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Tim Beiko & Justin Drake: The Sci-fi Roadmap to Ethereum

57 minutes 51 seconds

🇬🇧 English

S1

Speaker 1

00:00

And but there's also some like really future thinking stuff. So, for example, upgrading to post quantum cryptography. And even beyond that, there's something that kind of only opened up in the last few weeks. Not only should we defend against quantum computers, but we can harness them to make consensus even more robust.

S2

Speaker 2

00:20

Welcome Bankless Nation to the Sci-Fi Roadmap to Ethereum. You know about EIP-4844. You know about Proposer-Builder separation.

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Speaker 2

00:28

But you probably didn't know that the Ethereum roadmap does not stop at these things. It continues. Each component of the Ethereum roadmap has deeper frontiers than what you may be familiar with.

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Speaker 1

00:39

4844

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Speaker 2

00:39

PBS, these are just the first stops on a longer track of Ethereum's sci-fi roadmap. In this episode, we're going to explore these deeper frontiers to Ethereum with Justin Drake and Tim Baco, the 2 individuals who can probably see the furthest along the Ethereum frontier out of anyone. We're going to learn about what is statelessness and how it's helping Ethereum make the furthest reaches of the internet even more trustless.

S2

Speaker 2

01:01

How Ethereum is going to absorb ZK tech at the layer 1 level. How VCs are subsidizing Ethereum's layer 1 research and development efforts. What is an enshrined rollup and how is it different from all the other rollups that we're familiar with and why does Justin Drake want it so bad? How all of this stuff is leading to Ethereum needing fewer and fewer honest actors to work trustlessly.

S2

Speaker 2

01:22

And what does quantum computing have to do with the Ethereum roadmap? And no, it's not just that it breaks ECDSA signatures. And what are trustless mempools? Who do they protect?

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Speaker 2

01:30

All of these things that I just mentioned are just the tips of the iceberg. You're gonna learn so much in this episode, so much that you're gonna need to put your GigaBrain hat on or else your brain might explode. But first, a message from our friends and sponsors over at Stator. Stator is a liquid staking service provider.

S2

Speaker 2

01:46

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S2

Speaker 2

02:11

I hope you enjoyed this episode with Tim Baco and Justin Drake. This is the Sci-Fi Roadmap to Ethereum. And we're gonna get to it as soon as we talk to some of these fantastic sponsors that make this episode possible, especially Kraken, our preferred exchange for crypto in 2023. If the Giga Brain frontier scares you a little bit, don't worry, Kraken's got your back.

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Speaker 2

02:27

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Speaker 2

02:39

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02:58

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Speaker 3

03:11

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Speaker 3

03:19

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S3

Speaker 3

03:47

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Speaker 2

04:06

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Speaker 2

04:12

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04:33

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S1

Speaker 1

04:55

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Speaker 2

04:55

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S2

Speaker 2

05:06

Here we've got Tim Baco and Justin Drake, and we are at ETHCC. And this is 1 of the very rare opportunities where I can get everyone here on a couch together. We're going to talk about the future of Ethereum. To me, ETHCC is, even though it's in the middle of July, it's in the middle of the year, it still kind of feels like 1 revolution around the conference circuit at the very least.

S2

Speaker 2

05:25

It was the first conference post-COVID, and this is the third ECC post-COVID, So 2 years. And Ethereum has grown up a lot since then. We've had proof of stake now actually shipped. So that is in the rear view mirror.

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Speaker 2

05:38

Layer twos are no longer hypothetical. They are here. I remember last year, ECC, it was the year of the ZK EVM. And this year seems to be the year of the ZK EVM mainnet.

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Speaker 2

05:51

A lot of things have actually come to pass, but there's still a lot of things to look forward to. And so I'm hoping this conversation can guide me and the Bankless listeners, all the Bankless nation, what is the future of Ethereum? What is there left to do? And so, Justin, maybe I'll start with you.

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Speaker 2

06:09

At the highest level, how would you place Ethereum in time in its development roadmap? Maybe a percent completion or left to be done. How would you describe where Ethereum is in what it wants to become?

S1

Speaker 1

06:24

Right. So I think the initial vision of Vitalik of having, you know, this base layer, which is secure and scalable. So we have the proof of stake and the sharding is actually coming to fruition. But 1 of the things that's kind of surprised me as a researcher is that we seem to discover something new every 2 or 3 years.

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Speaker 1

06:46

And so the design space expands, but that's kind of exciting, right? Because there's more potential. So on the 1 hand, I want to say that we're, I know, 75%, 80% of the way down in terms of completion of the initial vision, but the vision has grown in scope. And so maybe we're only 50% of the way there.

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Speaker 2

07:05

Would you resonate with that, Tim?

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Speaker 4

07:07

Yeah, and I think 1 thing to maybe add to this is a lot of the new things that are coming tend to be related to like protocol adjacent phenomenon. So like MEV is obviously a huge 1, layer twos are a huge 1. So like if you think strictly from like Ethereum L1 as like a system, yeah, I think we're getting there.

S1

Speaker 1

07:30

Right, There's some quality of life things. So for example, account abstraction, encrypted mempools. These are things that we didn't necessarily realize that we needed at the very beginning.

S1

Speaker 1

07:44

But there's also some really future thinking stuff. So for example, upgrading to post quantum cryptography and even beyond that, there's something that kind of only opened up in the last few weeks. Not only should we defend against quantum computers, but we can harness them to make consensus even more robust.

S2

Speaker 2

08:02

I think hopefully in this conversation, if I guide this conversation correctly, we'll start with some of the short term concrete stuff. There are short term things that are being worked on right now. Probably the bank list nation is pretty familiar with things like 4844, PBS, the short term things that are going to be included into the Ethereum protocol, you know, short in Ethereum timeframes, about a year.

S2

Speaker 2

08:21

As soon TM. And then there's some like stuff that's also being worked on that, you know, are middle-term stuff. And then there's some very long-term stuff. Maybe I'll put quantum computing in there.

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Speaker 2

08:31

I don't know if ZKing the entire Ethereum is still a topic of conversation, but I want to open up that box. And so like short-term, mid-term, long-term, like in long-term is like the sci-fi stuff. So I think that's how this conversation is going to go. And maybe towards the end of this, we'll just summarize everything and talk about in that fullness of time Ethereum, the version of Ethereum that will eventually, the trajectory is strong, we'll get there.

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Speaker 2

08:52

What does that look like? But let's start with the short-term stuff. Like what would you say is the immediate priority that the devs are focused on the most in the short-term?

S4

Speaker 4

09:00

For it for 4. And I think beyond that, so the next upgrade is called Denkun. There's for it for 4, it's the main feature that's part of it.

S4

Speaker 4

09:08

There's also a couple other things that we're adding. So on the execution layer, 1 thing that's notable is deactivating self-destruct. So this is something we've talked about doing for years. And it might be the first time we actually deactivate the feature on Ethereum.

S4

Speaker 4

09:26

Trying to think, I don't think there's another case where we've done it. I mean, we deactivated proof of work, that was a big 1, but like something that like smart contracts and whatnot depend on. So basically preparing this entire upgrade. Another cool thing that's being delivered with this upgrade is exposing the beacon state route in the EVM.

S4

Speaker 4

09:46

So this means that the execution layer will be able to make like proofs and commitments about what happens on the beacon chain. And it'll help things like make staking pools more trustless. So generally, yeah, this upgrade is what devs are working on right now.

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Speaker 2

10:01

And so this is for 4 is the big 1, of course, And this is what we call Dank Sharding. This is Proto Dank Sharding.

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Speaker 4

10:07

Proto Dank Sharding.

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Speaker 2

10:08

Yeah. So the middle step between full Dank Sharding. And we already have layer twos on Ethereum. They're totally operational.

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Speaker 2

10:14

But This is what I would put under the rollup-centric roadmap for Ethereum, as in we are making Ethereum, the protocol is making rollups a first-class citizen. Can we unpack that nuance a little bit? What does it mean for rollups to be a first-class citizen? And how does that change what Ethereum is for with protodank sharding?

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Speaker 4

10:33

Maybe I can start with protodank sharding and you can talk about longer term, like making rollups a first-class citizen. But yeah, just to unpack dank sharding. So when you make a transaction on layer 2 today, the layer 2 bundles your transaction than a bunch of other people's transactions and posts the data for that back on layer 1.

S4

Speaker 4

10:51

And this is why layer 2s are kind of cheaper. So computation on Ethereum is expensive, but storage is cheaper. So layer 2s basically say we're going to do all the computation off-chain, put the data, the raw data from that computation back on Ethereum L1. And if you know there's a fraud or if you want to reconstruct the state on a ZK rollup, then you can take that raw data and like run through all the computation, but only if you have to.

S4

Speaker 4

11:15

And this is kind of the trick that that makes layer twos keep a lot of the security assumption because the data is on Ethereum, but also be cheaper because you're not running every transaction. So today, when you make an L2 transaction, something like 90 to 99 percent of the cost is actually posting that data back on Ethereum L1. And the reason why that cost is expensive is L1 stores that data forever. But that said, layer twos don't actually need that data to be stored forever on Ethereum layer 1, because with optimistic rollups, we have this 7 day exit window.

S4

Speaker 4

11:46

So this means that, you know, after 7 days, no matter what the data is, somebody could have like done something, exited all their funds. So what we're doing with proto-bank sharding is we're adding, can think of it as temporary data storage on Ethereum layer 1. So that this way, because the data is only stored for a couple weeks, we can charge much less for it. And this will reduce the cost of layer 2 transactions because now, instead of paying for storage forever, they're just paying for storage for a couple weeks.

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Speaker 2

12:14

And then Justin, if you want to finish this conversation, what does that mean for Ethereum and the protocol? So we have layer twos that have cheap data, very cheap data that lowers the gas fees, makes them faster. But again, the rollup-centric roadmap of Ethereum, Why are we prioritizing layer 2 so much?

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Speaker 2

12:32

And what does that mean for the protocol?

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Speaker 1

12:34

Right, so I'd say that Ethereum is prioritizing the friendliness to build rollups on Ethereum because posting this data is the main bottleneck. And I guess 1 of the consequences here is that we're gonna be able to scale the number of users on Ethereum maybe from 10 million to a hundred million or maybe even hundreds of millions. And 1 of the things that I expect in the short term is we're introducing this whole new resource, which won't be like fully consumed at the very beginning.

S1

Speaker 1

13:06

And so we might see dynamics similar to what Arjun did a few years ago, where basically the fees were so low that they subsidized the fees. So it's possible that for a period of time, maybe 6 to 12 months, we're going to be able to use rollups completely for free. And there's going to be this kind of this temporary subsidy almost that could act as a bootstrapping mechanism. I guess 1 of the things that I've been thinking of in the long term is how can we really have Ethereum native rollups?

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Speaker 1

13:40

And we call those enshrined rollups. And what we're going to do in the long term is actually get an enshrined rollup, 1 instance, by snarkifying the EVM. So if you take the EVM today as it is, every validator has to verify every single transaction. But once we've snarkified it, all the validators need to do is just verify this 1 snark per block.

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Speaker 1

14:03

And so it's also magically becomes a rollup. So the main net becomes a rollup.

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Speaker 2

14:09

Ah, OK. What does that mean for the other rollups that also already exist?

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Speaker 1

14:17

So what I expect will happen is that there will be kind of a nice complementarity because the enshrined rollups will have best in class security, but on the other hand, And 1 of the things that they enjoy is access to social consensus. So if for whatever reason, there's a bug in the EVM, then, you know, we're going to go and fix it. Whereas if there's a bug in 1 of the rollups, I know Arbitrum, then kind of their problem.

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Speaker 1

14:47

And so the way that the non-enshrined rollups fix issues is with governance. And so really we don't need this governance token. And so this in a way makes it more secure because governance, it's a way for flexibility, but it's also an attack mechanism.

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Speaker 2

15:06

So if we're snarkifying the EVM and we're getting similar properties to what you would get from a rollup, you can bundle up many, many transactions and have them go through much cheaper gas costs and much easier computation. Is that competitive with the current Layer 2 landscape?

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Speaker 1

15:24

So the Layer 2 landscape I don't think will compete with Enshrine Rollups for a few reasons. 1 is on cost. So you can do certain things with application layer rollups that you can't really do with an enshrined rollup.

S1

Speaker 1

15:39

1 of the things, for example, is batching. So if you are willing to settle, let's say once every 10 minutes, you can take these bigger batches of data and then you have more efficient compression. Think of it as when you're zipping a file, you have better compression if you have more data to work with. Another thing that you can do with the non-entry rollups is you can be very opinionated in terms of where the cash flows go.

S1

Speaker 1

16:03

So for example, Optimism, they can decide to fund public goods. But we, you know, with the enshrined rollups, the only real public good that we can fund is economic security and economic bandwidth. And then another thing that you can do with the application layer rollups is that you can have whatever virtual machine you want. You don't have to stick with the EVM, and so there's going to be a lot of advantages there.

S1

Speaker 1

16:30

And then maybe some other benefits could include services like pre-confirmations. It's relatively difficult to do pre-confirmations with an enshrined rollup, but that's something that the application of rollups can do.

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Speaker 2

16:43

Where is this on the theoretical idea to EIP on the roadmap spectrum?

S1

Speaker 1

16:50

So getting to 1 base rollup is actually only the beginning, but it's like 90% of the work. And the reason is that we have to do the really heavy engineering to have these snark proofs for every single block. But then there's this really cool thing that we can do, which is maybe only 10% of the work, where we can expose, as an opcode, the verification of a snark proof for the EVM.

S1

Speaker 1

17:16

And so that means that anyone can deploy and then try and roll up at the application layer. So it basically opens up the possibility to have as many copies of the Ethereum layer 1 EVM as we want, all with the exact same properties as Ethereum layer 1. When will that happen? My guess is that we're talking 5 to 10 years.

S1

Speaker 1

17:38

But I'll- Okay, so did

S2

Speaker 2

17:39

we accidentally skip into the mid to long-term roadmap of Ethereum?

S1

Speaker 1

17:42

Yes. Okay. But I'll caveat this that the development of Snarks has always surprised me in a positive way.

S2

Speaker 2

17:52

Sure.

S1

Speaker 1

17:52

And so it could only be, you know, 3, 4 years, potentially.

S2

Speaker 2

17:56

Okay. And so like, I think a little bit with what you're saying is in between the difference between an enshrined rollup and the rollup landscape that we know today, the Optimism, Arbitrum, ZK-Sync, all of these players, it's actually different use cases. Different use cases. They're similar in engineering, but will be expressed differently by how and why they will be used.

S2

Speaker 2

18:16

And so perhaps they're unlocking new use cases. So not necessarily competitive, more just like a new landscape.

S4

Speaker 4

18:22

They have way more flexibility, right? You can think of them as like, well, they are effectively smart contracts from Ethereum's perspective, right? Like, so they can do anything even more than what a smart contract on L1 can do, but they're not bounded by like the capabilities of L1 and also the rate of change of L1.

S4

Speaker 4

18:39

So it takes way more time, you know, to add a new opcode to Ethereum L1 versus if say Optimism wanted to add an opcode that's not on L1, they can do it like much quicker than we can.

S2

Speaker 2

18:50

Is the idea of an enshrined rollup, like Optimism, Arbitrum, ZK-Sync Polygon, everyone takes an opinion by default. Like everyone is an opinionated application of technology. Maybe the enshrined rollup is the least opinionated type of rollup that we can get.

S2

Speaker 2

19:06

And because it's inherent ties to the Ethereum layer 1, it also expresses itself differently.

S1

Speaker 1

19:11

Right. There's basically only 1 way of building an enshrined rollup, which is to take DVM as it is and just knock a fight, end of story. You can't be opinionated like doing an airdrop, for example. You also, 1 of the big disadvantages of the enshrined rollups is that they won't have the first mover advantage by a long shot, by 5 to 10 years.

S1

Speaker 1

19:34

And so, a lot of the network effects might already be established so that the enshrined rollouts maybe won't add that much value when they do come.

S2

Speaker 2

19:42

Okay, and then again, who is between the spectrum of theoretical idea to actually getting implemented into Ethereum. Like who is working on this? How, where is this in development?

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Speaker 2

19:53

How early are we on this, on this particular subject?

S1

Speaker 1

19:56

Right, so ironically, it's to a very large extent, the application layer rollups, they're doing the development for the end shrine rollups. Because the whole tech stack is basically being subsidized almost by VC money, billions of it, accelerating it, and we'll just be able to reap the fruits.

S2

Speaker 2

20:19

Okay, beautiful. Okay, so waiting for, is it specifically the ZK rollups that are doing this engineering or is it Optimism and Arbitrum too?

S1

Speaker 1

20:27

It's mostly the ZK rollups.

S2

Speaker 2

20:29

Mostly the ZK rollups. Yeah. Okay, so that technology, we're going to be able to, we're just letting the ZK rollups build and deploy, test the actual computation, test the technology.

S2

Speaker 2

20:39

And then when it's time, when it's ready, be like, hey, we can unbundle that technology, apply it to Ethereum at the layer 1, snarkify the ZK, the EVM. Does this make, wait, does this make the EVM a ZK EVM? Is that what this is? Yeah, exactly.

S2

Speaker 2

20:52

Oh.

S1

Speaker 1

20:53

And 1 of the consequences is that, you know, the meme will be, you don't need to be a validator on your Raspberry Pi, you can be a validator on your smartwatch.

S2

Speaker 2

21:02

Ah, can you elaborate on that? What does that mean?

S1

Speaker 1

21:05

Right, so 1 of the big computational expenses of being a validator right now is you need to run a Gef node and you need to verify every single transaction and whatnot, And that's very expensive. When you have a ZKVM, just verify a snark takes a millisecond. Your smartwatch can do that.

S2

Speaker 2

21:23

So it doesn't need, my smartwatch doesn't need that much computational power?

S1

Speaker 1

21:27

You won't need much computational power to be an Ethereum validator.

S4

Speaker 4

21:32

Can you talk maybe about today, how like the proving and verification time works on L2 and why having high powered sequencers, makes this more viable there than eventually have, like, what do we need to go from like a couple high-powered sequencers on L2 producing and verifying these proofs to like every validator and every node and like client on L1 being able to do it, you know, within 12 seconds?

S1

Speaker 1

22:00

Ah, right. Okay, so like 1 of the big difficulties right now is basically the latency of producing the proof. So what happens is that there's only settlement, let's say every 10 minutes or every hour, and the proving process is done on these huge like machines that are rented on AWS.

S1

Speaker 1

22:19

And the proving is not very decentralized and it's very high latency. What's gonna happen is that we have this technology called folding. And so we're gonna be able to take this big computation, break it down into small pieces, and kind of maybe potentially give these small tasks to different low-powered provers, and they can all collaborate trustlessly to make the proof. And 1 of the reasons why we're going to be able to reduce the latency dramatically is because we won't be working on these big chunks.

S1

Speaker 1

22:54

So we may be able to prove like 1 transaction at a time, and so the ultimate latency will just be of 1 transaction. But actually, maybe it will only be the latency of 1 opcode. So you break everything down into opcodes and then you kind of stream the opcodes through.

S2

Speaker 2

23:09

So you're taking the computation and making it into bite-sized chunks that can fit for more-

S1

Speaker 1

23:14

Into a stream, yeah. More chips,

S2

Speaker 2

23:15

yeah. And this sounds a lot like the Nova technology that you and I were talking at Zuzalu. Is that what this is? Yes, exactly.

S2

Speaker 2

23:22

Okay. There's a Bankless episode for that. It's on YouTube.

S1

Speaker 1

23:24

And then another aspect of this will be a hardware acceleration.

S2

Speaker 2

23:27

Okay. You want to unpack that a little bit?

S1

Speaker 1

23:30

Yeah. Okay. So we, we got it down to just proving 1 opcode, and that might take, I don't know, half a second. But once you have hardware acceleration, it might only take 5 milliseconds.

S2

Speaker 2

23:41

What does that unlock? If we're cutting off basically half of a second, what does that unlock? Or is it just cool?

S1

Speaker 1

23:53

Yeah, I mean, 1 of the complications, I guess, is, so 1 of the things that it unlocks is decentralization, in the sense that we might go from, you know, just 1 prover which is distributed to a thousand redundant provers. And they potentially, these provers can be at home. So, you know, you at home, you'll have this little box, which is the size of a shoe box, and you'll be able to single-handedly prove that Ethereum transactions are all valid and produce a snark.

S1

Speaker 1

24:25

And if we have a thousand people doing that at home, and 999 of them go offline, and you're the only 1 that's online if Ethereum can keep on running. And so this is this property which is called strong liveness, where you only need 1 single person to be online and honest for the Ethereum to keep on running. And it's a bit like the ceremony, the trusted setup. So we just need 1 person to be honest.

S1

Speaker 1

24:55

And at the minimum, we want 100 people, but we feel much more comfortable with 1, 000 people. And we feel even more comfortable if we're 100, 000 people, which is what we have right now. And I think having a thousand or maybe a few thousand people around the world, just like we have thousands of people running Ethereum nodes around the world, is gonna be more than enough redundancy.

S2

Speaker 2

25:15

Okay, I'm gonna do something, I'm gonna do something a little ambitious, which is connect the dots from everything we started to where we just finished and see how much I just retained. I think I can do this. So here we go.

S2

Speaker 2

25:27

So we have this rollup-centric roadmap of Ethereum. The optimistic rollups are well on their way. The ZK rollups are kind of the newest frontier. The optimistic rollups are kind of competing on governance.

S2

Speaker 2

25:38

The ZK rollups are the technology that we've been focusing on so far in this conversation. As the ZK rollups have matured, And again, we have 4844, which is going to take off the brakes for a lot of these things, which is how we entered this conversation. The ZK rollups like ZK Sync and Polygon ZK Tech as well is contributing to the ZK technology that if the Ethereum layer 1 will be able to extract the kernels of that technology and apply it to the layer 1. And we are going to take the EVM, which is how Ethereum goes from block to block to block with executing transactions, and we're going to turn that into a ZK EVM.

S2

Speaker 2

26:15

And with further adaptations in cryptography, this Nova thing, again, there's another Bankless episode for that. You combine that with the ZK-EVM and you kind of like shard computation. And so the ZK-EVM going from the Ethereum layer 1 EVM to a Ethereum layer 1 ZK-EVM makes like proving blocks very, very simple and easy for the individual. And then we can take that a step further and we can take all of that proving and char that out to many, many thousands of people.

S2

Speaker 2

26:45

And so more people can participate in the proving of Ethereum. And the significance of this is that what we are doing is we are requiring fewer and fewer honest actors to make the Ethereum protocol work. And actors also can be devices too. And so, which devices can actually participate in making Ethereum function honestly, that barrier becomes so low.

S2

Speaker 2

27:10

And so, like right now, there's a big, there's always a conversation of like, how could Ethereum be stopped? And at this point in time, too many devices have enough computational power to make Ethereum so decentralized that the answer of like, how do you stop Ethereum is a similar question to like, how do you stop water from flowing downstream? That was my summary of this. How was that?

S1

Speaker 1

27:32

Perfect.

S2

Speaker 2

27:33

Nice. OK. OK, so that was

S1

Speaker 1

27:36

4.844.

S2

Speaker 2

27:38

Where did 4.844 fit into that conversation? Because we started there, but does that really pertain to the ZK EVMing of the layer 1, or is that more kind of adjacent downstream of similar technologies?

S1

Speaker 1

27:50

I think 4.844 is kind of the initial motivation that got so many entrepreneurs and so much VC money to flow in to really push this technology development forward. But yeah, there's, we're going to reap the benefits as a community by having scaling in the short term. Initially, we were thinking of having these enshrined roll-ups, so-called phase 2 in the roadmap, much earlier on, and it would be done by rag tag teams of developers that are not very well funded.

S1

Speaker 1

28:21

There's not that many of them and we would have never made it. So this was the correct strategic move to kind of open up kind of slightly more of a commercial space, I guess. But we're going to go back full circle. And eventually, we will have these maximally credibly neutral and trying roll-ups that have the exact same security properties as Ethereum-Layer 1.

S2

Speaker 2

28:43

OK, so with this conversation, I was trying to go short, middle, long term with Ethereum roadmap. And it sounds like we did that specifically with roll up technology. So we covered that vertical.

S2

Speaker 2

28:53

So let's do that again with the next thing that I think is also in the short term roadmap, which is PBS, Proposer Builder Separation. So if you're a longtime bankless, you know what PBS is, but maybe we can start from the beginning. And what is in the short term for PBS? And then how does it extend into the future?

S1

Speaker 1

29:10

Right. So 1 of the things that I expect in the short term is this concept of MEV rebates and optimal execution. So right now, when you make a transaction on Ethereum, it goes to this public mempool, and basically you have like sharks eating at whatever flesh is available around that transaction. And it means that you don't have optimal execution.

S1

Speaker 1

29:34

So for example, if you want to buy a token on Uniswap, you just don't get the optimal price. You lose a few percentage points.

S2

Speaker 2

29:39

You get bitten along the way. Right.

S1

Speaker 1

29:42

And so there's this concept of an encrypted mempool which gives you a rebate. So instead of publishing your transaction publicly, you publish it to this encrypted mempool. And the way that the rebate mechanism works is that you have so-called searchers, these sharks, that actually turn from bad guys to good guys.

S1

Speaker 1

30:00

So they try and identify all the flesh, and then they tell you, okay, here's all the flesh, and they'll basically pay you for them to get the flesh. So you-

S2

Speaker 2

30:15

They say, hey, here are your vulnerabilities. Here is where you are being an inefficient actor in your transaction. Here's where you're going to get arbitraged.

S2

Speaker 2

30:24

Here's all your fleshy belly that you have exposed. I will pay you money to eat your belly.

S1

Speaker 1

30:31

Yeah, I'll give you back all your flesh, except for a little bit.

S2

Speaker 2

30:34

Except for that, I'm taking a little bit. So the shark turns into a piranha, and you're like, you have 1 little nibble, and that's all you get.

S1

Speaker 1

30:40

Right, exactly. And the reason why they only take a little bit is because it's a competitive market. The searchers are competing against each other to return as much flesh as possible to the user.

S2

Speaker 2

30:49

Pranas are known to be cannibals.

S1

Speaker 1

30:51

Oh, right.

S2

Speaker 2

30:52

I actually don't know if that's known, but I think it's a good metaphor.

S1

Speaker 1

30:56

So yeah, that's kind of in the short term. I mean, in a way It's almost before PBS, it's like user facing and it's gonna happen in the wallets. 1 of the downsides today of this approach is that we don't really have the technology to make it trustless.

S1

Speaker 1

31:12

And so what's happening is we have 10 different companies that are each offering their centralized, trusted encrypted mempool. And this... Who are these companies? So there's Flashbots, there's BlockNative, there's BlocksRoute, there's many, many others.

S1

Speaker 1

31:28

And so this actually makes it difficult for the wallets. So for example, Coinbase wallet and Metamask, they don't know which 1 to connect to. And so really the users are not reaping the benefits, only the very advanced users who know that they need to point their RPC endpoints to some other encrypted mempool get the benefits. And really, most users are unsophisticated.

S1

Speaker 1

31:49

They're not going to change the RPC endpoint. And so what we need right now in the short term is a standardization effort in order to get everyone on the same page. And then there's also going to be a technology phase where we'll be able to have a trustless or at least a trust minimized encrypted mempool. And the way that I see it is as a progression of technology.

S1

Speaker 1

32:12

We have centralized encrypted mempools. The next step is SGX, trusted hardware. And this is what Flashbots is working on with Suave. The step after that is threshold encrypted mempools, where you're trusting a committee of semi-trusted entities to decrypt the transactions after they've been confirmed.

S1

Speaker 1

32:35

And then there's kind of the end game, which is delay encryption, where you're not trusting anyone. You're only using pure cryptography and physics. And the way it works is that you encrypt your transaction, and then through time, the transaction automatically decrypts itself after a few seconds. And you can't accelerate the decryption because of the laws of physics.

S2

Speaker 2

33:01

Okay. Going back to the same question of where are we on this between theoretical cool sci-fi idea and EIP that gets put into Ethereum? Where are we on this landscape?

S1

Speaker 1

33:14

Right. So like, I think tomorrow after tomorrow, there's going to be this event and

S2

Speaker 2

33:22

this dinner around the standardization. Tomorrow is July 18th for the day of recording.

S1

Speaker 1

33:30

So I think what's gonna happen is some of the big wallet operators are gonna come together with the searcher community and say, okay, we need to come to standards because the users are not making use of that. And instead of an EIP, it's probably gonna be an ERC. Okay.

S1

Speaker 1

33:48

There's gonna be some sort of community standard that's outside of consensus that's gonna emerge.

S2

Speaker 2

33:55

Okay, so remind me again how this fits into the PBS conversation.

S1

Speaker 1

34:01

I guess it's related to MEV. It's before the builders actually, it's actually at the searcher and user level. But the reason why I mentioned it is that it's the main thing that's coming in the short term.

S2

Speaker 2

34:12

Okay, define short term for me.

S1

Speaker 1

34:17

Next, within the next 12 months.

S2

Speaker 2

34:18

Next 12 months, okay. Yeah. And, but PBS, is PBS coming inside of 12 months?

S1

Speaker 1

34:23

So we already have a form of PBS called MevBoost. Right. Which

S2

Speaker 2

34:29

is like off-chain PBS.

S1

Speaker 1

34:30

Off-chain PBS. Yes. And PBS, if you had asked me a few weeks ago, I was very, very scared because it was kind of this monster update, very similar to the merge, that's just keep growing and growing in scope.

S1

Speaker 1

34:45

But actually in the last few days, we realized that most of that can just go away. And there's this kind of this core EPBS that we can incrementally upgrade over time. So that would be kind of a medium term thing, let's say 2 to 3 years, where we deploy Co-BPS and then all the adjacent things like inclusion lists, for example.

S2

Speaker 2

35:08

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Speaker 2

35:15

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S2

Speaker 2

35:35

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S2

Speaker 2

35:52

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S2

Speaker 2

36:24

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S2

Speaker 2

36:57

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S2

Speaker 2

37:24

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S2

Speaker 2

37:49

Experience web 3 development the way it was always meant to be. Secure, fast, cheap, and friction free. All right, so that's the PBS. Now, Justin keeps on talking about encryption, so I'll throw him an underhand.

S2

Speaker 2

38:01

He's like, okay, but I can talk about ZK snarking that or I can talk about encrypting that. So that's PBS and 4844. I feel like we've covered those pretty well.

S1

Speaker 1

38:11

Well, 1 big thing around PBS is kind of the end game, which is MEV Burn.

S2

Speaker 2

38:16

Ah, okay. Okay, let's go there.

S3

Speaker 3

38:18

Let's go there. Because Justin, you had a

S2

Speaker 2

38:19

talk yesterday about MEV Burn. And of course, we had that fantastic Bankless episode. Yeah, place us in history around MEV Burn.

S2

Speaker 2

38:26

Like where is that coming and when is that coming?

S1

Speaker 1

38:29

Right. So 1 of the dependencies of MEV Burn is Entry and PBS. And inclusion lists is actually a requirement. And the reason is that MEV Burn is very opinionated.

S1

Speaker 1

38:39

It says that we will only include on Ethereum the most valuable blocks and nothing else. And so it- The

S2

Speaker 2

38:47

most valuable blocks as defined by the free market, because the free market is the thing that comes to Ethereum and says, I will pay this much money for this block.

S1

Speaker 1

38:56

Exactly. So the free market determines what is the most valuable block But that has a downs, well, it has actually upsides with sensitive resistance, but it also has a downside, which is now that there's a very clear price that you can pay to actually sensor transactions. And if you just keep on paying this price, which is very, very high, but nonetheless, it's a possibility, you can just keep on censoring this transaction. So if you're willing to pay, let's say, 1 ETH per block or 10 ETH per block, you can just censor transactions indefinitely.

S2

Speaker 2

39:23

And we're burning that Ether.

S1

Speaker 1

39:25

We're burning that Ether.

S2

Speaker 2

39:26

So for a very, very high price of burning a lot of Ether, you are allowed to censor transactions.

S1

Speaker 1

39:31

Exactly, yes. But we don't like that. And so we- I know, I know,

S4

Speaker 4

39:35

I know,

S2

Speaker 2

39:36

I know. We like Ether burn, but we don't like censorship. We'll take censorship resistance over Ether burn, okay.

S1

Speaker 1

39:42

So there's some individuals out there, some stakers, for example, Vitalik, who just doesn't run MEV boost. He says, okay, I'm just gonna build like dumb blocks that are not optimal, but at least we have sensitive resistance. And so every once in a while, Vitalik will be building the block.

S1

Speaker 1

40:00

And then if it so happens that the sensor transactions Vitalik will include them. But we don't want to be relying on altruism. We want it to be incentive compatible and inclusion list makes it incentive compatible. It's basically a way to get sensor transactions on chain, to force them on chain without having to pay any pen, any financial penalty.

S1

Speaker 1

40:20

So you get both the optimal block that the market gives you and you get censorship resistance.

S2

Speaker 2

40:26

And again, where is this in the roadmap?

S1

Speaker 1

40:30

So I would say, you know, 4 or 5 years because first we need EPPS and then we also need inclusion list. And then finally, MEVBurn.

S2

Speaker 2

40:39

Tim, I just want to throw to you like thoughts and reflections around like the holistic conversation that we've been having.

S4

Speaker 4

40:45

I mean, I don't think I have anything to add on MEV burn and ZK, ZKing at EVM and L2s. I think the other big part is the whole stateless bucket. Yeah, I don't know if you want to go there now, But yeah, so that's probably the other big incentive incompatibility in Ethereum now.

S4

Speaker 4

41:08

So we have, so just for background for the listeners, the Ethereum state is all the addresses, all the contracts, all the data and the contracts.

S2

Speaker 2

41:16

And it's the size of Ethereum.

S4

Speaker 4

41:19

Right. But just the current balance. So it's your balance at this block, not your balance, you know, a year ago. And so everyone's balance, everyone's NFTs, all the Uniswap pools, all that stuff.

S2

Speaker 2

41:30

The working memory of Ethereum? Yeah.

S4

Speaker 4

41:32

Yeah. Basically, you can think of it as like the RAM of Ethereum. And the problem is that writing to the state is like a one-time cost. You know, you pay to do this, but then like nodes need to literally store this forever.

S4

Speaker 4

41:45

Histories, there's things you can do. You can just literally not store it and just verify that at this point the history was correct and delete it. But the state, you need to know it, because it's like, I need to know that your balance in this account is like this many E. Ideally, we would like to bound this in a way so that as Ethereum grows, as there's more users, it doesn't become unmanageable to keep everyone's balances.

S4

Speaker 4

42:09

So the idea with stateless is to move to a world where the average node does not store the entire state. Only high-powered builders have to store them. And when they produce a block, they produce a proof of the state changes that sort of only gives you, you know, the changes that happen in this block. And you can verify that like this is actually correct and you know, no protocol rules are broken.

S4

Speaker 4

42:34

The challenge with getting there is today we store all the Ethereum data in a tree called the Merkle-Patricia tree. It sort of looks like a Christmas tree. So it's like very like long and narrow. And So making your proof, you sort of have to go from the top all the way down.

S4

Speaker 4

42:48

And those are like big proofs to gossip over the network. So what we'd like to do is move Ethereum's tree from looking like a Christmas tree to looking more like a bush, which is like wide and short. And then the proofs become just again from the top to the bottom, like much smaller. And so this is probably 1 of the next big things we'll be working on after this Dan Kuhn upgrade is transitioning the tree, like the database structure of Ethereum from 1 to the other so that we can eventually have the nodes not store all the state.

S1

Speaker 1

43:19

So to put this in terms of computational resources, right now you need a Raspberry Pi for the computation, but you also need this pretty large hard drive. You need about a terabyte or 2. And so statelessness is a way to remove the hard drive.

S1

Speaker 1

43:35

And you can think of it as being an intermediary step to full ZKVM. It's kind of halfway through where you remove the Raspberry Pi itself and then you now you just replace it with a smartwatch.

S2

Speaker 2

43:49

So understanding some of the connections here, I think these things start to weave together. But we started with talking about, with a rollup-centric roadmap and how that turned into the ZK EVM on layer 1 and enshrined roll-ups. And that's with ZK technology, which is cryptography.

S2

Speaker 2

44:07

Then the next thing that we talked about is encrypted mempools, right? Which is also cryptography. And then now we're talking about stateless clients, which is like pruning a lot of data with cryptography. It seems to be like, and Justin, there's a line that you said once upon a time that really stuck with me.

S2

Speaker 2

44:23

I think it's on your very first podcast episode that we did, which is, if you can't do something with cryptography, do it with crypto economics, but if you can do it with cryptography, do it with cryptography. And it seems like these, all of these 3 tracks of Ethereum's roadmap seems to be very, very heavily focused on cryptography.

S1

Speaker 1

44:43

You have a

S2

Speaker 2

44:43

comment on that?

S1

Speaker 1

44:44

Exactly. I mean, in all 3 cases, we're starting with the economic side of things, and then we incrementally upgrade with cryptography. If you take the EVM, we just went through the economic way of, I guess, everyone needs to pay the cost of doing the verification. And then we removed this trust assumption that an honest majority is all agreeing on the state and the same with the encrypted mempools.

S1

Speaker 1

45:11

We're starting with totally centralized encrypted mempools and then we make them trustless. Yeah, that is the theme. And 1 of the amazing things, I didn't even realize it was possible until a few weeks ago, we can completely solve safety of blockchains with cryptography. So there's 2 things that consensus traditionally solve, is safety and liveness.

S1

Speaker 1

45:39

And 1 of the aspects of safety is this thing where you can revert finality. So right now today, we have this notion of economic finality. It's a very, very strong notion, which says that if you have 2 inconsistent finalized checkpoints, meaning you had a checkpoint that was finalized and then it got kind of reverted and you got another final checkpoint, 1 third of the validators will get slashed. So there's a-

S2

Speaker 2

46:02

1 third of all staked ETH will be burnt, which is, you know, billions of dollars.

S1

Speaker 1

46:07

Yeah, something like, you know, $13 billion. And so it probably won't happen. But it turns out that with pure cryptography, you can have perfect finality, which is impossible with the laws of physics and cryptography.

S1

Speaker 1

46:21

And the key unlock was quantum mechanics, which was a big surprise to me because for the last 5 years, we've been doing research on defending against quantum computers. But now we can actually leverage their power, their very unique properties to be constructive about it. And the key primitive that I'm looking at right now is called one-shot signatures, which was discovered in 2020. There was this amazing paper, which kind of pretty much went unnoticed for 3 years.

S1

Speaker 1

46:50

But it solves finality, it gives us perfect finality. Another consequence is that we can reduce the threshold for finality from 66% to 51%. It solves trustless delegation, meaning that we can have protocols like Lido and Rocket Pool that have no trust whatsoever in operators that don't need any collateral. And it potentially also solves restaking.

S1

Speaker 1

47:17

It also gives us this notion of quantum money, which is a way to do the lightning network without routing. So 1 of the big complications of the lightning network is that you need to find this route of channels between the sender and the recipient. And more often than not, there's just going to not be enough liquidity in those channels. Whereas with quantum mining, you just need 1 hop and you don't need these channels with liquidity.

S1

Speaker 1

47:47

And then kind of another kind of crazy application is proof of location, where because you have these keys that are uncloneable, you can prove to the world that you're in a specific geographical location using latency and the speed of light. So the way that one-shot signatures, so what they are is basically a way to have a private key which can only sign a single message and then it destroys itself. How does it work?

S2

Speaker 2

48:18

It's hard just, and it must, it is a quantum innovation. This is quantum computing that we're talking about.

S1

Speaker 1

48:24

Yes, it's a quantum innovation. And there's 2 key properties of quantum mechanics that we're leveraging here. The first 1 is no cloning.

S1

Speaker 1

48:33

So your secret key is an unknown superposition of states, and you can prove that it's unclonable. So you can't have 2 copies of it. And then the second property of quantum mechanics is the destructivity of measurement. Once you measure the private key, which you need to do the signing, it collapses the state, effectively destroying it, meaning that you can't sign a second message.

S2

Speaker 2

48:56

So quantum, the word quantum, it starts to get, like people will probably perceive that, be like it's so far out there that it's so abstract. But this is not a research and development problem anymore. This is just like, we just have to build it, correct?

S2

Speaker 2

49:09

Like, it's a known quantity?

S1

Speaker 1

49:12

No, it's very much R&D. Okay.

S2

Speaker 2

49:15

But we know it's possible, right? It's not like theoretical.

S1

Speaker 1

49:17

We have a possibility result and now, you know, confidence shoots up to actually do the R&D.

S2

Speaker 2

49:23

Okay, right, right, right, right, right. Okay, that's what I mean. It's like, this is a sure thing.

S2

Speaker 2

49:27

We know that it works. We know that it works this way. Now we just have to build it.

S1

Speaker 1

49:31

Exactly. We know it's possible in theory. Now we can just go ahead and try and build it in practice. And in the very, very long term, maybe 30, 40 years, we can have one-shot signatures at the layer 1.

S1

Speaker 1

49:43

But the cool thing is that these things can provide a ton of value outside of consensus. And we don't need many quantum computers, we just need 1. Because now we have this 1 entity that we can delegate to, and we know for sure that they're not gonna rug us. And so they're kind of this trustless quantum entity.

S2

Speaker 2

50:02

And so just again, a single shot signature, like there's that old Call of Duty game, 1 in the chamber, you have 1 bullet in the chamber, as soon as you fire it, it's all you got. Like you throw it away. And so they're like disposable addresses that only have 1 signature.

S2

Speaker 2

50:18

And I think what you're saying is that the assurances that you get from 1 single address only being able to sign 1 transaction once or 1 signature once, provides like opens up a world of new use cases that provides a lot of trustlessness.

S1

Speaker 1

50:31

Exactly. Now, traditionally, you could do these one-shot signatures with trusted hardware, but that kind of sucks. You want to do it with pure cryptography. And for a very long time, I didn't think it was possible, but it is.

S2

Speaker 2

50:42

Cool, okay. Again, on the theme of Ethereum has a lot of cryptography in its roadmap. There's 1 thing I wanna touch on that I wanna go back to talking about statelessness.

S2

Speaker 2

50:53

When we have stateless Ethereum, how does that change how Ethereum is expressed? Like from the end users, like What does it meaningfully do to Ethereum? Like what can we unlock with that? I want to make sure I round out that conversation.

S4

Speaker 4

51:04

So the biggest, I guess if you think of the end user as a person sending the transaction, hopefully nothing. So if you're using a wallet sending a transaction, hopefully nothing changes. And that's good in terms of just UX.

S4

Speaker 4

51:17

If you're running a node, the idea is that the amount of disk space that you need doesn't grow to infinity. And if you think of it like, you know, through the economics angle, this is like the last broken thing on Ethereum in a way where you pay once and then you get to like be on everyone's hard drive forever. So this allows kind of the economics to match this where like we can decide that only the block builders need to keep the full state. You can keep a copy.

S4

Speaker 4

51:44

So, you know, say that you have all these like balances and you know, all these contracts that you're in, you could have your own like local copy of just like David's stuff or just Justin's stuff. But you don't impose that cost on everyone. And so that means that like, yeah, running a node, you know, that you're never going to need like a terabyte of RAM or a terabyte of like, or an ever growing amount of storage just to keep up with not even the chain history, but what's on the network today.

S2

Speaker 2

52:10

I think a big theme of the Ethereum roadmap has always been about sustainability. Like how do we make this thing sustainable? And that's been about like, Hey, let's go from proof of work to proof of stake because proof of stake is more efficient.

S2

Speaker 2

52:21

It makes the system more sustainable. And then the whole state growth side of Ethereum is this conversation. Like I remember throughout 2017 through 2020, we were all bullied by the Bitcoiners because they said that we could never run an Ethereum node and that our state growth or the Ethereum node would run to too many terabytes. Turns out that never happened.

S2

Speaker 2

52:38

But also we had the solution always in the back pocket, which was statelessness. And so what you're saying, Tim, is like when you make a transaction, that is data that goes onto the Ethereum blockchain that grows the size of the Ethereum blockchain. And I have to pay 1 gas fee. And then every node across the world has to download my data and store it forever.

S2

Speaker 2

52:56

And so that is not sustainable because it's 1 cost for 1 person once. And then it's also a 1 cost for every node operator now until the end of time. Like it's just unbalanced.

S4

Speaker 4

53:06

Exactly. Yeah.

S2

Speaker 2

53:06

And so this makes this more sustainable because of statelessness. You can prune the blockchain and still have complete trustlessness.

S4

Speaker 4

53:14

And it's not even when you say the blockchain, just to be clear, it's not like the past history, the past blocks. It's like you, David, can prune everyone except yourself. But then if you get a block, if I make a transaction in the block, there's just a little proof attached that says, hey, Tim actually had, you know, the 1 ETH that he spends or the 1 NFT that he sold.

S2

Speaker 2

53:32

Yeah. I love how this is all cryptography based. 1 theme about cryptography that I think, if listeners aren't familiar with, we should 100% pull out, is that it shifts power to the individual. It fundamentally makes individuals have the same amount of capabilities as large-scale institutions.

S2

Speaker 2

53:50

And so while we're talking like, wow, it's cool that all of these themes that we're talking about on the Ethereum roadmap is like, here's what we can do with cryptography. I bet if we ran back this conversation, we could do it again through the lens of, and this is how it benefits the individual. This is how it protects the individual and elevates the individual to be a first-class citizen, no matter what their resources are. That's my intuition here.

S1

Speaker 1

54:11

Right. And 1 of the few things that doesn't use cryptography is the monetary policy and the word sustainability here is just so important. And kind of, you mentioned Bitcoin as it is kind of ironic because their monetary policy is just not sustainable because it doesn't provide this guaranteed security. And so the way that I see the kind of end game for the monetary policy of Ethereum is kind of this 2 phase components that are summarized as sustainability.

S1

Speaker 1

54:39

On the 1 hand, we have minimal viable issuance, which means that we have-

S2

Speaker 2

54:45

Also perhaps maximally sustainable issuance.

S1

Speaker 1

54:49

Sure. Right. Because it's not unnecessarily dilutive and it gives us the security that we need. And then on the other hand, we kind of have the maximum viable burn.

S1

Speaker 1

54:59

So whatever economic value that is being provided on Ethereum, we get to capture it as a community. And it started with EIP-1559, where we basically, the network is able to capture congestion fees. The next step is MEV burn, where we can capture the value from contention, basically transactions contending to be at the very top of the block. And then the final thing is restaking yield, which it turns out we can also burn.

S1

Speaker 1

55:33

And so in a way, the minimum viable issuance, we've reached the end game with the proof of stake and the merge, but the burn, we actually only in 1 of 3 phases.

S2

Speaker 2

55:46

Okay. So the economics of Ethereum is going to stay the same as a meme. Like we've gotten there. Like we were at the minimally sustainable issuance,

S4

Speaker 4

56:00

but maximally sustainable,

S2

Speaker 2

56:01

excuse me, maximally sustainable issuance or yeah, but we get to improve upon it across many more vectors to make it even better.

S1

Speaker 1

56:08

Right, exactly. Specifically on the value capture part of it.

S2

Speaker 2

56:13

Justin, Tim, this has been a great exploration into this sci-fi future of Ethereum. So thank you for helping me navigate. I think I learned a ton and I'm sure the Bankless Nation has as well.

S1

Speaker 1

56:21

Thanks for having us.

S4

Speaker 4

56:22

Yeah, thanks. Merci.

S2

Speaker 2

56:24

Merci. If there's any information or people, like where should people point to if they want to learn more? Twitter.

S4

Speaker 4

56:33

It depends how much you want to learn. So if you just want some updates, Twitter is probably a good place. If you actually want to work on this, the Ethereum R&D Discord is a great place.

S4

Speaker 4

56:41

E3 searches as well. Just show up there in 1 of the threads and yeah, you'll get to work with Justin.

S1

Speaker 1

56:49

Yeah, you can reach me on Twitter. I have open DMs and more often than not, I'll reply to questions.

S2

Speaker 2

56:55

But- That's a bold commitment.

S1

Speaker 1

56:58

1 thing that I do enjoy as well is just random people telling me, oh, hey, I've heard about this 1 shot signatures. And actually, I just had lunch with someone who came to me. And so if you are interested in this cool technology, do reach me out.

S2

Speaker 2

57:12

All right. We will put all their Twitters in the show notes Bankless nation. You guys know the deal.

S2

Speaker 2

57:16

Crypto is risky. Ethereum is risky. DeFi is risky. Probably cryptography might be the less risky thing that we do, but also perhaps not.

S2

Speaker 2

57:23

I don't know. You can lose what you put in. We are headed west. This is the frontier.

S2

Speaker 2

57:26

And it's not for everyone, but we're glad

S4

Speaker 4

57:30

You you