those will be fixed. So that's, that's where I find myself to be. So where does that leave us? Meher, if you look at the Ethereum roadmap, what part do you think should be accelerated? Actually, I don't know. So actually, like, if the roadmap is the data availability direction,

then I think actually Ethereum's kind of like doing well. Maybe the one thing, like the one thing in the data availability direction I do feel genuinely curious about is whether whether the avalanche consensus algorithm is just so much better. Because if like Ethereum has to be like this settlement layer, then you want stuff to settle quickly. So you want finality quickly. Now finality in the current Ethereum system is like 10 minutes. Whereas like finality in avalanche, average finity in avalanche is like 500 milliseconds, right? So 1,000x faster.

So when that consensus algorithm kind of exists and you want to be a settlement layer where speed matters a lot, maybe I think like that's worth evaluating. But even if Ethereum doesn't do that, even if it's like, OK, data availability is the future. Then I think actually like the roadmap is pretty good. I think like the engineering roadmap, I have nothing to say about it. It's the premise that it's a data availability and settlement chain that I feel quite uncomfortable about. So yeah, what do you think, Friticus?

I've spoken a lot today. What do you think? I'm super happy that you've spoken a lot. Yeah, I'm glad you're back. I see your points. I think you make very good points. Yeah, I need to think about it more before I reply, I think. Brian, what do you think?

I think I somewhat agree. But I think even if, even if Ethereum has a more limited role, it could still play, it can still play an important role in this sort of, you know, decentralized financial world of the future. And Ether could play an important role and it could be a sort of like hop-like thing, even if it doesn't secure those L2s. But let's see. Cool. So I think we'll have to do an update episode on this and like, you know, 12 to 18 months and see how it played out. Mejah, what do you think the right time frame is?

So, I mean, like, if you wanted to convert this into a financial bet, I think, I think it's actually pretty easy. So my financial bet would be, you know, like these spread trades that you have, which is long L2, short L1. So long polygon short eight, long, connoises chain long gnosis chain

short teeth long whatever stock coin will be there long stock coin short eth if you

if you have a basket of these we can define this that they will outperform because I actually believe that the value

will migrate up like so Ethereum based their stack, settlement, then the execution stack, then smart contracts, then users, the value will migrate from the settlement stack to the execution stack. So when you have like this long polygon short teeth

trade, that is what you're betting on. And maybe we can actually convert this into a basket and we can like monitor it over five years. So I think like the relevant timescale is like five years. And I'm actually even finding. to even convert it into a financial bet and and monitor it. And being that like Fitriq is on the other side, no sales prediction markets.

We can, if we can prediction market if I'm fine to do that too, as a governance feature of some kind. Let's do it. Cool. Well, I think we can settle the mechanics. Can be settled afterwards. But thanks so much. It was a pleasure.

to speak with you both and it was especially nice to have my hair on again and to hear about his fault and interom, which I think are definitely interesting and far-provoking and I guess we saw already some nice discussion that ensued

on Twitter recently, so hopefully this episode will trigger some more discussion and who knows, maybe Vitalik will listen to it and and have a have a green tier of red wine and ponder the future. So, all right, with that, thanks so much.

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