Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Joseph Lubin: What's Next for ConsenSys and Ethereum

Episode Date: March 26, 2020

We caught up with Joseph Lubin, Founder of ConsenSys, at this year's EthCC. It has been over a year since he last came on the show, and we wanted to get his take on what has been happening in the ecosystem since then. We talked about the ConsenSys reorganization, interoperability between public and permission blockchains and the opportunities there, government-backed stable coins and the possibilities of nation-states building their own, DeFi and the phenomenal growth in the ecosystem, his predictions for 2020, and thoughts on the challenges facing Eth2.0.Topics covered in this episode:A look back on the past year since we last had Joe on the showThe ongoing ConsenSys reorganistaionJoe's views on the recent Twitter discussion that “Ether is the ConsenSys token”Interoperability between public and permission blockchains and the opportunities thereGovernment-backed stable coins and the possibilities of nation-states building their ownThe evolving naratives around EthereumJoesph's vision on how DeFi compliments the existing financial systemJoseph's predictions for 2020The challenges ahead for Eth 2.0Episode links: ConsenSysJoe Lubin on Epicenter (episode 269)EY and ConsenSys Announce Formation of Baseline Protocol Initiative to Make Ethereum Mainnet Safe and Effective for EnterprisesJoseph Lubin TwitterConsenSys TwitterReset Everything virtual eventThis episode is hosted by Sebastien Couture & Friederike Ernst. Show notes and listening options: epicenter.tv/ethcc-joe-lubin

So, Joe, why don't you tell me what you had for breakfast? I don't miener. Not croissant. I prefer to be leger. Okay. And lege is good. I had the German cell breakfast. Piece of bread with cheese.

So which is very much not the French, not the French. Yeah, so. Hey, everyone. Welcome to Epicenter. My name is Sebastian Guzio. Today we have a special episode, you as we bring you our conversation with Joe Lubin. I recorded this interview with my colleague, Federi K Ernst, at the Ethereum Community Conference in Paris, which took place in early March.

Now, it had been over a year since we last had Joe on the podcast, and it was a good opportunity to check in and see how he's doing. I've always enjoyed talking to Joe because he's a really down-to-roof-goy and he's always got some interesting insights. So we discussed a number of things, including the consensus reorganization, or as he puts it, the continual consensus reorganization. We discussed his vision for intrapability between public and permission blockchains. We talked about the prospects of governments and central banks leveraging Ethereum to issue stable coins. And of course, Ethereum 2.0 and the challenges ahead. Now keep in mind that we recorded this interview in early March and that a lot has happened since then.

The world is a very different place now than it was three weeks ago. And this got me thinking, like many of you, I'm sure, about how the crypto community is dealing with all of this. So I'd like to organize an event where we can come together and talk about these issues. My goal here is pretty simple. I want to create a space where people from different communities within crypto can come together, leave their ideological differences at the door, and talk about these issues. So there's a lot of things I think that need to be discussed. For one, how teams are dealing with confinement.

Of course, remote work is pretty widespread in our industry, but I think this crisis is forcing teams to think about new and innovative ways to collaborate. The other thing on a lot of people's minds is some of these assumptions that are being tested at the moment and the correlation between crypto and traditional finance. And also, I think it's a right time to talk about monetary policy, both in crypto, but also in the broader economic context. Governments around the world are implementing massive stimulus measures that are going to have lasting effects on startups and on our industry. So we're still in the very early stages of planning this, but I did want to mention it here to gauge the interest. So we set up a website where you can leave your email address and we'll keep you informed as things developed.

The link to that website is in the show notes, but I'll mention it here. It's epicenter.orgs slash reset everything. And with that, here's your interview with Joe Lubin. I love that we're starting this off in French because we're here at 8CC and so it's so good. And I can't speak French, which immediately makes this a challenging interview. Thanks for joining us. Thanks for having me. in this transparent cage for blockchain professionals that also serves as a sauna.

It also serves as a quarantine box against... That's nice. Yeah. Yeah, that is lovely. So, you know, we last spoke to you, I think it was probably about a year ago. I want to say, yeah? It feels longer than that. Everything feels longer.

Yeah, it must have been 18 months. Yeah, yeah. I mean, I feel like it was around January of 2019. Do you remember what we talked about? I do remember. Blockchain, maybe? We did talk about blockchain. So, yeah, give us a sense of, you know, how you think the ecosystem has evolved in a year,

which your sort of takeaway on the ecosystem. So on the development front, I think the growth, the innovation has been astonishing. on the sort of speculative financial front, it has pretty much continued in doldrums. On the enterprise front, it has been just charging. It remains in exponential growth as far as we can tell. So on the development front, there are still spectacularly talented people building in the industry and being drawn into the ecosystem. And with respect to scalability, privacy, confidentiality,

we're seeing, we have seen over the last 18 or so months, massive breakthroughs that are coming online. So whether it's zero knowledge techniques for privacy and confidentiality, zero knowledge techniques for scalability in the form of optimistic roll-ups, ZK roll-ups. Starkware did sort of experiment on mainnet where I think they

landed about 9,000 transactions per second throughput. Yeah, it's really impressive. Yeah, it's pretty incredible. We are working with a project called Scale Networks, which is an EVM-compatible layer to network solution.

We have a our commerce and decentralized finance team has a product and set of services called Activate that is enabling us to both launch their token and facilitate some of the operation of their network. And so we can launch, we can still launch utility token. So there has been much interest in tokenized securities and we're seeing a little bit of traction there. We did a project called Mata Capital there. We're doing a handful of other projects with tokenized securities. But we're still being. fans of utility tokens. Utility tokens would not be considered securities by securities

regulators around the world in most places and have some sort of utility in the network. And we're able to help projects like scale launch because we have a deep understanding of the securities regulatory infrastructure around the world so we can help launch the token. We can ensure that there's usage of the token. We can ensure that there's full life cycle monitoring, security monitoring of the token. We have another tool. Our Pegasus Engineering Group has another tool called Orchestrate. As we move into a world where we have these business networks and they're effectively merged with financial infrastructure because we're tokenizing everything,

orchestrate can enable businesses that are operating on networks like Scales Network to manage gas and nonces and cancel transactions when they're in flight and resubmit transactions and register smart contracts, etc. And so those kinds of breakthroughs are bringing the technology to life effectively. Cool. It was already pretty apparent from your answer that consensus still has a lot of different projects, but consensus is being reorganized to a certain extent. Can you talk about that? Yes, consensus from day one around five years ago has been in continual reorganization. A lot of the organization has been smooth, organic, evolutionary. We had two events where we essentially made bigger changes and those events saw us shedding from a little north of 10% in each case. Job functions that effectively weren't core to what we were as an organization.

So more recently we, let me go back a little bit. So consensus started about a year after the Ethereum project began. It started with the vision and mission of continuing, expanding on that project. And we started because it was an immature technology and there was no ecosystem or developer tooling, et cetera. We were trying to build decentralized applications, but there was no infrastructure or developer tooling to enable us to do that. And so we gathered a whole lot of brilliant entrepreneurs and technologists. and began to explore the solution space. In exploring the solution space,

we incubated, invested in, launched way over 100 projects, and many of those have developed very significant traction, a real product market fit. Many of those did not. We ran lots and lots of experiments in a pretty freewheeling culture.

And we're at the stage where now we have a bunch of projects that do have very significant traction. These are Hyper Ledger Basu, the Pegasus tools and products around that. It's Infer, it's Metamask, it's Uport, it's Solithio. And all of those essentially fall along what we're calling a core tech stack. So they are working increasingly closely together, and we're building effectively what we're calling a blockchain operating system out of those pieces. So in recognizing that there were some pieces that had lots of traction but didn't fit in our

cortex stack and some pieces that did fit in our cortex stack over the last year we've really been sort of separating into two major functional groups within consensus and will effectively become two companies, an investment company and a software company. and a software company. And so in that process, we realized that we didn't need a massive marketing group, and we had the ability to streamline in various other ways. So there were certain regions that we weren't doing great in. And on the professional services consulting side,

we made some significant adjustments. And so we're just a much leaner, much more coherent and integrated software company. and the investment company is also re-architected to optimize our portfolio and make new investments. Cool. I'll ask about these two companies in a bit, but just before that, so basically consensus has been hugely instrumental in growing the Ethereum ecosystem. And there recently was a discussion on Twitter where someone said, Ethereum is the consensus token. in many ways that's extremely flattering.

How did you feel about that? Well, I didn't pay attention. I wasn't aware of that Twitter discussion. And in a sense, there's some truth to that. But other than for operational needs, consensus has never really held ether. We are certainly aligned with a, called a strong monetary policy. and certainly aligned with growing the value of the Ethereum ecosystem. A strong ether brings talent into our ecosystem.

It brings attention into our ecosystem. It adds security to the protocol. But very directly, it doesn't increase the enterprise value of consensus. Yeah, sure, absolutely. So the two companies you talked about earlier. So if I understand correctly, one of them is kind of the investment arm and I don't really want to talk about that or that much but tell us about the other company the company that builds stuff so is is there

token going to be associated with this how are the how are all of all of these diverse projects in this the core tech stack going to work together and what are what what what what are the thinking on that sure so the core tech stack company is called consensus and it is so internally we We call it SoftwareCo versus Investco. And consensus is a unique organization in that it's pretty much the only company in the world that has a very sophisticated public mainnet solution that is full stack. And also we use the exact same code as a sophisticated private permissioned Ethereum solution when we stand up networks or enable others to use our tooling. we over the last year or so as we get more and more integrated and integrated means that our different teams are working very closely together to create coherent documentation

coherent and shared APIs for different domains of focus shared product roadmaps shared go-to-market activities When we take that into a discussion with a prospective customer, we can basically offer from a coherent and optimizable solution from the protocol layer with HyperLedger-Besu and orchestrate and other tooling called Pegasus Plus that enables enterprises to have the comfort of support and tools around the core protocol element to infrastructural elements. So that's Infura on Mainnet, but it's also potentially Inferra direct in a private permission system.

So Pegasus and Infura can respond to some of the same API calls, soon probably all of the same API calls. We have developer tooling in the form of security audit infrastructure, in the form of Truffle, which we work extremely closely with. Still, Pegasus orchestrate enables people to orchestrate their transactions, but also do real-time security monitoring very soon. And so that infrastructure layer is critically important. Then we have identity and reputation solutions.

So decentralized identity, verifiable credentials. We lead the Decentralized Identity Foundation and the verifiable claims and credentials group of the W3C. And there's Metamask, the wallet, which works very nicely across public and private systems. It's got a plug-in system called SNAPS that's enabling us to start addressing different protocols around the world, and we definitely have an increasingly active interledger strategy. And then at the application layer, we can do document management and all sorts of other applications. including tokenization. So various different forms were issuing bonds and equities and municipal bonds and lots of other things.

And all of that we can do because going all the way back to the Ethereum token launch, we've done a tremendous amount of legal work with securities regulators around the world. And we can navigate that space with confidence. And so we can deliver those solutions in a perfectly regulatoryly compliant fashion. You talked about the interchained aspect here. I'd like to ask you where, sort of taking a step back and seeing where this is going, I mean, there's a pretty important professional services component to consensus, but you're also building technologies that are operating on the public side. In the future, how do you see sort of the public permissioned interactions playing out? do you see permission chains moving more and more towards public networks or do you think that they'll remain sort of in their walled gardens? I mean, like we're seeing things already in cosmos where like already we're starting to see sort of public validators validating private blockchains or permission blockchains. How do you see that playing out in Ethereum?

Yeah, the bifurcation of our ecosystem into public permissionless and private permission was, a sort of necessary ramification or circumstance that was essentially natural and caused by enterprises, what enterprises are and what they need to be conservative about and pay attention to. So we saw the same thing with companies adopting web technologies where they wanted to use certain protocols, but they needed to use them inside firewalls on internets until they became private enough, confidential enough, scalable enough back then and secure enough. And so we're seeing the same thing. We fully expect that the World Wide Web will become an increasingly decentralized World Wide Web,

where it will incorporate many decentralized protocols for trusted transactions, on blockchain networks for decentralized storage and bandwidth and heavy compute and proof of location, decentralized identity, et cetera. That's just starting to happen, I think. The Enterprise Ethereum Alliance is driving some of that activity. So first, by using the exact same technology for consortium networks like Comptial. network that we built or Covantus that we're building, enterprises can build out use cases in a private context and use the exact same technology, the same expertise to move towards

the public permissionless network. We can also, when Ethereum is scalable, private and confidential enough, we can lift these systems, those logical constructs, and drop them down on public main net, if that makes sense. Do you think this will be restructs? to businesses or do you think governments will also resort to the Ethereum public blockchain? Yeah, I absolutely believe that the governments will find utility on public blockchains. So governments are sort of the platform on which businesses run, and the whole world is filled with platform risk. So we've seen platform risk in building your solution on Facebook or on LinkedIn or on the Apple store, et cetera.

And it would be great if we moved into a world where there was less platform risk for startups, but also less platform risk for larger organizations. As we move, so we've done a bunch of provenance, supply chain track. and trace work. We have a group called Trium that is working with Procter & Gamble to put the provenance of materials and diapers and various other P&G products on the blockchain so that a consumer can scan a QR code and see where the materials came from, all the processing steps, etc. Supply chain track and trace is going to be an incredibly important use case for blockchain. And it's going to be especially valuable to have that on public mainnet so that can't be improperly manipulated.

But also, as we move into a world where we have different kinds of conflicts like trade conflicts, having an infrastructure that is sufficiently decentralized so that even nation states can trust that nobody's able to improperly manipulate it will enable us to take our supply chains, which are currently massively interleaved. And as long as we have, say, signatures, identity for devices, as long as we have good data coming into blockchain systems, then these systems are going to be able to keep that data fairly clean. And so when we do have conflicts, hopefully we'll be able to still continue to trust our interleaved supply chain networks.

Cool. So when I alluded to governments earlier, I mean, basically what governments do is they issue currency. So do you think governments will use the, it will use a theorem as a base layer to issue, you know, central bank issued currencies? So I- When Euro die. Yeah, that's happening. So I think most governments will move to, Central Bank digital currency is just a natural evolution of bringing technology to money systems. I do believe that central banks will use similar cryptographic primitives that are used in blockchain systems. I think very few of them actually need a blockchain system in order to implement a central bank digital currency.

I am hopeful that some of them will be interested in introducing privacy of your financial assets and confidentiality with respect to your transactions to the monetary systems of their nation states. So I think there will be some countries in the world that value that. I do think that probably the world will put pressure on those governments or central banks so that, They'll say, okay, you can have your citizenry appreciates privacy and confidentiality and free markets and stuff like that. And so we will be comfortable if holdings under a certain size or transactions under a certain amount can be perfectly confidential or private. There are certainly other countries that will continue to use technology as a surveillance tool. and they don't need blockchain to do a really good job on that. So do you think that some countries

will sort of position themselves as many do now as sort of fiscal paradise, right? Like where, but moving towards the future, you'll have digital currencies that preserve privacy and this sort of thing and others that have maybe more KYC, less privacy and this sort of thing? So we're just talking about nation state-state issued money. and technology is moving so fast.

It's, you know, people are going to be able to do very impressive things that enable real privacy and confidentiality on these networks. But with respect to nation state currency, I think there will be some countries that distinguish themselves. So Christian Carlo, formerly of the CFTC, has, been, so he's driving thought leadership around central bank digital currencies and he feels like the United States, to the extent that it upholds principles of freedom and privacy and free markets, etc., is a place where because of rule of law and because of how things are constructed with respect to the Constitution and the law in the United States, it may be a place that creates a really good version of a central bank digital currency.

It may be a place where, you know, certain protections will apply. Always the optimist. Well, yeah. I just think it's really interesting because when he mentioned that to me, I was like, yeah, maybe America could create something that's pretty good. It's not going to be what crypto anarchists appreciate. of what can be built on these networks. But I think there are lots, so we should have choice. We should have optionality in our monetary systems and our payment systems.

And central bank, or, you know, nation states and central banks have certain responsibilities, and they have the right to issue their own tokens, basically, and they have the right to create the rules around those tokens, and their citizenry should work with their leadership. and take a look at what's available in the different technologies and make their best choice. And some nation states will make choices that I wouldn't make. But they're free to do that.

Yeah. Yeah, no, I tend to agree. I think despite the fact that people always, well, some people sometimes pack the U.S. as the surveillance state. I mean, inherently, it is a nation state that values privacy, a lot more than other countries. So, for instance, in the European Union, in some countries, you can't transact, you're not allowed to do transactions over a thousand euros in cash.

And in America, of course, that's completely fine. So, yeah, I would tend to agree. We'll see how it goes. And nation states, especially ones as big as America, are just so many different factions, so many competing interests, and we'll see what ends up winning out. Yeah, I mean, I want to talk a little bit about sort of the evolving states of Ethereum. By that, I mean sort of the evolving narratives in the space.

And I think, you know, every time we have one of these conversations, that narrative maybe shifts a little bit. So, you know, at the very beginning, there was this idea of the world computer. And then from that, there was a period where Ethereum was sort of the, you know, the funding machine. So it didn't start with the world computer. What did they start with? So Vatelik wrote the white paper because he was working with some different projects. And way back then, seven, even eight years ago, people were interested in creating their own cryptocurrencies.

And so one way to do that would be to take the Bitcoin code base and fork it and change a parameter or two and make light coin or something along those lines. And despite the fact that that sounds really quick and easy, it would take a month or, several months to just do that little thing. And that doesn't even include setting up a whole ecosystem and incentivizing people to care about this thing that you care about. And so Vitalik's initial interest was build something that was general enough so that somebody could start their own cryptocurrency on the same platform and benefit from the already built infrastructure. Right. Okay. I'm taking shortcuts here. But I mean, we've gotten to a point now where defy is sort of the prevailing narrative in the space.

I'd like to get your thoughts as sort of like, you know, what kind of, what kind of, what is the future narrative in Ethereum? Like what, where does it go from here, essentially? So I think all the narratives are valid simultaneously. So Vitalik's initial narrative is still very valid. We create lots of digital assets. whether they're sort of cryptocurrency-like or equities or bonds or utility tokens or identity. And so certainly the world computer narrative is an interesting one.

I think the world computer is going to be something called the World Wide Web, and it'll get increasingly decentralized as we incorporate more of these protocols. For the web, we had a couple decades of Internet of Information protocols, so free-to-use protocols where the information was infinitely copyable and cheap. And now we have new protocols where the information shouldn't necessarily be infinitely copyable. And some of this information is actually quite valuable. and now we've got a few decades ahead of us to explore those different protocols. And so the narrative that I see is a much bigger narrative.

It's essentially building out the global or re-architecting the global economy on a base trust foundation, which needs to be maximally decentralized or will be corrupted by patient, well-resourced actors. On that, we need a financial plumbing layer. and a lot of those early internet magic money Lego DFI protocols are being built on Ethereum. There's some being built in other places and even Bitcoin is being wrapped and moved over to Ethereum to participate in the open decentralized finance ecosystem. So all of that represents financial plumbing that includes insurance and prediction markets

and decentralized exchanges and certain kinds of lending approaches over collateralized, under collateralized flash, et cetera, and, you know, automated portfolio management. So so many of these different protocols can now be snapped together or wired together into a financial infrastructure that will be usable by banks and central banks, but also these same tools will be usable to people. And so it's very similar to the web revolution where publishing was suddenly usable by normal people and whole industries built up around that. And so we've got a new base trust foundation and a new financial infrastructure for the planet

that we can all participate in and that we can all carry around in our pocket effectively that we can all program. And on top of that, the world company, and governments can re-architect their systems on a better set of foundations. Okay. So it's money Legos for everyone. So no, it's not Money Legos. So Money Legos represents an enabling layer, an enabling financial

layer. It's not about building the financial layer. You know, the world probably didn't set out to build the financial system. The world set out to, you know, make food and, you know, and make shelter and make transportation and make clothing, et cetera. And you need financial plumbing in order to efficiently get all that done. And so what we're building right now is, I think the financial plumbing and all of the industries, the existing ones and novel industry that we probably can't quite fathom yet, will be able to re-architect or architect themselves on that platform. I mean, we didn't set out to build the financial system yet we did with all of its necessary.

Yeah, with all of its flaws. Sure. And all of its advantages also. Yeah, it's also pretty remarkable. It's also pretty remarkable, yes. But, you know, given that Ethereum smart contracts, defy, allows anyone with, you know, the ability to code. And soon the ability to drag and drop things in a browser to create a... No code is getting really interesting.

Code is getting interesting indeed. Since defy enables anyone with a computer to create a financial instrument and to make that available to the world, you know, what are some of the perverse aspects that you think we need to be mindful of and perhaps, you know, not to replicate or even worsen some of the perverse aspects of the existing financial system? So I'm not going to harp on perverse aspects. I think the way that I view that. Always the optimist. Well, my perspective is that, yeah, it's going to be the Wild West.

It's going to be crazy, wonderful. And whether it's, there have been so many eras of new technology, I would call banks and safes and stagecoaches that transported money, a new technology, and every new era. has its builders and its breakers. It's consultants, its self-appointed consultants, that see a system, that see value there, that see vulnerabilities there,

and that essentially extract its fees in order for pointing out how the system can be a little bit better. And so this, you know, the open, programmable financial system, which enables people, programmers to touch the financial rails, the live financial rails directly, program value tokens that move along those rails directly, there are going to be a lot of pitfalls there, but it's also when we get a hold of it, when we prudently build it out in probably layers, it's going to be incredibly empowering virtually everything in society.

So if I were forced to make recommendations, I would recommend to all the different groups that are building out financial protocols to go slowly, to move as prudently as possible, to recognize that because they're in a composable synergistic ecosystem, anything that they do potentially affects everything else. So even if you formally verify security audit, the logic and the contract and the bike code, you're still potentially going to make a change in your little system and your little Lego block that represents a tool or a vulnerability that somebody can exploit in some other part of this system. And so we're going to need to get everybody together to take a systematic or systemic view on how all this works together. And I think that ecosystem is realizing that it needs to be. move slowly. If you had to venture a guess right now, what the most surprising thing that will

happen in the ecosystem in 2020 is, what would your guess be? Most exciting thing that will happen in 20 years. Surprising. First, oh, okay, first, let me just continue or finish off what I was saying. We're already making progress in that direction. So with the token launch boom and ICOs, we started a project. called TruSET and Masari started up to basically crowdsource awareness of what these different ICO projects, protocols, et cetera, we're doing. So all the critical information that you really need. We have a project called DFI SCORE that is, it's an open source project, it's crowdsourcing,

all the different criteria that we should be paying attention to for all these different protocols. So that work is already underway. So to your question, the most surprising thing that is, that I expect to see in the next 20 years? No, this year. Oh, this year. Oh, until the end of 2020.

So I don't know that I would be surprised by it, but I think this year will see definitively that enterprises and perhaps even governments find value in public mainnet blockchain systems and we'll start to very actively use them. Are you sensing that from conversations that you're having? I'm curious how the conversation has changed in the last two or three years with governments and enterprise and this sort of thing. So as I said near the start of the podcast, we haven't seen enterprise slowdown at all. Through all of the crypto winter, which applied to speculators, you know, buying and selling tokens on public mainland.

that. Enterprise has continued to take a studied approach to the technology. And so we've been working with major financial institutions, major consumer product institutions, energy companies, building out consortia. The Congo Trade Finance Consortium Network that we built has major financial institutions and energy companies, and it's seen over a billion dollars worth of transactions. And so the ability to digitize, which doesn't require blockchain, but blockchain is a trigger for many businesses and industries to engage in digitization, the ability to cooperate in a trustful context with those that you compete with or value chains. That's a massive breakthrough in how businesses can architect themselves.

So the first thing they're doing is experimenting in context that they can have good control over. And so we're now seeing systems built where error reduction, where double keying, where reconciliation, all those things just go away because everybody's sitting on this single shared source of truth. They're sitting on basically the same database system. whole industries can make use of the same database system where they can trust each other because they're writing protocols that effectively can find and facilitate their behavior. And so, yes, we're talking with lots of enterprises.

We're building with lots of enterprises. And it's interesting that, you know, thank you, Facebook. You did something really wonderful for once. Exactly. Facebook's always thinking about the benefit of humanity. And so they introduced this Libra project just to wake central banks up, basically, to wake commercial banks up, to wake up people who are interested in building alternative money systems and alternative payment systems. And so I like the structure of Libra. I don't like – wouldn't like it if Facebook was driving Libra still because it would have implications for monetary policy for small and medium-sized nations.

but lots of different projects like Libra are very exciting in providing choice. And essentially the world is waking up, just as the world woke up to the Internet and web technologies. Enterprise and government world. So let's look ahead now. There are several things upon us. One of the big things that's happening in Ethereum is the Shifter Ethereum 2.0. It's been talked about for some time now. I'm curious to get your thoughts on what you think are the biggest challenges ahead for the ecosystem with regards to rolling out East 2.0.

So it could be on sort of any level of, you know, from technical challenges to regulatory challenges to community governance challenges. Give us your thoughts on where. Yeah, so Ethereum 2.0 is going extremely well. Consensus has the team shift around, but we've got at least six teams working on different aspects of the development of the protocol, research, and rolling out of Ethereum 2. I like to think about it in terms of evolution of platforms. So evolution of the X-86 architecture, evolution of the Mac operating system. It's very similar. Both of them, actually, they're interestingly different.

The X-86 architecture had to maintain rigorous compatibility from generation to generation. I think that slows the evolution. It slows... For our listeners, you're talking about evolution of computing, the sort of... 386 processors, 486 processors. Yeah, thank you. And so because you had to keep all this structure around, you couldn't totally re-architect the system.

The Mac operating system evolved differently. So when it moved from Mac OS 9 to Mac OS 10, it was basically the next computer system reverse taking over the Apple company. and went from this single-threaded operating system to this Unix-based, you know, Marvel of technology. And what they were able to do was enable people who wrote MacOS 9 programs to just run those programs in emulation on MacOS 10. And if you wanted to upgrade your program, you could start using these other libraries and move to multi-threaded, et cetera. And so that's, that is what Ethereum is doing.

Universal apps, I think is what they were called. Yeah, yeah, sure. So you could have both code bases inside. That is exactly what the Ethereum ecosystem is doing. It is starting fresh, designing an optimized awesome Ethereum 2. And it will enable Ethereum 1 applications to continue to operate. If Ethereum 1 applications want to make use of new features, then they'll be able to upgrade. The really interesting thing about all of that is that, well, these are separate systems, Ethereum 1 and Ethereum 2.

There will be a smooth progression from Ethereum 1 to Ethereum 2, and Ethereum 1 enables Ethereum 2. So there will be all these bridges built. So first we're going to see staking that enables on Ethereum 1 that enables the beacon chain, the heartbeat of Ethereum 2, to be stood up. So that's very likely to get landed in the first half of this year. So beacon chain, there are three major phases, phase zero, one and two, beacon chain is phase zero. That happens within a small number of months, enabled by Ethereum 1. Once that happens, we can see two things.

We can see bridges back to Ethereum 1, enabling Ether to move back and forth. But we can also see blocks on. Ethereum 2 finalized blocks on Ethereum 1, making Ethereum 1 much more secure and therefore enabling the issuance of ether to be reduced. The next phase in Ethereum 2 is adding 64 data shards, so massive increase in the amount of available data on blockchain. The first good user of Ethereum 2 data shards is Ethereum 1 smart contracts. And so we're seeing all these layer two solutions, optimistic rollups, zero knowledge rollups,

that need a ton of data. And so they're going to be able, essentially smart contracts on Ethereum 1 are going to be able to access massive amounts of data on Ethereum 2. The next phase is execution environments. So we've got the quilt team within consensus that are already building execution environments and we've got specs for phase one and specs for phase two. So all three major protocols have well matured specs. We're going to build several different kinds of execution environments,

and we will see it won't launch for real in 2020, but we'll see developers will understand different ways of programming for Ethereum 2 before the end of this year. And so we'll release some execution environments when all of that is landed sometime next year. Ethereum 1 essentially becomes an execution environment on Ethereum 2. And so it will effectively be, you know, there'll be a checkpoint in time, and it will be able to migrate into the Ethereum 2 context. At that point, it's likely to be able to use lots of different data shards, but probably all of its state will sit on one data shard of Ethereum 2.

And so smooth transition, we will work to make sure that developers as Apple computer did, developers have a smooth upgrade experience. You know, technology companies have been paying attention to developer experience for a long time, and we're not going to do dumb things like break composability. I think we can wrap it up there. I think we're not going to do done things like break composability.