Pod Insights Bankless 188 - The Next Ethereum Upgrade: Blobspace 101 with Domothy About this episode Dom, aka Domothy, is a researcher at the Ethereum Foundation who is working on the research and development of some key Ethereum protocol upgrades like EIP4844, danksharding, and MEV Burn. We last had Dom on Bankless about that last one, MEV Burn, and this time we’re bringing him around to fully understand an incoming new property of Ethereum that EIP4844 is going to introduce… a new resource market… called BLOBspace… kind of like Blockspace… but for Blobs!
What are blobs? What is Blobspace? How is it different from blockspace and blockspace markets? What will it do for Ethereum and its rollups? These are the questions we explore with Dom today.
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✨ DEBRIEF | Ryan & David unpacking the episode:
https://www.bankless.com/debrief-blobspace
You know how we say blockchains sell blocks? Well, soon Ethereum’s going to be selling more than just blocks. It’s going to be selling blobs too.
We’re just a few months out from the biggest Ethereum release since the merge and no one’s fully mapped out the implications. But it’s going to be huge.
- Ethereum’s getting a new product to sell… it’s called Blobspace
- The cost of transacting on L2s is about to drop toward zero…
- The economics of ETH gas and the burn are about to change forever…
Blobspace, EIP4844, proto-danksharding…that’s what the geeks call this new ETH feature upgrade.
This is everything you need to know about Blobspace with Ethereum Researcher Domothy in this absolute banger of an episode.
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TIMESTAMPS
0:00 Intro
7:20 Why We’re Doing This Episode
8:45 Blobspace
9:40 History of Blobspace
11:30 Sharding & Dead Ends
14:00 Execution Sharding
16:50 Layers of a Blockchain
21:00 Ethereum Rollups
22:50 Vitalik’s Thought Process
26:10 Ethereum Development Hidden Genius
30:00 Current State of Ethereum
34:00 What is a Blob?
39:25 Blobspace Explained
44:20 Validator’s Perspective
47:00 Data Availability vs. Storage
56:31 User’s Perspective
1:00:30 How a Blob Becomes a Blob
1:04:00 Properties of Full Danksharding
1:05:20 New Math & Tech Behind Blobs?
1:12:00 L2 Blobspace & Scaling Factors
1:15:40 Blobspace Economics
1:20:00 Block vs. Blobspace Balancing
1:23:20 L2s Competing For Blobspace
1:32:10 Ethereum Subsidiaries
1:39:00 What’s Next?
1:41:30 Closing & Disclaimers
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RESOURCES
Domothy
https://twitter.com/domothy
Domothy article on Blobspace
https://domothy.com/blobspace/
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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures
Transcript 18,408 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:16 Ryan Sean Adams? Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front-run the opportunity. This is Ryan Sean Adams, and I'm here with David Hoffman, and we're here to help you become more bankless. You know how we say blockchain sell blocks? Well, soon Ethereum's going to be selling more than just blocks. It's going to be selling blobs, too. That's right, blobs. So we're just a few months out from the biggest Ethereum release since the merge, and I think no one has fully mapped out the implications of this, but it's going to be huge. So Ethereum is getting a new product to sell. It's called Blobspace, that is in addition to Blockspace. The cost of transactions on Layer 2s is about to drop
0:57 Ryan Sean Adams? towards zero. The economics of ETH gas and the burn are about to change forever. We're calling this upgrade the Blobspace upgrade, EIP4844, proto-dang sharding. That's what the geeks are calling this new Ethereum feature upgrade. And we want to cover today everything that you need to know about Blobspace and this coming Ethereum upgrade with Ethereum researcher Domothy. And this is an absolute banger of an episode. I couldn't be more proud to present this to the Bankless Nation. A few takeaways here. Number one, we go through what is Blobspace? Number two, we go through the history, how we actually got here, this rollup-centric roadmap. And number three, we go through the economics. What does this mean for Ethereum's economics, for ETH value accrual, for ETH the asset?
1:42 Ryan Sean Adams? David, why was this episode significant to you?
1:44 David Hoffman? I think if there's any sector of conversation that you and I really just love is the intersection of cryptography and economics, like numbers and economic manifestations on top of these protocols. That's our love language. This episode is that. So, I mean, we've talked about EIP4844, we've talked about proto-dang sharding, those are the same things. We've defined it a handful of times in a number of Different capacities. We've never done the aggressive headfirst dive down the rabbit hole and come out the other side of economics. So like we have technically scaled data availability at a technical level. That is a protocol improvement. But how does that
2:27 David Hoffman? connect to the markets side of Ethereum? The two marketplaces, the one marketplace that are now being fractured into two, block space and blob space are now two different independent markets that are being contained each inside of an Ethereum block. What does that mean for Ether? What does that mean for the marketplaces that arise around these things? How does the equilibrium of the supply and demand of each push and pull on each other? What does this do for layer two scalability? What does this do for economic use cases on top of layer twos? How does demand for layer one change the demand for layer two? There's so many good stuff at the bottom of this conversation. We're going to start with the basics, the ones that, you know, bankless listeners probably know all about 4844, just to lay the groundwork. But then we're going to poke out
3:12 David Hoffman? the other end of the rabbit hole into the economic side of this conversation, which I don't know if many people have even had before.
3:19 Ryan Sean Adams? I don't think so.
3:19 David Hoffman? Other than back channels and Harvard DMs and speculation.
3:22 Ryan Sean Adams? Yeah, this is going through the implications is perhaps my favorite part. And this is one of my favorite types of episodes that we do because it's both frontier and imminent. I mean, we're just talking months away from this upgrade. So it's right around the corner. It's very relevant to our here and now lives. This is not sci fi, actually. This is not sci fi Ethereum stuff.
3:41 David Hoffman? This is the near term stuff.
3:43 Ryan Sean Adams? Yeah, this is the stuff we get to look forward to. So guys, we're going to get right to the episode with Domothy. But first we disclose, nothing big to disclose today. Both David and I hold Ether. You already know that.
3:52 David Hoffman? Shocker.
3:53 Ryan Sean Adams? We are long-term investors. We're not journalists. We don't do paid content. There's always a link to all bankless disclosures in the show notes. All right, we're going to get right to the episode with Domothy. But before we do, we want to thank our friend and sponsor Kraken, which is our number one recommended exchange for 2023. Go check them out.
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6:27 Ryan Sean Adams? Bankless Nation, we are excited to introduce you once again to Dom, also known as Domothy. He is a researcher at the Ethereum Foundation. He's working on research and development of some key Ethereum upgrades that are coming down the pipe, including EIP4844, that's the subject of today, also full dank sharding, and also MEV burn. We last had Dom on the podcast, in fact, to talk about MEV burn, and this time, we're bringing him on to describe this new property that Ethereum will get post-EIP4844, and that is blob space. Yep, you heard that right. Not block space, blob space. If you've not heard about blob space, you don't know what this means, this is the episode for you. We're going to take you through the 101 of blob space and get all the way to the 400s
7:12 Ryan Sean Adams? level. Dom, welcome to Bankless.
7:14 Speaker 02 Yeah, I'm happy to be here. Thanks for having me on.
7:17 Ryan Sean Adams? All right, so we're going to get into what blobs are, blob space, how it's different from block space, and I think we want to do that in kind of three different sections here. The first is history. We're going to talk about how we got here and why rollups are really going first, and then we'll get into the technical of what blob space actually is, and then we can conclude with the economics, what all of this means. I just want to give a quick TLDR at the very beginning of like why we're doing this episode, why it's important, and I think there's probably three reasons. Number one, blob space is a new resource on Ethereum, okay? And I think, we think, that this will be as important a resource as block space. That's key insight, number one.
7:58 Ryan Sean Adams? Number two, blob space makes rollups really, really cheap and scalable, and that's going to change everything we know about the Ethereum ecosystem. And number three, blob space is coming, like possibly this year. Some estimates are possibly November. Of course, we don't have firm dates from Ethereum core developers, but that might be a consensus bet, and once it does, it's going to reshape just about everything economically, structurally, about Ethereum. So that's why we're doing this episode right now and why it's timely. Dom, did I say anything incorrect there? Is that a decent summary?
8:31 Speaker 02 Yeah, it's pretty much all correct.
8:33 Ryan Sean Adams? Before we get into the history, Dom, can I just ask a very simple question? To understand blob space, is blob space just block space for Layer 2s?
8:40 Speaker 02 Pretty much, yes. All the data that Layer 2s need to commit on-chain are gonna go into these blobs, which is the new resource, as Ryan said, into Layer 1. And the Layer 1 doesn't know what's inside these blobs. It's just there to prove that Layer 2 committed that, so that no one can cheat.
8:56 Ryan Sean Adams? So that's all it is. Blob space is just block space for Layer 2s. And right now, Layer 2s are actually using Ethereum block space instead of blob space. And what we're doing with this new upgrade, EIP4844, is we're partitioning off this new resource called blob space, and we're making that cheap and very available for rollups. And so now they can start consuming more blob space than they do block space. Is that about right?
9:24 Speaker 02 Yes.
9:24 David Hoffman? So Dom, in order to fully understand how we got here, how we got to blob space, I think it's worthwhile going back into memory lane to understand the fullness of the Ethereum roadmap, because it came to a very logical conclusion of blobs and blob space. So maybe we can go back in time. Because at one point in time, Ethereum's rollup-centric roadmap was not a thing. We had this thing called execution charting, which we never actually got, but we kind of are now. Can you take us back to wherever in the history of Ethereum's roadmap is appropriate to really understand the full context of blob space?
9:59 Speaker 02 Yeah, so in the research phase, it was always assumed that the solution to scaling a blockchain was gonna be some form of sharding in one way or another. And back when we were at proof of work, it didn't really work to split the blockchain into 64 or 1024, or whatever power of 2 number of mini blockchains, because each blockchain would have a very small fraction of the overall security. So the plan was always proof of stake first, and then we do this magical split into mini blockchains that run in parallel, where each validator is randomly shuffled. That was basically the general idea for execution charting to flip the trilemma of scalability on its head where instead of being limited by the lowest requirement
10:43 Speaker 02 node on the network, now you would have more nodes equal more scalability, which is what we're, as we're going to see, this is what we're going to get with VAP 444 and full dank charting. So that's pretty much the research goal was to get to charting. And then we had more research discovery along the way, but that was the earliest design to get charting.
11:05 Ryan Sean Adams? So Dom, when you say sharding, that's basically just like splitting Ethereum into different pieces, right? Like sharding it.
11:12 David Hoffman? Or any database.
11:13 Ryan Sean Adams? Yeah. Or any database.
11:14 Speaker 02 Yeah. This is a concept that already exists in computer science for database management. Basically, it's sharded as in it's a lot of smaller shards of the blockchain get much more scalability in parallel. So that was the goal, but it turns out it's pretty hard to do that safely with execution charting. And it was a very debated area of research until rollups game.
11:37 Ryan Sean Adams? Yeah, I was going to ask you, and this is, by the way, we're going to memory lane. So this is somewhere around, you know, 2019, I think.
11:44 Speaker 02 Yeah, just about.
11:45 Ryan Sean Adams? Yeah, like that was around the timeline where we sort of discovered that, oh, sharding in this way, full execution layer sharding is going to be really hard and it might overly complicate the protocol and it might take us years to get there and we might never be able to get there. And so there was a lot of like, I felt anyway, as not an Ethereum researcher, but like an Ethereum, I don't know, advocate, user, like investor. It felt a little bit sad and hopeless back in 2019. Like we were never going to make it, this technology that we hoped would be possible, scaling blockchains was never going to happen because there were all of these dead ends. Can you describe what the dead ends actually were? Like, why was this so difficult?
12:29 Speaker 02 It was a very big upgrade that was planned. If you remember around 2019, that was the ETH 2.0 slogan where the goal was to have one big upgrade with proof of stake, with sharding, with everything along.
12:41 David Hoffman? We were going to go from like the stone. Own age of Ethereum to sci fi Ethereum in one single upgrade. We were going to get all the upgrades that we've gotten in the last like four years at once.
12:51 Speaker 02 Yeah, so one big jump. And it turns out that's that's hard to do. There's a lot of complexity involved and it was split up into different phases. And then we said, okay, first we're going to launch a beacon chain. Then we're going to figure out how to actually merge it with the current execution layer. And then we're going to do phase one, which is just data sharding. So no execution, just all these smaller blockchains. They're just going to contain data. And then we're going to figure out how to do execution charting. So it was a lot of let's figure it out as we go, but also in a safe way. So we don't do something we regret later and then break the whole blockchain. Cause there's a lot of economic activity going on on it.
13:28 David Hoffman? I want to keep on going and defining execution charting just because once you understand execution charting, the current roadmap of Ethereum, the roll up centric roadmap of Ethereum is placed into even better context. I think, and so a quote from your article, Dom, that you wrote is that sharding, execution charting, the original plan for sharding of Ethereum. And I did like how you said that we were going to get to sharding one way or another. We just didn't know how we were going to do it. We knew sharding was the answer. We thought originally Ethereum, the roadmap was like, okay, execution charting. Turns out that was a dead end and we picked a different path. Still ended up getting to sharding, a different flavor of sharding, which we'll get to. But in the beginning, you wrote this line in your article about execution charting and the technical details about it.
14:10 David Hoffman? And you said, sharding is the shuffling of validators, the Ethereum beacon chain, layer one validators that we know today, shuffling validators randomly across distinct shards of the blockchain. Each shard essentially being its own mini blockchain, running in parallel to the beacon chain, which sounds a little bit like what we have today with rollups. But the difference here is that the shards of Ethereum are actually a part of the layer one protocol. Something that has been in my mind lately is like the relationship that a chain has with its own infrastructure. And so execution charting to me is like state sponsored shards, as in the protocol, the layer one protocol actually determines what the shards are and. That stands in contrast to the rollup centric roadmap that we have today.
14:55 David Hoffman? But really, to me, execution charting is at first we started with 64 with a planned upgrade to 1,048 shards. But it was the Ethereum layer one was going to be all 64 of these shards operated and managed and produced by the Ethereum layer one protocol. And that's where we started. Am I articulating this correct?
15:15 Speaker 02 Yeah, exactly. So I would say that the way we're getting execution charting this way is more indirect with rollups and data charting. But it's kind of like a cheat code from a research perspective because Ethereum layer one has much fewer things to do and worry about. And then the rest is uploaded to rollups, which is in my view, better than the original plan. Like you said, state sponsored shards where everything is the same. It's the same blockchain, same EVM, same trade offs about everything, which was like imposed on users. And now instead of that, you can have rollups competing against each other to get the best environment, the better trade offs. Like if you personally prefer like super speed over super security, then you can go on a different rollup.
15:57 Speaker 02 And you have more choices and there's more innovation and competition at layer two.
16:01 Ryan Sean Adams? There's so much to unlock here and there's a lot of, I know we're trying to explain blob space at the 101 level. But there's so much kind of like, I guess, stacked knowledge that feels almost necessary to explain going to this episode. We have a ton of resources at Bankless to explain these various topics. But one I just want to touch upon is the three different layers of a blockchain and kind of this modular world that Ethereum is in. There's the consensus layer, and this will be a recap for some Bankless listeners. But there's the consensus layer, there's the data availability layer, and then there's the execution layer.
16:38 Ryan Sean Adams? The consensus layer defines what's true. Okay, that's kind of with Ethereum mainnet, by the way, all three of these layers are kind of, you know, combined in the same thing. The consensus layer is arguably what a blockchain should really be focused on doing. Figuring out what's true in the most decentralized, you know, corruption resistant way possible.
16:56 David Hoffman? What's true being the order of the blocks?
16:58 Ryan Sean Adams? Yes, exactly. The order of the blocks, exactly, and the processing of those blocks. The next layer out is the data availability layer and that, you know, my rough approximation of what that is, is what's happened. So you've got what's true consensus, what's happened. That's kind of like the data layer of a blockchain like Ethereum. And then you have the outside layer, which is kind of where all the activity is. That's where all the action is. That's what's happening right now. That's execution as we define it. And the original Ethereum 1.0, let's call it, combined all of those three things on main chain in just one environment couldn't be parallelized. And now what we're doing with rollups, the rollup centric roadmap with Ethereum is we are, I guess, sharding out.
17:43 Ryan Sean Adams? You know, I'm resistant to using that word, but, but maybe increasingly we will kind of use that word, sharding out execution from the main chain into these rollups. But the rollups, in order for them to be still secured fully with the, the similar security guarantees as Ethereum mainnet, have to post their data, that is what's happened, back to the Ethereum mainnet, right? In order to get kind of the consensus benefits and the data benefits. And when they do that, it costs money. It costs, right now, block space. And it costs kind of a lot of money relative to what they're doing. So EIP 4844 and what we're calling proto Dank sharding.
18:26 Ryan Sean Adams? The reason for this whole discussion is the economics, you know, change post this update in a very rollup favorable way. But anyway, important for us to know that when we're talking about consensus and data layer and execution, all three of those are kind of separate layers in this new Ethereum paradigm that we're moving towards. Dom, David, do you guys have anything to add there?
18:48 Speaker 02 I would say you got it pretty much correct. I'll just insist more on a certain point is that data availability right now is more implicit and it boils down to trustless verification, right? We want everyone to be able to verify the chain by themselves and not have to have a trust me, bro, third party in the middle, which right now this is the bottleneck, right? You need to be able to verify everything, which implicitly means you need to have the Data available to you to check the state transitions and execute the transactions so that anyone who sends you money, then you can verify that it's legit and they really did send you that money. And it's not like on some other worthless fork or something.
19:27 Ryan Sean Adams? So let's talk about that for a minute. So the rollups post the Ethereum data availability layer. So that it's not a trust me, bro type of situation.
19:35 Speaker 02 Exactly.
19:35 Ryan Sean Adams? What does that mean for a user inside of a rollup? Does it mean they always have a way to withdraw their assets from the rollups? Or like, what kind of certainty, security does that give them?
19:49 Speaker 02 Yeah. So at its core, we say that rollups inherit the security of L1, which is a very quick tagline for rollups. And the way it works is you have the layer one contract that bridges asset between Ethereum and rollups. And ideally, this smart contract can and should in the future all be immutable and not upgradable. And which is why layer one is going to enforce some constraint on what these layer two blockchains can commit to layer one and so that they can't steal assets. And if they censored, then you can still rely on the layer one contract to enforce like withdrawing your asset or forcing a transaction to go through on layer two.
20:26 Ryan Sean Adams? This is why, by the way, I think Dankrad said recently that his definition of an Ethereum rollup is a rollup that posts its data on Ethereum. And if it doesn't do that, then it's something else. It's not an Ethereum rollup. Maybe we use the term Validium or something else for that.
20:42 Speaker 02 Yeah.
20:43 Ryan Sean Adams? Do you subscribe to that way of defining an Ethereum rollup, Dom?
20:46 Speaker 02 He actually said this about layer two, not rollups. The rollup term is very specific. That is what he means. He says layer two are rollups and there is no layer two thing that isn't a rollup according to Dankrad. And he means that as in like you mentioned, Validiums that have data availability off-chain, not enforced by Ethereum. And once you leave this Ethereum bubble of security, then you have more trust assumptions regarding the data availability, which leads to a sort of semi trust me, bro situation as in you, if you want to exit your assets, then you need to get the data from somewhere. And if it's not Ethereum itself, it's It's going to be someone else and you have to rely on them to give you that data.
21:26 David Hoffman? Not only do you have to rely on them, but you also have to rely on the mechanism, right? So you could post your data on Bitcoin if you wanted to and Bitcoin is super trustless.
21:34 Speaker 02 Yeah.
21:34 David Hoffman? But then you need to trust whoever's facilitating that relationship. Typically, we call that a bridge.
21:38 Speaker 02 Yeah.
21:39 David Hoffman? Just wanted to add that nuance there. There's another quote in your article Dom from Vitalik that I'm hoping you can kind of put us into the shoes of tall, uh, tall order right now. The quote that you put in there is, "It seems very plausible to me that when full execution charting finally comes, essentially no one will care about it. Everyone will have already adapted to a rollup centric world, whether we like it or not. And by that point, it will be easier to continue down that path than try to bring everyone back to the base chain for no clear benefit and a 20 to 100x reduction in scalability. Basically, we could do the complex thing in scale layer one execution, but all that would really achieve is that rollup sequencers would be like, "Oh, cool, more data."
22:21 David Hoffman? And then barely touch the execution that we took so long to shard. This is Vitalik saying that Ethereum layer one was always destined to only ever be for settlements, even if we sharded layer one execution anyways. Can you kind of just put us through this, the thought process of Vitalik? Why did we know that even if we did do execution charting of the layer one, that we would still ultimately end up at the rollup centric roadmap anyways?
22:45 Speaker 02 The idea is that rollups can afford to do sacrifices that layer one can't do because layer one enforces constraints on layer two with the bridge contract that I mentioned earlier. So it's something that we can't just achieve the scale and the order of magnitude that rollups can, even if we shard execution at layer one. And the quote about Vitalik is that we're going to spend so much time doing execution charting and it's not going to matter because rollups are still going to be much more scalable. And even if we do scale execution, that also means scaling data because like I said earlier, to check execution, you need to have the data. So scaling execution implies scaling data, but not the other way around.
23:26 Speaker 02 So to get back into context, scaling layer one just means it scales layer two exponentially. So whether we want it or not, rollups are here and they're going to be much more scalable than layer one. So the pragmatic thing to do is to just go down that path and work with rollups rather than like try to be some kind of layer one maximalist that said, no, you stay on my monolithic chain that I spend so much time sharding. Everyone's going to say, why? It's so much faster on layer two.
23:52 David Hoffman? Isn't this related to the dynamic I was talking about earlier where execution sharding is like the state sponsored version of sharding where every single shard is totally homogeneous? They're all the same size. They all go at the same speed. And then what you're saying is like, well, and Vitalik is saying in this quote is like, even if we have that world of execution sharding, they're still too rigid. The shards are still too homogeneous. We want more pluralism of core value of Ethereum. We want more pluralism in our rollups. And so even if we do execution sharding, what we get out of that is still too rigid. We can still get more expressivity, more optionality for rollups anyways on top of execution sharding. So we might as well just lean into that. Am I connecting the right dots here?
24:36 Speaker 02 Yeah, it's related, but the quote about Vitalik was really about scalability because even an EVM rollup is going to be much faster than a sharded layer one.
24:44 Ryan Sean Adams? One thing I find interesting about this rollup centric approach, which hasn't been mentioned, but I think kind of implied with what you were saying, David, is, you know, the original version of Ethereum was very top down, central planning, right? It's kind of like the Ethereum protocol is, you know, expanding main chain in all of these different directions. And that of course has some benefits, but we've discussed many of the trade offs versus the rollup centric roadmap is very bottom up, like free market, developing its vision, going off in many different streams at once.
25:22 David Hoffman? The Ethereum Foundation is not.
25:23 Ryan Sean Adams? Developing rollups. Yeah, and there's something interesting with the analog that we so often use of like, you know, nations and how they're built. And you know, the first model is how much should a government actually do? Right? It's kind of like an open question in different societies. I feel like have different answers to this question. But the extreme answer almost never works in any organized society, which is like the extreme answer is the government should do freaking everything. Right? Like your clothes and run all the companies and like do all the banking and like do everything. Right. Okay. And like, I think that the most well functioning societies are those that do just the right amount. Right. Of, you know, involvement. The Goldilocks government, yeah. It's kind of like this Goldilocks zone.
26:04 Ryan Sean Adams? And of course, you know, there's probably an overton window of like, what sort of works there. But this was Ethereum trying to like, figure out how much work kind of the the central government should effectively do here. And where it's left off is we're just going to be, we're going to focus on settlement. We're going to focus on this consensus layer and then the outer ring kind of giving a spot for settlement for cheap data availability. And we're going to let the free market, the private market, all of these experiments run in parallel in the rollup world. And I feel like this is almost like a hidden genius that I didn't see at the time. You know, 2019, the kind of the pivot from ETH 2.0 felt to me like a crushing blow.
26:47 Ryan Sean Adams? I almost felt a little bit like Fred Wilson, the notable VC, who said at that time, Ethereum has failed to execute. I felt a little bit of that, like, oh, okay. So we're giving up on the dream because it's too hard. And all of this like research about sharding was for naught. And now I look back at it in 2023, I'm like, holy shit, that was genius. I can't believe, I can't believe we pulled that off. And I don't even know if all of this was intentional or like, you know, there was foresight or we just kind of got lucky with how this experiment has played out. But the amount of innovation I see in the rollup world and all of these experiments being pursued in parallel, and by the way, funded, funded.
27:27 Ryan Sean Adams? Adequately. I'm putting it mildly, but like funded well by like VCs and token incentives and all of these different things have really like accelerated Ethereum development to warp speed. Anyway, I don't know if there's anything there, Dom, that you can kind of glom onto and respond to, but that's certainly an observation that I've had recently.
27:45 Speaker 02 Yeah, it's a very astute observation, but in terms of being intentional or not, I would say it was kind of forced upon Ethereum researchers because many points we've already touched on is execution sharding is complex. And the way we're doing with den sharding plus rollups, it's kind of a cheat code, but a cheat code that's going to happen whether we want it or not. And then we just lean into that. And as you said, it turns out that it's like one of the best way to scale a blockchain if we want to have everyone in the world to have access to a scalable, trustless environment.
28:16 Ryan Sean Adams? Okay, so that's a little bit of the history and how we got here. And I think I hope we explained, gave you a tour de force on how we got here to a rollup centric roadmap. Now take us to the current state, if you will, Dom. So right now, we do have many rollups. And right now, these rollups, these Ethereum rollups, many of them do use Ethereum, I guess all of them, if you take Dankrad's explanation, do use Ethereum for data availability. That means they post kind of the, you know, the fraud proof type data back on Ethereum mainnet and they consume block space in doing that. It was a few days ago I checked, so that these numbers, you know, will be somewhat inaccurate, but I think layer twos, according to Ultrasound Money, consume about 200, 300,
28:56 Ryan Sean Adams? you know, say 200 to 500 ETH worth of block space on the daily. All right. And this is them paying for data availability back on Ethereum. So tell us about the current state. What's wrong with that? That sounds pretty good. We've got rollup centric roadmap. We've got layer two experiments. The fees are fairly cheap across layer twos, I think. I mean, I don't know what you guys have seen recently, but like on the order of cents, you know, for most of them. What's wrong with our current state?
29:23 Speaker 02 What's wrong with it is that a few cents is still too much for scaling blockchains worldwide. Like Vitalik said years and years ago, the internet of money should not cost 5 cents or 50 cents or I forgot the exact quote. And it's something that people make fun of him because of layer one gas fees. So the current state of things is, like you said, we do have rollups and they do use Layer 1's data availability layer, which is like an implicit layer, and as we will see later. And it's still very expensive because of two things. It's that one, the cheapest way to commit data on chain right now is call data, which is about 16 units of gas for every byte that they commit on chain. It goes into the gas fee market, which can be very expensive.
30:06 Speaker 02 As we see like one NFT drops and then everyone's using the chain. That makes it more expensive for rollups. It's a gas goes up, the cost of putting the one byte is the 16 gas and that price goes up too. And it's also limited. The block sizes have to stay limited because of the problem of scaling a blockchain. But the cheapest node has to be able to verify the chain and that's why blocks have to be small. And there's no cheaper way to put data on chain right now for rollups.
30:34 Ryan Sean Adams? So it's too expensive, it's limited, and we've got this weird kind of resource issue.
30:41 David Hoffman? Coupling.
30:42 Ryan Sean Adams? Yeah. Yeah, coupling, resource coupling issue. That's a great word for it, David. And so what happens is, you know, 100,000 users on a rollup are competing with like 200, you know, NFT bidders on main chain and they're all competing economically for the same block space. And you know, drives the 100,000 users, the prices up. So there's this resource coupling problem as well. Those are the three problems with the current state.
31:07 Speaker 02 Yes. So the resource coupling problem is kind of a weird thing economically, but there's a technical reason, historical reason why Ethereum went to couple everything into a single unit of gas. But it's weird when you think about it, because these 200 NFT bidders are using execution mainly to send money and settle an NFT trade, whereas these rollups are using data. So it's two completely different resources that shouldn't be linked together. They should have their own supply and demand market, but one goes up, the other goes up as well. So that's kind of the problem of the current state with rollups.
31:39 David Hoffman? So not only are these resources coupled, but what you're saying, Dom, is that these resources are inappropriately coupled, as in they don't have to be coupled. One is using data, the other is primarily using execution. And these are two different resources that just because everything is contained inside of block space, that these things are coupled and inappropriately so.
32:02 Speaker 02 Yes, that's exactly it.
32:03 David Hoffman? Okay, so Dom, we're going to get to what is about to be. My favorite question that is ever about to be asked on the Bankless Podcast. Are you ready for it?
32:11 Speaker 02 Yeah.
32:12 David Hoffman? Dom, what's a blob?
32:15 Speaker 02 So you want the technical answer because we already end waved it. It's a blob is just a piece of data that rollups can put onto main chain.
32:23 David Hoffman? Yeah, I think it's time to get into a technical. Okay, so I'll ask it again. What's it technically? What's a blob?
32:27 Speaker 02 Technically, a blob is 4,096 field elements that are just under 32 bytes each. So that's the playground that rollups have to to put data and they have to abide by this format.
32:41 David Hoffman? What is the difference between a block and a blob?
32:44 Speaker 02 The block contains basically everything at execution. And I don't know how to explain this. It's like it contains the transactions and then you execute the transaction and you see that I sent you one ETH and that changes the state of Ethereum layer one. It's like I have one less ETH and you have one more because we executed that transaction on chain. And everyone agrees that this transaction happened before and after some other transactions.
33:09 David Hoffman? Wait, so we have blocks.
33:11 Speaker 02 Yeah.
33:11 David Hoffman? And then we have blobs.
33:12 Speaker 02 Yes.
33:13 David Hoffman? And then we have like data of transactions. Transaction data goes into block space. Blobs go into blob space and everything is contained in a block, correct?
33:24 Speaker 02 Yes.
33:24 David Hoffman? And so it's the new thing is this new blob space. So we have block space. And I think people might get, and I'm getting confused, but I'm trying to parse this apart that we have blocks and we have block space and we have blob space. But blob space and block space are spiritually equivalent and both of them are going into blocks. And so there's this weird dynamic where block space and blocks have the same like name, the same block. But blob space and block space are shoulder to shoulder with each other, equally contained by a block.
33:59 Speaker 02 Yeah, so we're getting into metaphor land. On the consensus layer, what we say is that these blobs are in some sort of sidecar alongside the block. So the block can stay small and then there's the big blobs next to it that are not exactly contained in the block, but the block contains a reference to the data. Which is what rollups are going to use to do all sorts of zero knowledge magic, that sort of stuff.
34:22 Ryan Sean Adams? I think one of the first learnings here, the first takeaways in this section, because it's going to take us a few minutes to really understand what the heck a blob is and what the heck blob space is. But you know that thing that we say on bankless so often is blockchain sell blocks? Well, I think, David, we have to amend that.
34:39 David Hoffman? Oh, no.
34:39 Ryan Sean Adams? Blockchains sell blocks and blobs. This is a new resource, I think, is the key insight that Ethereum is kind of going to market with, if you will, after EIP 4844, which, again, could happen this year. It's not only selling block space to the market, it's also selling blob space. And blob space is a product tailor-made for rollups. What does it do for rollups? It gives them a space to park all of their beautiful fraud-proof data.
35:12 David Hoffman? So beautiful.
35:12 Ryan Sean Adams? A data availability layer is so beautiful and incredibly cheaply. So it's much more efficient resource to get done what rollups need to get done, which is post these proofs into Ethereum, I guess, block space. But it does it. Ethereum is now in the blob business, baby.
35:31 David Hoffman? Dom, you said that a block references a blob, but that a blob isn't in a block. Is that correct? And can you elaborate?
35:39 Speaker 02 Yeah, that's the metaphor. The blob is the sidecar that's alongside the block. And then, basically, one key insight is that, like I said earlier, if I send one ETH to you on layer one, every single node has to compute the transaction to verify my signature, verify access to state of your account and like subtract a number from me, add a number for your account. And that's the very expensive thing. That's kind of the bottleneck that doesn't scale very well. And the way that rollup scale this way is that I send you one ETH on a rollup, and that's cool. The rollup is going to batch that alongside a lot of other transaction onto layer one inside of a blob. And now, layer one doesn't care about the data inside that blob. That's the rollups business, right?
36:21 Speaker 02 So I send you one ETH that doesn't impact layer one nodes. They're just gonna... See the data, say, okay, the data is there, it's cool, the roll up is, everything on the roll up is happening is legit. But there's no expensive computation that layer one happening for layer two transactions. Other than this very small transaction to verify like a proof or update the optimism state root. Every time a sequencer commits a transaction. So that's why the biggest resource they need is data and it's how we scale the whole blockchain.
36:53 David Hoffman? Right, okay, so the way that I understand I give a metaphor to block space. Is that block space is like a container of data. And if I send Ryan some ether, that's a very small bit of data that I'll throw into block space, start to fill it up. If I send Ryan an NFT, that's an even bigger bit of data. If I mint 13 NFTs at once, that's an even bigger amount of data and that fills up block space. Block space is like this bucket that you fill with different sizes of transactions, eventually you become full. Is blob space like that, as in like there's a container that is filled? Or does it operate with different properties?
37:27 Speaker 02 It's similar, but it's a decoupled market too. So there's like this other different bucket that only gets filled with data. The layer one doesn't care, it's very agnostic about who post what into these blobs. All it cares about is getting these blobs out there for whoever needs them to commit to them and download the blob content. This is what layer one enforces.
37:47 David Hoffman? Okay, so post EIP 4844, when we introduce blob space. Aggregate Ethereum blocks, the size, the data size of aggregate Ethereum blocks will be blob space plus block space, correct?
38:01 Speaker 02 Yes.
38:01 David Hoffman? Okay.
38:02 Ryan Sean Adams? Let's look at this through the different lenses of kind of actors and stakeholders in the Ethereum ecosystem. So I want to go through validators in a second, but let's first start with rollups. So why is blob space a better product than block space for rollups? Is it just because it's cheaper? Or what other properties does it have that makes it appealing? And you know, better for rollups to consume.
38:27 Speaker 02 From the point of view of a rollup sequencer, it really boils down to being much cheaper and much more plentiful. Layer one is going to do more technical stuff to scale this blob space. But from the point of view of a rollup, it doesn't really matter. It's just data for them. That's all they need and that's all they care about.
38:44 Ryan Sean Adams? And how do they sort of activate it? Is there anything that they need to do on their side? Is it basically like, so all of these proofs that they were posting and buying block space in order to prove they just switch over? So it's just like, rather than using, I don't know, electricity for your furnace, you're using now natural gas. You just use a different resource because natural gas is so cheap. But like, you know, the system works the same way. You still get your heat. That's what they're doing here, yes?
39:10 Speaker 02 Yeah, exactly. So after 4844, they'll have to update to support these blobs and stop posting everything on Layer one in the expensive call data section of blocks.
39:21 Ryan Sean Adams? Is there anything that like they'll lose by posting, like doing this via BlobSpace versus BlockSpace? Or is it just basically kind of an equivalent substitutionary good? Like it's just as good for rollups?
39:34 Speaker 02 It's just as good and even better for them because it's cheaper and more plentiful.
39:38 David Hoffman? Can I put a transaction in BlobSpace? Can I like send Ryan some ether in a blob? Or like what prevents me as a Layer one user from consuming BlobSpace?
39:49 Speaker 02 Nothing prevents you. It's a permissionless system. Like, so it's tailored for rollups, but of course you can put any data inside Layer one blobs as you please, but it's up to you if you want to pay for that.
40:00 Ryan Sean Adams? I'd be more expensive. Maybe a bad idea.
40:03 Speaker 02 Yeah, I'm predicting that there will be some NFT project where the JPGs are inside blobs at first because blobs are going to be pretty cheap and plentiful.
40:10 Ryan Sean Adams? Interesting.
40:12 David Hoffman? Okay, so there's a phenomenon in the NFT world about like NFTs that are on-chain, like CryptoPunks and MFers and a few other NFT projects. What's the famous one? The generative one? Autoglyphs are like the big on-chain art. Does BlobSpace just simply allow for more? And perhaps as one use case of BlobSpace, of which I'm sure there's infinity, it is like that we can just put more NFTs, more JPGs on-chain?
40:34 Speaker 02 Yeah, I'm predicting there will be a lot of DGEN stuff happening with BlobSpace.
40:38 Ryan Sean Adams? The safe bet.
40:38 Speaker 02 Because it's going to be very cheap at first.
40:40 Ryan Sean Adams? Oh no, we don't want that though. We want the. The blob space for our roll up transactions, we don't want to create another D gen market. Not the point of resource decoupling.
40:49 Speaker 02 Yeah, it's decoupled because if they want to put data on chain, we can't stop them, right? They could just pretend to be a roll up.
40:54 Ryan Sean Adams? Yeah.
40:54 Speaker 02 Yeah, we can't be top down about who gets to use what from a credible neutrality at layer one. And I don't think there's a way to enforce that only roll up sequencers use blob space.
41:04 Ryan Sean Adams? But probably the properties of blob space are such that they are most conducive to.
41:08 Speaker 02 Yeah.
41:09 Ryan Sean Adams? So one example, Dom, isn't there like an expiry on the blob space? And this brings us to kind of the, we'll talk about the expiry, but this brings us to the second lens I wanted to talk about, which is from a validator's perspective or staker's perspective, like I'm running a node and I'm staking. Does this, the introduction of blob space, change anything for me? Does it increase the requirements of the validating machine that I have to run? Do I now have to store, in addition to all of this block space, do I now have to store blob space? Maybe those questions are related.
41:39 Speaker 02 Yeah, so with 4844, it's gonna go up a little bit. You have to download and serve these blobs, all the data that's inside the blob, but you don't have to store it forever. So that's what you mentioned, blobs will expire after, right now the specs say about 18 days, I believe. And after that, it becomes like, it was attested that it was available during those 18 days. But if it expires, then you're not gonna be able to get it from a node if the node pruned it. So you have to get it from some other source and then you'll be able to see that it was available on chain during that time.
42:13 Ryan Sean Adams? So this might be a reason why it's not as conducive as block spaces to a non-chain NFT. Although I know there may be ways around this, but why is this 18 days not a problem? So why isn't that a problem for layer two? It's like if the data goes away after 18 days, aren't I?
42:28 David Hoffman? Yeah, wait, wait, wait. Prodding data away from blockchains is blasphemy. How dare you, Dom?
42:32 Ryan Sean Adams? Yes, yes, why, how could you?
42:34 Speaker 02 So this is kind of the weird thing with the name data availability, because it's not data storage and it's not continued data availability forever.
42:42 Ryan Sean Adams? Okay.
42:42 Speaker 02 So it's kind of the opposite. There's a big problem with storing everything by every node forever. That doesn't really scale if you're to pay once to get your NFT JPEG on chain and then it's. Stored by everyone forever for all of eternity with the data just going up and up, up only forever. So instead, we use Blob expiry to just ensure that the data was available, once it was published, and available to be downloaded by everyone. And this is also from the lens of rollups is that if you're a hundred years from now and you want to sync the optimism state from scratch, you'll have to get the blob data from somewhere. But then, once you have the data, nobody can lie to you and say, oh, I
43:23 Speaker 02 a hundred years ago, I had a thousand E that came from nowhere. And then here's a data and then you can check that data and you can not just check the integrity of that data, but check that its availability was enforced by Ethereum long enough for anyone to snitch on an invalid transaction on optimism. So you'll have these properties of being able to verify the data yourself. It's just that Ethereum is not the one that's going to serve you that data forever for free.
43:49 David Hoffman? Okay, so data availability in contrast to data storage, availability as in Ethereum is making this commitment to the world around it, that it is enforcing that data is sufficiently available for the surrounding universe to be able to take and do what they need with that data in order to do whatever they want to do. And we've chosen 18 days as some time length that data is being made available to individuals, to node operators, to other layer two infrastructure providers, to other protocols like Filecoin or data availability solutions like Celestia. Anyone to take the data that Ethereum has made available
44:32 David Hoffman? to the world, hence data availability for 18 days. And then that data has gone from Ethereum to some more long-term storage solution, which there are so many of, it's not even worthwhile for me to list them off. But we can start with data availability solutions like Celestia, Eigenlayer data availability, something else.
44:51 Speaker 02 Rollups themselves.
44:52 David Hoffman? Your hard drives, like rollup operators themselves.
44:55 Speaker 02 Yeah.
44:55 David Hoffman? And so we're just making this statement that like, so long as we can say that Ethereum enforces data availability of all blob data. For eighteen days, then the universe is going to be able to do what they need to do with that data in order to have a fully trustless chain of data that goes back to Genesis. Is this correct?
45:15 Speaker 02 Yes. Yes. So the goal is really to have lightweight nodes be able to verify everything, including the availability of what's been published in a scalable way. And also, another thing to point out is that this blob data is not like part of the state where you need to read and write to it many, many times a second. You can just store it on a cheap hard drives. And if you're like a hobbyist or any stakeholder in a specific rollup, you can just download the data you need from the rollup you're using. And then you can just store it for pretty cheap on like hard drives. And data storage is just a thing that's continuously getting cheaper and cheaper over time.
45:53 David Hoffman? Right, like notably like terabytes of data are like under a hundred dollars right now. So maybe we can theorize that in the future, there will be some like software application that you run on your desktop computer and you link it to like your main addresses. And then it follows your addresses around some pre-selected layer twos like Optimism and ZK Sync and Arbitrum. And then it looks at your addresses and then automatically downloads all of the blob data for your addresses that you've specified. And then it just stores that on your personal computer. And then you can be the one that verifies the history of blob space in addition to the many other data storage solutions that may also be downloading and saving the same data. Is this perhaps a version of the future?
46:35 Speaker 02 Yes. And also rollups can have their own designs to incentivize a storage of their own data. If like it's something that's very important to that particular rollup in its community. So the design space is infinite.
46:47 David Hoffman? So in addition to pushing execution out to the free market and making layer two teams optimized for execution, we're also just pushing data storage out to the free market as well.
46:59 Speaker 02 Yes. So one metaphor that I've used, Vitalik uses that Ethereum is supposed to be more of like a billboard where you can have information in real time about what's on the billboard. But once it's like erased, all you can do is verify that this information wasn't on the billboard, available to everyone to see back when it was published.
47:18 Ryan Sean Adams? Yeah, that's kind of the image I get from Ethereum as well. It's just, it's kind of like a, you know, present moment of time type of consensus mechanism. It's not trying to store the full consensus, like, truth of the universe. The full state of the universe, yes. Inside of this computer. Yeah, it's more like, kind of like a hurricane or just kind of like- The tip of the chain. Yeah, it twirls around. And so that has this distinction between data availability and data storage. So Ethereum is trying to be a data availability computer, but not a data storage computer. And so this 18 days is also significant because there does have to be some reasonable time period here, right? Like, it can't be like 15 minutes, or like 2 hours, or even 24 hours. Because there are things like with rollups, right?
48:00 Ryan Sean Adams? We have kind of like optimistic rollups, have a seven-day proof challenge type window, right? And that's why it has to be, you know, greater than like 7 days. Or it just, you know, 18 days feels like an okay time horizon. But it shouldn't be like 6 months, because that gets into data storage. And it shouldn't be like, you know, an hour, because that's not enough time for all of the data storage and fraud-proof type solutions to kind of react. Is that accurate as well?
48:28 Speaker 02 Yes. So it's basically, it just has to be long enough for anyone who needs that data to download it. So that's why I said earlier, it's kind of a cheat code for execution charting. Because then you have these rollups posting blobs. And if it's a rollup you don't care about, then you just don't download the blob. You're gonna see that it's there for, you're gonna, as a layer 1 validator and layer 1 node, you're gonna participate in securing that rollup. But even if you don't care about it, you don't download that blob, and that's it. You just, it's like the original plan with these mini blockchains, where you would only care about the blockchain that has your fund, like, one of the shards that have your fund, and you don't care about the others. But this is even better, because then the security is not split around these mini blockchains the same way it would have been with the original sharding plan.
49:13 Ryan Sean Adams? Just to tie off this question, you said the requirements for a validator do increase a little bit. Like, what are we talking here?
49:19 Speaker 02 With proto-dang sharding. I did the math in my blog post. With the current size of a blob and the target number of blobs every block, we're talking about 50 gigabytes extra storage by every node. But this is for 4844. After full dank sharding, it's gonna go down somehow. Blobs are gonna be bigger, and then the requirements are gonna be lower for every node. Which is the magical sharding.
49:44 Ryan Sean Adams? So the goal of Ethereum in general is to be able to run a validator on consumer-grade hardware, right? And we meet that goal right now. Like, you can run a validator on a Raspberry Pi. And what you're saying is this blob space change increases the hardware requirements by about 50 gigs of hard drive space. So doable, I think, you know, on most consumer hard drive rigs. So it's not nothing, but, I mean, 50 gigs, like, you could get, you know, thumb drives for, I don't know, 10 bucks that are 50 gigs these days.
50:14 David Hoffman? Mantle, formerly known as BitDow, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network, a brand-new, high-performance Ethereum Layer 2 built using the OP stack, but uses EigenLayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 onboarded, like Game7 for Web3 gaming, and Bybit for TVL and liquidity and on-ramps. So if you want to build on the Mantle Network, Mantle is offering a grants program that
50:58 David Hoffman? provides milestone-based funding to promising projects that help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at @zeroxmantle. You know Uniswap. It's the world's largest decentralized exchange with over $1.4 trillion in trading volume. You know this because we talk about it endlessly on Bakeless. It's Uniswap, but Uniswap is becoming so much more. Uniswap Labs just released the Uniswap Mobile Wallet for iOS, the newest, easiest way to trade tokens on the go. With the Uniswap Wallet, you can easily create or import a new wallet, buy crypto on any available exchange with your debit card, with extremely low fiat on-ramp fees, and you can seamlessly swap on mainnet, Polygon, Arbitrum, and Optimism.
51:42 David Hoffman? On the Uniswap Mobile Wallet, you can store and display your beautiful NFTs, and you can also explore Web3 with the in-app search features, market leaderboards, and price charts, or use Wallet Connect. To connect to any Web3 application. So you can now go directly to DeFi with Uniswap Mobile Wallet. Safe, simple custody from the most trusted team in DeFi. Download the Uniswap Wallet today on iOS. There is a link in the show notes. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world. And now, something big is happening. Introducing the Cello Layer 2. It's a game-changing proposal that's going to bring Cello's rapidly-growing ecosystem home to Ethereum. Vitalik has shared his excitement for the Cello Layer 2 on the Cello Forum. So has Ben Jones from Optimism. But why? The Cello Layer 2 will bring huge advantages, like a decentralized sequencer, off-chain data availability,
52:27 David Hoffman? and one-block finality. What does all that mean? Rock-solid security, a trustless bridge to Ethereum, and more real-world use cases for Ethereum without compromise. And real-world adoption is happening. Active addresses on Cello have grown over 500% in the last six months. With the Cello Layer 2, gas fees will stay low, and you can even pay for gas using ERC20 tokens. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello Forum. Follow @celloorg on Twitter and visit cello.org to shape the future of Ethereum.
53:00 Ryan Sean Adams? Dom, there's two other lenses I just want to put this through. One is developers, which I think, you know, a lot of the development, a lot of the app building will kind of migrate to Layer 2s. And probably the obvious answer, the good news for them is, you know, your application can support like more transactions per second because they'll be a whole lot cheaper. So go have fun, right? That's probably the answer for developers.
53:20 Speaker 02 Yes.
53:21 Ryan Sean Adams? How about users? Is there anything that they, like, how will they experience this new blob space world? This post 4844? I know David's going to try to send me some ETH using blob space somehow. I don't know if they'll be able to do that, but
53:34 Speaker 02 Maybe.
53:35 Ryan Sean Adams? The typical user. Yeah. How will they be able to do it?
53:38 Speaker 02 The typical user, hopefully, all the technical stuff is abstracted away from them. It's more the heavy users who really insist on having trustless verification of everything to secure their funds themselves with their own keys. And this is what blob space allows them to do. It's just, they just keep that data, only the data relevant to them about their funds, where it's stored on the state, how to move it, stuff like that. So the overall trustless and permissionless is not sacrifice from a blockchain point of view.
54:07 Ryan Sean Adams? Yeah, I guess this will just accelerate the migration from mainnet to rollups as well. I'm sure we could probably predict that this economic change will result in that.
54:16 Speaker 02 And you quickly mentioned developers. I would also, I'd like to add that right now. Developing on Layer 1 is kind of a weird thing because every block space is so limited that as a developer, you have to do all sorts of fancy tricks to use less gas for the same transaction. But on Layer 2, you're going to have so much more block space of Layer 2 blockchains and rollups that you're not going to have to worry about these fancy tricks to use less gas because you're just going to be way more bandwidth for Layer 2 as a developer.
54:43 Ryan Sean Adams? Dom, you just said as a developer that, you know, block space and you use that term block space.
54:47 Speaker 02 Yeah, for Layer 2.
54:48 Ryan Sean Adams? For Layer 2s, okay. So Layer 2s basically are almost like a value-added reseller of blob space.
54:54 Speaker 02 Yes.
54:55 Ryan Sean Adams? So they take this blob space, it's now a lot cheaper and subsidized by Ethereum, and they convert that to block space.
55:01 Speaker 02 Yes.
55:01 Ryan Sean Adams? In their own Layer 2, and then they sell that to devs and applications.
55:04 David Hoffman? Oh, Layer 2s turn blob space into block space.
55:07 Ryan Sean Adams? Yes.
55:08 Speaker 02 Yeah. That's the tagline of the rollup-centric world is that it's much easier to scale data availability on Layer 1 and rollups are going to take that data and convert it to scalable execution. So scale one, you scale the other for much easier.
55:23 Ryan Sean Adams? Yeah, it's just like, you know, unrefined oil that you then process and turn into like a petrol or something like this.
55:30 David Hoffman? Amazing.
55:30 Ryan Sean Adams? Yeah.
55:31 David Hoffman? That's a great metaphor.
55:33 Speaker 02 So as a developer on Layer 2, you have much more freedom to do whatever you want, however you want. And it's something that kind of goes under the radar with Layer 2 execution is that you can only batch the state transitions onto Layer 1. So if I do a very, very complex execution at Layer 2 that sends one ETH to like a thousand people and then, I don't know, loops around and buys a bunch of NFTs and trades them somewhere, buys collateral, like you can think of this hyper-complex transaction and then that goes batches onto Layer 1, only the state transitions. So people don't need to verify the whole execution of the transaction, they only need to verify the
56:12 Ryan Sean Adams? The output.
56:12 Speaker 02 The actual outcome of the transaction. And that's much more scalable and it's pretty cool how more complex transactions at Layer 2 become cheaper compared to the same transaction at Layer 1. Like it's not the same ratio of scalability for each transaction, like a more complex transaction has way more savings. So as developers on Layer 2, there's way more use cases and way more freedom that become available to do all sorts of things that we aren't even conceiving of right now.
56:40 Ryan Sean Adams? Computers are so cool.
56:42 David Hoffman? Okay, Dom, let's do our best to get into probably what's about to be the most technical part of this conversation, which is actually, how does a blob become a blob? There's some like crazy math involved here. There's things like polynomial commitments that make me scared. How does a blob become a blob? How do we start this conversation?
56:59 Speaker 02 It's all polynomial magic.
57:01 David Hoffman? Oh, no.
57:01 Speaker 02 So, basically, you have these 4,096 elements that contain your data of your blob.
57:09 David Hoffman? Sorry, what's an element?
57:09 Speaker 02 Field element. It's basically a number, but inside of a
57:13 David Hoffman? Okay.
57:13 Speaker 02 modular arithmetic. I don't know how technical you want me to be about this polynomial stuff.
57:18 David Hoffman? I have a feeling we're getting to the firmware level of, you know, technicality here, but please continue.
57:23 Speaker 02 Yeah, this is the stuff that everyone on Layer 2 doesn't need to care about, including developers and rollup sequencers. All they do is send the data to Layer 1, and then Layer 1 transforms it into this big polynomial equation that, like, if you have a bunch of data, you put them inside these things, and then you interpolate into a polynomial. So it's kind of like, you know how two points make a line? Then you can just treat your two-point dataset as a line equation. And then suddenly, this line is like extended to infinity on both sides. So that's what we're doing, but with 4,096 numbers instead of just two. So it's going to be a big degree polynomial.
58:01 David Hoffman? I think at the end of this technical conversation, the mic drop punchline is that this is what sharding is. And then there's a bunch of like middle ground, question marks, math steps that I don't understand.
58:15 Speaker 02 Yes.
58:15 David Hoffman? But the end result is like, oh, the execution sharding that we originally planned for in the roadmap, now we have data sharding, and it's done with these polynomial commitments. And ultimately, you have more data that is actually contained by a much smaller amount of data that, like how you said with this extending the line, the smaller amount of data contains references to every other bit of data that is in the blob. And once, you know, quote unquote, extend the line, you can like unfold the packet of data to create the full amount of data that is the blob. That's my summary of this. Do you want to add any more of that?
58:52 Speaker 02 There's more polynomial magic to reconstruct the whole data from just a portion of it, but also to check its availability, which is the crux of den sharding. You'd want nodes to be able to check that data availability. Like that data was actually published by a block producers and a rollup sequencer. You can check that a rollup sequencer was legit and posted the data on chain, but without downloading that data yourself. So you're not suffering that burden from trying to enforce the availability of data. This is what the polynomial magic enables.
59:26 Ryan Sean Adams? So really quick here, Dom, so you just mentioned data availability sampling, I believe. This is a future upgrade that is beyond EIP 4844.
59:35 Speaker 02 Yes.
59:36 Ryan Sean Adams? So EIP 4844, another synonym for that is proto-dank sharding. And the proto means like, I guess, pre, it's first, right? First dank sharding.
59:44 Speaker 02 No, it comes from proto lambda.
59:46 Ryan Sean Adams? Proto lambda, that's right, nevermind. I have forgotten about that. So proto lambda, it's also implies maybe like it's first, we do that first.
59:52 Speaker 02 Yeah.
59:53 Ryan Sean Adams? And then the data availability sampling you were just discussing, which also uses some magic polynomial math, that comes later with full dank sharding. And the benefit there with full dank sharding later TBD, we don't have any dates on this. Like, think years, not months, okay?
1:00:09 Speaker 02 Yes.
1:00:10 Ryan Sean Adams? And the benefit that that gives us with full dank sharding and with data availability sampling, full dank sharding is what? The validator clients just hold less data? So that 50 gigs that you were talking about earlier, that drops down? Or like, what properties does full dank sharding give us?
1:00:25 Speaker 02 Yeah, so 4844 sets the stage for full dank sharding with all the polynomial stuff. But also, like I said earlier, Ethereum right now has this kind of a data availability layer in the form of block space and call data, but it's not scalable, right? Because every node needs to download everything, which makes the bottleneck. So to answer your question, the data availability sampling aspect of full dank sharding will enable this data availability layer to become much more explicit, where even a full majority, like a super majority of validators can't fool you into believing that an unavailable block is available.
1:01:04 Speaker 02 And this is what your node is gonna sample, just a tiny amount of data to be sure with like a one in a trillion probability that the data is actually there.
1:01:13 Ryan Sean Adams? Okay, so Dom, just again, high level, not in the weeds, because there's so many things we could explain here, but a high level, this branch of magic polynomial math, which enables proto dank sharding and full dank sharding, okay? This feels like a free lunch to me. It's like, wow, we've just like, here you go with some math. We just put some math on it and we, you know, we get scalability. What kind of like, is this new stuff? Is this branch related to cryptography at all? Because we're used to exploring on bankless, of course, you know, Ezekiel Snarks and this whole new branch, this relatively new decade old branch of cryptography that's completely revolutionized everything about blockchains and how we scale them, what we do on them. But this, you're talking polynomials.
1:01:57 Ryan Sean Adams? I mean, I learned some polynomial stuff in like algebra, right? In high school. Is this a new branch of math? Or is this stuff that we've used all over the place and are just now applying to Ethereum and blockchains just because we figured out a clever way to do it?
1:02:11 Speaker 02 Yeah, I would say it's a combination of many things that we already knew inside cryptography. So like erasure coding and data reconstruction and polynomial commitments. And this is basically, it's new in the way that Bitcoin was new, right? Because Satoshi did not invent proof of work. It did not invent cryptography, cryptographic signature. Like the novel thing was combining these things together and getting consensus. So it's kind of like that from a research perspective. I'm not saying that data availability sampling is as novel as Bitcoin was in 2009.
1:02:43 Ryan Sean Adams? But like this stuff, like data availability sampling and erasure coding, that sort of thing, I mean, that's existed for a while with just like hard drives, right? Am I right? Like the old style of hard drives, when you put them in RAID arrays, that sort of thing, you use some of this?
1:02:55 Speaker 02 Yeah, you're talking about redundancy.
1:02:57 Ryan Sean Adams? Yeah, redundancy, exactly.
1:02:59 Speaker 02 Yeah, it's an old concept. I know RAID doesn't really do it with polynomial, but it's kind of the same idea where if you lose a portion of the data, you can reconstruct it. So of course, this part is not new or novel, but applied to blockchains, we can combine all these elements together. That we already knew into this data availability sampling to solve the problem of data availability in a scalable way. Because right now it's not scalable. To confirm that a block is available to the network, your node has to download the whole block. And that's why it's kind of implicit where it's like, of course, like I need the block to verify the signatures and the transactions and everything. So that's like an implicit step. You need to download the block. But now we're really thinking about it. How do we
1:03:40 Speaker 02 solve the problem of checking if the block and the blobs are all available without having to download the whole blocks and all the blobs? And this is what full dank sharding will solve.
1:03:50 David Hoffman? Dom, are you able to kind of put numbers on the scalability that proto dank sharding and then full dank sharding enhances? Like, how much more scalability that we, is that a valid question? Can that be measured?
1:04:02 Speaker 02 It's very speculative, I would say right now. Like, people are throwing numbers around like 10 to 100x with just 4844. And then with dank sharding, we're talking, I know Vitalix throws like 100,000 TPS, but it's, it's a bunch of speculative and weird metrics. Because a transaction can be anything and the more complex one get more scalability, like I said earlier. So I don't really have any numbers. But with 4844, we're going to get those numbers and something I'm very excited for.
1:04:29 David Hoffman? Right. It's impossible to really measure these things. Like a transaction is a different thing depending on different contexts. But I think the point that I was trying to get out of you is that there's a number of zeros.
1:04:38 Speaker 02 Yeah.
1:04:38 David Hoffman? It's a number of zeros of scalability increases depending on how you measure it. And there's this one like little part about full dank sharding that I think is actually just a really emblematic about the balance that Ethereum takes between hardline trustlessness and pragmatism. And that is the number that you said earlier. I don't know, maybe you just threw it out there, but it is spiritually like aligned with this number. It's like one trillionth. And in full dank sharding, we do this data availability sampling mechanism where you sample a data and if you are somebody who's trying to produce a fraudulent block or hide data, there is at most after one sample, a 50% chance that that is a fraudulent block.
1:05:17 Speaker 02 Yeah.
1:05:18 David Hoffman? And then you take another sample of the data and you cut that in half. And then you cut it in half. So it goes down to 25. 12.5%, 8.275%, whatever. And you do that, like, I think 30 times?
1:05:29 Speaker 02 Yeah.
1:05:29 David Hoffman? And you get to 1 1 billionth odds
1:05:33 Speaker 02 Yeah.
1:05:33 David Hoffman? that this block is fraudulent. And at some point, we, like Ethereum in dengkharting, pick this number. It's like, okay, we'll do 30 samples. And then that will give us a 1 in 1 billionth chance that this block is fraudulent. And we will accept that probability. We are not so crazy hardliners that we won't trade off multiple orders of magnitude of scale increases when we are giving up a 1 1 billionth probability that this single block in the blockchain has fraudulent data. That is a trade off that Ethereum is making. Multiple orders of magnitude of scalability increase for a 1 1 billionth probability that somebody hid data inside of a block.
1:06:16 Speaker 02 Yeah.
1:06:16 David Hoffman? I think that's just like such an elegant way of articulating Ethereum's values. It's like, and, and the way that cryptography allows us to do cool things by compressing the bad and magnifying the good. I just think it's so elegant.
1:06:30 Speaker 02 Yeah, so it ties in with the concept of weak subjectivity, right? Because with blob is fiery, we're kind of losing that aspect that a caveman can just go hibernate in a cave for a thousand years and then come back out and then verify the whole blockchain from Genesis. That's something that we already kind of sacrificed with proof of stake, with the weak subjectivity. But it's such a small trade off compared to the scalability it enables and everything. And yeah, compared to what you said, I would say we're probably going to do more than 30 samples with full dengkharting. So it's going to be even lower probability that you believe an invalid block is valid and available. But also, this is the probability that your node personally gets fooled. Like, there is no way you can fool the entire network, right? With all these probabilities.
1:07:13 Speaker 02 You, even a super majority can't convince the network that unavailable blobs are available and then do nasty stuff at layer two.
1:07:20 Ryan Sean Adams? You know, David gave a shout out to computers earlier. I just want to shout out math right now because yeah, this is great. Like, the statistics, the math behind this is absolutely fantastic. I do want to just ask a general question here. In order of magnitude is fine, right? But just this will lead us into the next section. So we talked about the history. We talked about the technical, and I think we've we have a sufficient definition of what blob space is. At least I feel like I know blob space now. I know what it is. Now we want to talk about the economics of blob space and this decoupling of the market. But before we do it, I do want to get some rough approximation of what David was saying based on kind of like the scaling factor, right? So if I go to L2B slash scaling slash activity,
1:08:04 Ryan Sean Adams? there's this chart here that shows me the current scaling factor of layer twos, and it gives an approximation. And it says layer twos are operating at their activities about 5X main net right now. And that's useful for me. And this is 5X main net. And right now, this world, they're consuming a very small amount of block space, aren't they? Per day of Ethereum, right? And they could be consuming a lot more block space. And if we had the activities to support it, layer twos could be, you know, a much higher than a scaling factor of five. I don't know if that's like 10 or 50 or 100. I'm not really sure. But then, when they have this new blob space resource available to them, then they have this whole other scaling factor.
1:08:47 Ryan Sean Adams? And as you and David were saying, it totally depends on what they do inside of that blob space, right? So they're going to take the blob space, they're going to resell it as block space. And the block space that they resell could be very complicated transactions, or it could be very simple transactions. But rough order of magnitude here, right? If we have blob space, and it's almost like, let's say it's 80% used. This blob space is now used post EIP 4844. How much of a scaling factor are we talking for like this type of typical DeFi type transactions? Are we going to be able to turn this like 5X into a 50? Are we talking about like a 500X Ethereum main net? And again, just rough order, like approximations here.
1:09:33 Speaker 02 Well, the amount of scalability really depends on the users. So like Rollups could update to 4844 and then have the same amount of users and the same 5 point something X. On L two B would stay the same. The difference would be that it would be much cheaper for each layer to users to the point where it's practically free. Right? So like you said, eighty percent, if the eighty percent of the blob space is used, then the price of blobs goes to zero, right? Because it's anything below a hundred percent.
1:10:00 Ryan Sean Adams? That's right.
1:10:01 Speaker 02 The price, it's like EIP one, five, five, nine. If we're above a hundred percent of gas target usage, then the price goes up and down to manage congestion. So the prediction would be that at first blobs are going to be mostly empty and only used scarcely by rollups because they don't have the actual user base to fill them up. So we're going to see rollups operate practically for free with just a tiny amount of execution gas at layer one and some other expenses for like rollups, whatever expenses they have. But then that's layer two transaction can be subsidized and then you can have a world where layer two is basically free for a while until there's enough users to fill that blob space and congest it and make it go up in price.
1:10:46 Speaker 02 So that's kind of the economics of four eight four four in a speculative prediction of mine. And I'm, that's one of the things I'm really excited to see is raw data and how it's actually used.
1:10:57 Ryan Sean Adams? So Dom, let's spend more time kind of defining the economics of this. And this is a quote from your article and we've alluded to this earlier in the episode, but you said this. Another fun aspect of EIP four eight four four is the introduction of the two dimensional fee market, meaning execution and blobs will be priced separately according to the individual demand for each. The price of execution is simply the gas fees we know today with EIP one, five, five, nine and all that good stuff. So can you explain what you mean here? So this is a two dimensional fee market. There's like two types of gas. Is that one way to think about this?
1:11:33 Speaker 02 Yes.
1:11:34 Ryan Sean Adams? And then you mentioned the hollow EIP of fifteen, five, nine. So how is that related? What does that imply about the gas market for blob space?
1:11:43 Speaker 02 So it's a two dimensional market in that these two resources are going to be priced separately. So one concrete aspect is that the famous NFT drop at layer one example like. If it happens, then the rollups are shielded from that because the price of blobs that they commit on chain is going to stay the same relative to the demand of other rollups. Whereas layer one execution gas can be very expensive. So that's a cool aspect that layer two users are shielded from whatever DGEN activity happening at layer one.
1:12:10 David Hoffman? Right, we're we'll use the word decoupling now. We're originally coupled markets, now we are decoupling the markets.
1:12:16 Speaker 02 Exactly. So the high level overview of 1559 that I'm sure listeners know very well is that there's a target of gas used per block. And if it goes above that target, the price of gas goes up for the next block and then it goes down if there's below the target. So and the goal is to manage congestion, right? If there's too much demand for gas, the price goes up and it makes some more efficient auction than we had before. And then that base fee gets burned because you don't want validators to be able to manipulate it to their own benefit to have like high gas fees and reap the rewards. And we get the same kind of market for blobs, but it's a completely different market. So right now the specs say that we target three blobs per block,
1:12:58 Speaker 02 but we can handle six. And if it's six, then the price is going to go up for the next block. And it's that same idea, like the price goes up exponentially if the blocks are always filled with six blobs. And by the way, these numbers might change because it's still a discussion in progress. And that's the blob market. We're going to have a separate EIP 1459 and with another base fee for each blob gas being used, which also gets burned for the same reasons.
1:13:24 David Hoffman? Okay, so both gas fees to pay for block space, AKA the status quo, that's burned, we know this. Blob space is also burned in the same mechanism. It's basically one to one parity with block space, correct?
1:13:36 Speaker 02 Yes, just the price function is a bit different for blob space, but that's technical stuff. We but it's the same concept.
1:13:41 David Hoffman? Yeah, you gave the numbers three. Three is the target, so we target three blobs. Blobs are all uniform size, right? One blob is always the same size as another blob.
1:13:50 Speaker 02 Yes, but if a rollup has more data, they can post two blobs in the same transaction if they want. So like the data requirements for rollup, they can use as many blobs as they want. They just have to pay for it like the rest of other rollups.
1:14:03 David Hoffman? Okay, so post 4844 in Ethereum, a block will have space for three blobs. So when we talk about blob space, we're actually just talking about three slots for blobs, but with tolerance to flex up and down.
1:14:16 Speaker 02 Yeah, so that's where the 50 gigabyte number comes from. Like, if there were six blobs every single block, then that number would be 100 gigabytes, but that's completely unsustainable, right? If you have six blobs for every block for 18 days, then the price of blobs just goes up exponentially, and at some point, there's just not enough ETH in the world to pay for those blobs with that high base fee. So the target is going to be reached, that on average, three blobs per block. But that's to manage congestion. But if there is no congestion, then you have like one blob or zero blob in a block, then that price goes down to basically zero. So that's where the, at first, when there's no congestion, blobs will be practically free.
1:14:55 David Hoffman? So one perspective about this is, oh, we have a brand-new resource called blob space, and it also burns ETH. There's another mechanism, a brand-new mechanism to burn ETH. Yay, we're gonna burn more ETH. But actually, I don't think that's true, because the existence of blob space is likely going to pull away demand for block space, because why are we doing this in the first place? We're trying to make rollups cheaper. And so there will be a tension, a balance between block space and blob space. They won't be formally coupled in the protocol technically, because we are decoupling this block space, but they will be coupled. Because if it is so much cheaper to do whatever you're doing on layer one on a layer two, then transaction demand is going to flow out of the layer one towards the layer two,
1:15:39 David Hoffman? and then rebalance the demand between blob space and block space. So these are like informally coupled. If it is so much cheaper to buy blob space than it is to buy block space, then these things will probably balance out a little bit. But in aggregate, I think total burn will come down, because we are encouraging, incentivizing layer-two activity, which is fundamentally cheaper than layer-one activity. This is my intuition, is this right, Dom?
1:16:06 Speaker 02 Yeah, in aggregate, it's gonna go down at first, and then as layer two hopefully gains more adoption and more users, then it's gonna go Back up eventually with way more users doing like half a penny or thousands of a penny per transaction on layer two. That in aggregate, if that's enough to fill the blobs and then the rollups have enough fees from these many, many thousands of a penny transactions. They can afford to pay for high gas prices for blobs. Once that's congested, but right now I don't believe blob space is going to be congested at first with that level of activity. Which is why that's a very alleviating, just three blobs per block is going to be very alleviating for rollups needs.
1:16:49 Speaker 02 But we're going to lose that 200 or 300 ETH a day that Ryan said earlier. Like that's probably going to go way down. So we're gonna. To zero. That'll drop towards zero, right? We're gonna burn slightly fewer ETH at first, but it's not really a problem. Cause if we're getting much more adoption from that and scalability, then that's a win.
1:17:07 David Hoffman? Right. The line here was like, we were just going to make it up in volume. So where things are going to drop to zero because we're reducing fees to layer twos. But then layer two fees also drops to zero. And then all of a sudden we're like, we can take off the brakes of layer two economic demand and pick it up in volume. And so this is Ethereum opening up its layer twos to the long tail of economic use cases. That can approach, you know, point 000001 pennies per transaction because we've enabled blob space.
1:17:36 Speaker 02 Yes. And like I said earlier, rollups can have their own incentives and pay for these fractions of a penny for each users. And then you have a layer two experience where it's completely free. And then you can just do whatever you want and more complex dApps can now be viable because there's basically no fees. And that's sort of activity at first that's going to be incentivized by these effectively zero transactions. That's going to drive more users onto layer two and that's going to fill up the blobs eventually.
1:18:04 Ryan Sean Adams? And then at some point, it's going to start burning more. All of this has been a fascinating conversation, very interesting, but one of the least explored areas, right? So I think some people listening will just, you know, maybe early in the podcast or up to this point be like WTF, there's going to be a whole new resource market? Like, how does that impact demand? You know, there were these ideas earlier that are, and some people still think this, that layer twos will compete against Ethereum and, you know, kind of the layer one, right? This is a whole new variable, I guess I'm saying, that I'm not sure many have looked at when it comes to like, how do you try to predict the future price of ETH and the future demand for block space? What's effectively happening
1:18:45 Ryan Sean Adams? here, though, is we get, you know, a new furnace, right? So we've had the furnace one of just block space demand and that burns some ETH, then we have the second furnace firing up. In the short run, this will be all of the layer two block space consumption will drop down towards zero. In the longer run, we may end up burning more ETH and we probably will, but that will take some time. I don't know if that'll take months or that'll take years. In fact, it's probably impossible for us all to predict here. But one of the side effects, I think, is it depends, you know, kind of how you model out the value of ETH and where that sort of comes from, right? Because there's certainly some value
1:19:27 Ryan Sean Adams? of ETH accrual that is related and correlated to kind of burn. How much block space is consumed? How much blob space is consumed? How much ETH is burnt? That sort of level. But then you also have to think about, in the layer two world, all of these new DeFi applications, or in general, applications that open up based on cheap block space, how much ETH will they actually consume as what we've termed before economic bandwidth? Or like ETH-based collateral? I mean, you look at an app like friend.tech on base, and it's purely denominated in Ether, right? It's like purely, and so that has been a net accretion point for Ether value. And so the question, I think, becomes, with these new layer twos
1:20:08 Ryan Sean Adams? opening up, how much more do they start to use Ethereum's monetary properties and ETH's money? Right? And ETH is collateral and ETH is a store of value and all of these things. And does that compensate for the short term reduction in burn? It's a very complicated kind of economic model, but those are the puts and takes of this. One question I have for you, though, Dom, is you mentioned this use case of Layer 2s will no longer have to compete against the DGEN NFT drop on mainnet. What would a world look like where other Layer 2s, though, are competing against other Layer 2s for blob space? So, you know, that would have some contention and resources. So can you imagine a world where we are not 80% of blob space consumed,
1:20:52 Ryan Sean Adams? but we're doing the full, you know, three blobs per block thing? We're getting into four and we're getting into five and we're getting into six. Does this mean like an Arbitrum Layer 2 competes against an Optimism Layer 2? I'm not even sure how to imagine this world. What does that look like?
1:21:07 Speaker 02 That's pretty much exactly what you said. They're gonna compete each other and like you can think of rollups taking like small pennies from a lot of users for transaction fees on Layer 2. And then that's enough to pay for Layer 1 blobs. And whatever is left over is the rollups profit, right? So if the blobs just go up, then the Layer 2 like becomes like they're gonna lose money if the blobs are too expensive for them. Then the most efficient rollup that can have more activity, can batch more transactions, can compress better, they're gonna make more use of that more expensive blob. So that's sort of a world where we're heading to where if blob space becomes congested, then the best rollup that uses this more efficiently is gonna be able to provide
1:21:50 Speaker 02 cheaper transactions on their Layer 2, which gonna drive them in like, like you say, like Arbitrum versus Optimism, like they're gonna fight amongst each other for who can use that blob space better.
1:22:02 Ryan Sean Adams? So all of these rollups are in this race to convert this raw material of blob space from Ethereum into the most valuable product it can in the form of Layer 2 block space. And some rollup ecosystems will be more successful than others at doing that.
1:22:18 Speaker 02 Yes.
1:22:19 Ryan Sean Adams? Whatever that means, whether that's kind of the network effect of the rollup. Well, it means the same thing as the Ethereum Layer 2.
1:22:24 David Hoffman? We call the Ethereum Layer One block space is the most valuable block space in the world because people do NFT drops on there. People do DeFi stuff on there. Network effect stuff.
1:22:34 Speaker 02 There's a lot of liquidity.
1:22:35 David Hoffman? People pay more for Ethereum Layer One block space. And Layer Two block space will be judged on its same merits. Like, how dense is Layer Two block space will be a function of how much demand there is, which is going to be a function of how much aggregate economic activity there is on every respective Layer Two.
1:22:52 Speaker 02 Yes, and it's also on a spectrum where, like a rollup that aims to be ultra-secure, like they're going to want to commit to a blob every single block to, because from the perspective of a Layer Two rollup, once a transaction is batched onto a Layer One blob, it becomes finalized from the rollup's perspective. Like, the security is now uploaded to Ethereum. So if you're a rollup whose community really values high security, then it might be worth it for them to post a blob every single block, even if it's not completely full or stuff like that. So that would make the rollup more expensive. But a rollup that doesn't care too much about security, like a rollup that has like game assets or something where it's not too valuable.
1:23:34 Speaker 02 And they can afford to just wait out a few blocks and have the price of blobs go down. And now they commit a lot of data compressed. Like, rollups don't have to post a blob every single block. So that's another aspect of like individual trade-offs that rollups will make.
1:23:49 David Hoffman? And this is something I wanted to unpack is there's this new variable in blob space resources, which is exactly what you said. How frequently does a Layer Two choose to commit its state root to the Layer One? And with proto-dang sharding, you said that there is space for three rollups per block to submit their blobs.
1:24:09 Speaker 02 Well, for three blobs.
1:24:10 David Hoffman? Three blobs, excuse me. Three blobs per block on the Layer One. So like three total rollups can submit a total of three blobs per block. That's a low number. That is a very low number. I mean, that goes up with full dank sharding.
1:24:21 Speaker 02 Yes.
1:24:21 David Hoffman? But only three blobs per block every 12 seconds. And so this is also going to be a vector, a variable that Layer Two's tinker with. If you submit your blob every single block.
1:24:34 David Hoffman? To the Ethereum layer one, you are maximally secure. But that might not be the optimum balance of security versus expensiveness or efficiency that your users on your particular layer two demand. Maybe like the typical optimistic roll up, which is already operating on fraud proofs. Maybe they only need one blob every, I don't know, 10 minutes or something. And all of a sudden, going from 12 seconds to 10 minutes is massively more efficient. And so this isn't really anything that's part of the core Ethereum protocol. But that is a variable to consider when we talk about layer two economics, which is how often do they commit their blob to Ethereum layer one blob space?
1:25:13 Speaker 02 Yeah, I'll just add something for the listeners. Like if you're a layer two users and the layer two post every 10 minutes, you don't have to wait that 10 minutes. Like your transaction is instantly confirmed by a sequencer and then you can instantly do other stuff. But every 10 minutes would be the full commitment and batching on chain where your transaction on layer two now becomes completely settled and finalized. And the sequencer can't change it. So that's sort of the trade off like we have today or with Bitcoin, where you wait more blocks if you want more security. Like if you're on a roll up and you want ultimate security, then you're going to wait until that's the transaction is committed and batched on chain before considering it finalized. But if you don't really care, you're just doing small transactions and
1:25:57 Speaker 02 the sequencer is going to be the one in charge of the security in transit until it gets onto my layer one.
1:26:05 Ryan Sean Adams? One word you used earlier in this conversation, Dom, I want to return to is subsidy. That's kind of an interesting word because, you know, like we like analogies on bankless. And this sort of feels like a, almost like a government subsidy of a particular sector that the government wants to grow, right? Like say solar, there is going to be a government subsidy in the form of tax credit or tax reduction for a particular industry or set of resources because why? Because let's say some government wants to subsidize green energy in the form of solar.
1:26:44 Ryan Sean Adams? Agree or disagree with that that policy. Let's not get caught up in the weeds here. But this is effectively the Ethereum protocol subsidizing in a way the roll up roadmap. Would you use these terms? Maybe the net effect is going to be the propagation of roll ups because the resource is now much cheaper. How do you think that analogy holds?
1:27:05 Speaker 02 I would just argue against a tiny thing you said about it's not the layer one subsidizing. The layer one just says, here's the blobs, do whatever you want with it. And if they're so cheap, then it's up to the roll ups to decide if they want to subsidize and run at a loss just to attract more users. It's like we've seen this war with the DApps, like subsidizing liquidity or giving token incentives. Like roll up sequencers can do the same thing and see here's few transactions, here's the token incentives, come use our roll ups. Come like increase the network effects, just so that in the long run, they have these users and compete against each other for network effects. But this is, in the end, it's positive for Ethereum because it's all getting settled on Ethereum.
1:27:45 Speaker 02 And like it's really up to the roll ups to decide if running at a loss for a little couple of months is worth it. But while the blobs are very cheap and not congested, then that's probably what a lot of them are gonna try doing.
1:27:58 Ryan Sean Adams? But the broader point here, Dom, is that the Ethereum protocol in general and Ethereum researchers are choosing to implement this change in order to make roll ups, you know, far cheaper.
1:28:09 Speaker 02 Yeah.
1:28:10 Ryan Sean Adams? Right? And this is towards this goal of like what Vitalik said is like a blockchain transaction should be fractions of a penny, not even like pennies, right? It's all towards that goal, but it is an intentional decision that the protocol is making, right?
1:28:24 Speaker 02 Yeah, it's the roll up centric roadmap. It basically puts roll ups as first class citizens on the layer one chain. But it's not really a subsidy as such. It's just a decouple market to have more efficient usage of resource that can then be scaled up.
1:28:39 David Hoffman? I think you might be actually able to take the alternative perspective on this, guys, which is like. Ryan, the way that you articulated that is that the protocol designers of Ethereum want a specific outcome. And I think that is actually totally true and exactly what happened. That's why we call it the rollup-centric roadmap to Ethereum. Yet also, what we are doing is merely decoupling data from execution into two different spaces in a block. And then what happens as a result of that decoupling is that it just so happens that rollups are cheaper. But simply doing the act of decoupling is all that 4844 is doing. We are just separating data from execution. It just so happens that that makes rollups cheaper. And so I think that there is an argument that is actually decently, credibly neutral.
1:29:23 David Hoffman? Like, we are not picking winners and losers here. We are not saying that rollups are the winners, even though, again, that is kind of like why we're doing this. We are just merely decoupling data from execution and letting the free market build on top of this permissionless protocol. And it just so happens that decoupling data from execution is more efficient and allows for more total net economic activity to be produced through cryptoeconomics. Do you like that approach, Dom?
1:29:48 Speaker 02 Yeah, it's fine. It's a good analogy. We don't really pick and choose the winners and losers. It's really, here's the, here's the resources available by Layer 1. Go make use of them as efficiently as you want. And that's what the market is going to converge onto, right? The rollup that has the most efficient usage of blob space will offer the cheapest fees. And this attracts the more users. And on the long run, like, I know that's something Justin Drake likes to ponder about is enshrining a rollup onto Layer 1. At which point, we're using the full dank sharding and 4844 infrastructure to scale up Layer 1 execution. But that's kind of in the far future where we enshrine a ZKVM.
1:30:28 Speaker 02 And now we can have much higher gas limits and have a rollup at Layer 1 that's going to scale up.
1:30:35 David Hoffman? And that's, Dom, is that, that's 2019, isn't it? Are we full circle to 2019 and we have like sharded execution? We're finally going to be able to do that?
1:30:44 Speaker 02 With an entrined rollup, yes, that would be effectively be scaling up execution, but in a much, much better way than we initially planned. So we're going full circle. With rollups and then getting that into layer one in the end, but it's that's like kind of in the far future in crypto time. We're just gonna have rollups.
1:31:03 David Hoffman? Doing the full circle and returning to execution charting in the distant future of Ethereum's roadmap is like one of the weirdest, most fascinating things about this universe's timeline. Books will be written about this. I agree. This would make 2019 me so happy to hear that this is actually happening. We found the more natural route to execution charting.
1:31:23 Speaker 02 And it's it's a much better outcome and it's a much better way to get there too, because we at layer one, we don't have to do as much upgrades and that's much research because we can just let the market innovate and find the best designs, the most secure ZKVM and stuff like that. And then we just enshrine it. We just yoink it from layer two that developed it, innovated, competed for it. And then I'm assuming it's open source, of course, and we enshrine it into layer one and reap the benefits. And then we get back the coveted execution scaling.
1:31:52 David Hoffman? You sly dogs, you. I don't know how you made this happen, but it's a pretty clever. This is just the beauty of the harmony of Ethereum that I think really exemplifies why and so many others are just attracted to the protocol. It's just like a nice, it was a beautiful harmony between the free market and the protocol. Right? Like top down rules mixed with bottom up markets. And then that is Ethereum and we got there in a roundabout way.
1:32:15 Speaker 02 It's the philosophy of addition by subtraction, like whatever the community can do, we just delegate and there's no top down approach, really.
1:32:22 David Hoffman? Beautiful, beautiful. So just to really drive home the roadmap on this, we have 48, 44, optimistically, you may be coming November, pessimistically, some coming in sometime 2024. Full dank sharding sometime after that. And then you just kind of left us with what will definitely be future content, which is enshrining a rollup into layer one. What does come next? So like, let's say we're post full dank sharding. Is that it when it comes to data availability? Or like, what are the next steps after this?
1:32:51 Speaker 02 It's not really a sequential roadmap, as you know, so it really depends where we'll be with the other items like Enshrine PBS and stuff by the time we have full dank sharding. So it'll be definitely one more step towards the end game. As described by Fatale.
1:33:06 Ryan Sean Adams? So let's just talk through that blob space and how this kind of pans out with respect to the roll up. So we'll have EIP 4844, right? And at that point in time, blob space and like layer two data availability and transaction costs will drop towards zero. Okay. And then over the months, we know apps will will take off. If you have a really cheap resource like a blob space guaranteed, it gets used. Okay. If we have cheap block space, it gets used on Ethereum. That is the rule here. And so by the time that starts to ramp up, maybe we are consuming those three, four, five blobs per block. We start to get congestion. And so rather than the, you know, the 2022, people complaining about expensive block space. They're everyone's complaining about this blob space is too damn high, Dom.
1:33:51 Ryan Sean Adams? And then, then we have another ace up the sleeve, which is full dank sharding. Again, we don't know the exact timeline here, but once the blob space fills up, full dank sharding gives us even more blob space availability. Right? And if things work out from a timing perspective, maybe it, you know, we meet the market need at the right time when things are just starting to get congested again. Is that roughly the idea here?
1:34:16 Speaker 02 Yeah, that sounds about right. It will be a crazy increase in blob space with full dank sharding. But we definitely have some things to figure out before we get there, like with regards to networking and proper sampling techniques and everything. So this is why 4844 is the perfect stepping stone for rollups because they don't have to wait as long. They can just use the blob space today and then not even have to upgrade. Once we have full dank sharding, it'll just be done behind the scenes for that.
1:34:43 Ryan Sean Adams? Wow. Well, this has been an epic episode and a tour de force. I think the blob space 101 of everything we needed to know. And I was trying to keep track, David, of how many times we said the word blob on this podcast.
1:34:54 David Hoffman? I don't know, but you definitely failed. I don't know how well you did.
1:34:58 Ryan Sean Adams? Well, you know what? I think some bankless listener will be able to tell us how many times the word blob was said on this podcast. And if you DM us, you know, maybe there'll be something special at the end of that.
1:35:08 David Hoffman? They could tell me any number. You can't believe you're actually counted.
1:35:12 Speaker 02 Just control after.
1:35:13 Ryan Sean Adams? Dom, thank you so. For walking us through this today. It's been Thanks for having me on. Fantastic. Thank you. There is an article as well, if you like written material that Domothy wrote about blob space will include a link to that in the show notes. Got to let you know, as always, crypto is risky. You could lose what you put in, but we are headed west towards blob space, the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.
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