David and Anthony on Monolithic vs Modular Blockchains

Hey Bankless Nation Here's some weekend content for you! Every now and then, Anthony Sassano and David hop into a live stream and chat about things. We thought the conversation was especially useful this week, so we're putting it on the podcast feed. Enjoy! ------ 📣 ZERION | Your Gateway to the Metaverse! https://bankless.cc/Zerion ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini​ 💧LIDO | DECENTRALIZED STAKING https://bankless.cc/Matcha 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ----------- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/b...

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Hoffman?

  Let's wait a second. Probably online, but let's wait.

• 0:12David Hoffman?

  There we go. We've been online for the last like 15 seconds. What's up, Anthony?

• 0:17Speaker 01

  Hey, man. What's going on?

• 0:18David Hoffman?

  Oh, yeah. Just another good old Friday, Friday night livestream with my, my best bud Anthony, who lives in Australia. So it's Saturday morning for him. Hey, we're two, two in a row in last two weeks.

• 0:29Speaker 01

  Uh huh. I was gonna say that like we are, we typically do these kind of like randomly, I guess, but like two in a row. I guess you're not traveling right now. So it's just easier.

• 0:37David Hoffman?

  Yeah. Yeah. Well, we started these off, I kind of think as a mistake mistakenly towards the end of COVID, rather than at the start of COVID. And so we had like a good like four or five that were all like every Friday. But then at least in America, like COVID, COVID is like over. And then, and then I started going doing real life things. But I then I also moved on to San Diego, started traveling a bunch. And so like now for, for me personally, it's just like, I go out to like New York, Colorado, all the crypto conferences, get absolutely exhausted for like 10 days and then come home to San Diego, which is kind of like a party town. But I just come home and it's like, no, quiet, quiet, peace, peace and quiet, please. Peace and quiet.

• 1:17Speaker 01

  Hmm. Yeah. Yeah. And I just sit here firmowing via Twitter.

• 1:23David Hoffman?

  Hey, there, the conference season is back on. So I heard you recently got vaxxed. So congratulations about that.

• 1:30Speaker 01

  Yeah, fully vaxxed finally.

• 1:32David Hoffman?

  Whenever Australia lets you out, like we're waiting with open arms, brother.

• 1:35Speaker 01

  Yeah, probably next year at this stage, but it's okay. I mean, it's summer. Oh, it's not summer yet, but like it's getting warmer and I love that in, in Melbourne, like when it's warm here. I just like getting away when it's cold, like during the winter months. It's, it's not, it doesn't get that cold, doesn't snow or anything, but I'm just not a person who likes the cold. Funny enough though, like when I was in Denver, it was during like winter in February, like what was it? 2019, 2020. Um, and it was a different cold. I didn't mind it, but like the cold you get down here is like a shit cold. I don't know if that's a thing, but like it just felt different.

• 2:06David Hoffman?

  Denver is like, it's, Denver's really, really cold and also really, really dry. And so like, it makes the cold not so bad because it doesn't like, wet cold is always worse. Wet cold or wet temperatures just transfer heat more like if it's colder, it's worse. If it's hotter, it's worse. Every time I go to Denver is I just get immediately just like all the moisture just like sucked out of me like immediately chapped lips. Everything is so dry. Like I breathe out and I just feel just like the vapor just leaving my body. I'm sure this is, this is why people tune into these Friday conversations to hear exactly this.

• 2:42Speaker 01

  Yeah, yeah. I mean, it's not like we haven't got things to talk about with Ethereum land. I mean, like, how amazing has the last week been just watching the merge stuff going on? I think that's been the most exciting thing, right?

• 2:53David Hoffman?

  Dude, yeah, there, there is like this semi-regular ceremonious time on Twitter where all the Ethereum non-technical people watch all the technical people. What post screenshots of code in some compiler and the, the people, the, the, the client developers, whether it's L1 or the layer one Ethereum or excuse me, not layer one. Ethereum one versus Ethereum two, which I know we're not calling it that anymore, but anyways. We all just view the code and pretend we know what we're seeing and but the all, all the people that are spitting out the, the tweets and the pictures about like, oh, merge consensus. Like our nodes are syncing. They're all like, yay. And then all the other people around the non-technical, technical people see these tweets and we're all just like,

• 3:35David Hoffman?

  yay, happy times. Don't know what it means, but like the devs are happy. So if the devs are happy, we're happy. Yay.

• 3:43Speaker 01

  That's exactly what it is. And the funny thing is like, a lot of these devs just don't really post to Twitter very often or their tweets may not get much engagement. But like now they're posting.

• 3:52David Hoffman?

  Twitter maxies, yeah.

• 3:53Speaker 01

  Yeah, yeah, exactly. Their heads down building. But yeah, I mean, this week we've seen like tons of those screenshots on, on Twitter. And then today, I mean, I woke up to this, we had Ben Edgington, who, who publishes the What's New in ETH2 newsletter, which is an amazing newsletter, by the way, guys. ETH2.news, it will keep you up to date with everything happening with ETH2. But like he posted a picture of all the, I think it was like three or four of the. Clients on either side, on the ETH one and ETH two sides, being in sync with each other. And then all the kind of like, well, not all of them, but like a lot of the core devs kind of just in another picture, like celebrating. And I looked at that and I'm just like, this is so awesome. Like I, I commented out and I'm like, this reminds me of like a space shuttle launch. And all the kind of like, you know, scientists, NASA scientists, like in the kind of like little room. And they're all like, oh my God, yes, it didn't blow up, right?

• 4:39Speaker 01

  It didn't kill the astronauts.

• 4:42Speaker 01

  It kind of, it kind of feels like that with, um, with, with that picture. But I mean, we're so close, man. Like seriously, I don't know. Like I don't want to give any kind of dates or anything because I don't have any kind of like dates to give. But it feels like the merge is a lot closer than, than people think it is. And I've been, you know, beating the drum that the merge is coming. I'm not going to give a date, um, but I don't know. I feel like the.

• 5:01David Hoffman?

  Anthony says, I'm not going to give a date as if he would be a person to give a date.

• 5:06Speaker 01

  Hey, I can, I can guess. I can guess. I can estimate, right?

• 5:10David Hoffman?

  I see what you're saying. I see what you're saying.

• 5:11Speaker 01

  Yeah, yeah, yeah.

• 5:12David Hoffman?

  You're not saying like the date that, that you're just saying you're not going to guess rather than like, oh, I'm not going to be the official bestower of the date.

• 5:19Speaker 01

  Yeah, yeah, yeah. Because people will quote me and be like, uh, you know, thought leader, Anthony Sassano said the merge is going live on January this date. Um, but no, no, it's just been super exciting, man. Like I think, uh, we're, we're, we're almost there. Like this is something that's been coming for a long time. It's the biggest upgrade in Ethereum's history and the fact that we're so close to it now is, is incredible. And I feel like everyone is just so energized, like not just like us, but like the core devs themselves, everyone in the community. We're all like, you know, going towards this one goal, like as fast as we can. It's just, it's so good.

• 5:49David Hoffman?

  Yeah. And it's a long time coming. It's a, and perhaps the original one promise that Ethereum promised.

• 5:59Speaker 01

  Vitalik's vision, right?

• 6:03David Hoffman?

  It's the utmost like commitment that Ethereum has committed to. And a significant reason why Ethereum gets a lot of flack for not upholding his commitments. If you view Ethereum from the outside, if you view it from the inside, you understand it a little bit more. Like there's so much just like, um, but denial that Ethereum gets at this, at this phase, just because like everything is in the rearview mirror, right? And like, we're everything, everybody in Ethereum is like, it's another one of these ceremonious times where we get to watch people like move the goalposts back. Keep on moving them back. Keep on moving them back. Like we're now on proof of the stake. Like what you got next?

• 6:39Speaker 01

  The goalposts always shift. Like, there was a long, for a long time, the Bitcoin maxis kept saying, you know, ETH2 is never gonna launch, ETH2 is a pipe dream, blah blah, whatever. Then the beacon chain went live and they moved the goalposts and kind of said, well, that's not really ETH2. And I mean, okay, technically, it's not like the full vision or whatever. But I think that, you know, the goalposts just keep moving. And then, once the merge happens, like, I'm sure they'll come up with something else. And I think it's just kind of annoying having to deal with the goalposts keep shifting. And like, the hilarious thing is, is that, like, the market is kind of like rewarding ETH for its progress, I think. Especially, not just against USD, but against Bitcoin. Like, we believe in the flipping and things like that. And it's gonna take longer than we all would like it to take.

• 7:23Speaker 01

  But I feel like the market is definitely rewarding Ethereum for that, but also punishing it for its weaknesses. Like Ethereum taking longer to scale than people would like, it's punishing Ethereum somewhat by, you know, some of the value flowing to other chains. And that's fine. I guess it's all short-term stuff to me anyway. I don't, I don't consider it anything like a big deal there. But it's funny how like, you know, the narratives can probably maybe, you know, work in the short-term-ish. But like, medium, long-term, man, like, I don't know. I always believe that like, the fundamental stuff wins out.

• 7:52David Hoffman?

  Yeah, I do want to go down that path, but there was a question in the YouTube comments from Reed. When I said like, oh, we're not supposed to be calling it ETH1, ETH2 anymore. He goes, what are we supposed to be calling it now? I think that's something worthy to tap into. And so I'll take my stab at answering this question. And two devs, two non-devs are gonna try and answer this. Okay, so previously, we had Ethereum 1. And that was the proof-of-work Ethereum chain, where everything is inside one chain. And then we have Ethereum 2, which is the future proof-of-stake charred chain that is also a bunch of like rollups. As it turns out, this has, rather than being like a binary, like first we're here and then we're there,

• 8:37David Hoffman?

  it's turned into a phased rollout. And we can, as a result of that phased rollout, there is no one like canonical line between like Ethereum 1 and Ethereum 2. With proof-of-stake versus proof-of-work, that is only talking about the...

• 8:54David Hoffman?

  Consensus layer of Ethereum, and there's two layers. There's the consensus layer and then the execution layer. And the execution layer is where like you send your transactions, some nodes, a miner like processes them and then makes a block and they they execute the transaction. And then they go from the execution of the transaction part to the consensus part by adding that block to the blockchain. And so you, these are two separate things. These are two separate components. The execution layer is the EVM, and then the consensus layer is proof of work. So we're keeping the execution layer, which also includes all of the state of Ethereum, right? All of the history, we're keeping that. And we're just replacing the consensus layer and going from proof of work to proof of stake. So like, it's not like there's a new chain,

• 9:39David Hoffman?

  there's no new ether, there's no new anything. There's this one canonical state, and then we're just swapping out the consensus layer, which is proof of work. And so where the developers are trying to get away from this whole ETH1 ETH2 thing because it puts bad images into people's minds, we're just replacing one of the components about what makes a blockchain a blockchain with something else, a new component that also makes it a blockchain. But now, instead of proof of work, it's proof of stake. So it's more of a seamless migration. You want to, is there anything I missed? Or you want anything you want to add?

• 10:09Speaker 01

  No, that's, that's kind of the gist of it. Yeah, I mean, people will have seen execution layer and consensus layer be thrown around. I mean, the simplest way to explain it, I mean, to your point as well, is just like, the kind of like execution layer is like, you know, ETH1 that we know and love today, proof of work, everything. Consensus layer is the beacon chain, where we're doing staking. And once the merge goes through, literally all that's happening with the merge is that we're replacing proof of work with proof of stake. Everything else stays the same. Like, the Ethereum we know and love stays the same. You said it, the state stays the same. There's no new ETH or whatever, nothing like that. We're just replacing proof of work with proof of stake. So now the stakers are the ones who process transactions, you know, compile blocks, verify blocks, all that sort of stuff, and put them into the chain. And it's, it's kind of like

• 10:54Speaker 01

  the same job that the miners were doing. It's, it's pretty much the same thing, like, but we're just kind of swapping it out. Now, I mean, the reason why everyone's excited about this, even though it may seem like I'm kind of like maybe downplaying it a little bit, is obviously because we get rid of proof of work, which we consider to be, you know, not, not great. We don't consider it to be- Yeah, it was definitely.

• 11:12David Hoffman?

  Graciously a means to an end.

• 11:14Speaker 01

  Yes, yeah, exactly. And the Ethereum community just generally doesn't like proof of work. At least for Ethereum, maybe they they're fine with it for Bitcoin. But for Ethereum, we prefer proof of stake for a number of different reasons. And I guess the other big reason people are excited about the merge is that the new issuance, the new ETH issuance is going to drop by about 90% instantly, like literally as soon as the merge happens. We cut 90% of the new ETH being issued because we pay stakers, you know, a lot less than what we pay miners. Because you're only paying the people that are staking. So with proof of work, the issuance takes, uh, uh, uh, sorry, the, the new ETH being issued is kind of like over all of the ETH supply.

• 11:51Speaker 01

  You're paying it to miners. And then within kind of like proof of stake, we're only paying ETH to what the 7 million ETH that he's staked right now, or probably a little bit more than that. So the issuance just drops like 90%. And we get more security for that, actually. And I won't go into all the technicals there, but that's kind of like the reasons people are excited about it. So you'll, you'll see like execution and consensus layer be, be kind of like, uh, used. And that's the terminology that we use, you know, going forward. I know it's confusing to follow along because these things can change very often for people. And then everything else just falls into that, right? Like you mentioned the phased rollout. The thing about the phased rollout is like even that changed where it's kind of like, we don't have phases anymore. It's like, okay, well, we know that there's these major roadmap items that we want to deliver.

• 12:34Speaker 01

  Whenever one of them is ready, we'll deliver it because originally sharding was supposed to come before the merge. We were going to do sharding on, you remember, on the beacon chain and then the merge would come. It was like phase one for sharding, phase 1.5 for the merge. And, you know, it just got, it kind of got to a point where everyone's like.

• 12:50David Hoffman?

  1.5.

• 12:51Speaker 01

  Yeah, it kind of got to the point where everyone's like, okay, let's just do the merge, right? Like it makes more sense to do the merge first. And then we'll do, we'll do kind of like sharding after the merge. Or we'll do statelessness if that's ready before sharding. But I think sharding will be ready first, like a data sharding, actually, not, not execution sharding. But, um, from that perspective, yeah, it's, it's kind of like not really, even really a phased rollout anymore. And then, you know, people think, okay, what if rollups fit into this? Well, rollups kind of like, uh, uh, you know, they still sit on the Ethereum, kind of like execution layer. But then when sharding comes into it, they also kind of like post their, their data and kind of like their proofs to. Uh, to, to kind of like, uh, the shards as well. So it's, it, you know, it may seem like a bit chaotic right now and maybe a lot of terms flying around.

• 13:34Speaker 01

  But like it, once, once it all kind of comes together, it just simplifies things a lot. We won't have to kind of like refer to E1 and E2 and all this sort of stuff. It'll just be Ethereum. And you'll still see people talking about consensus layer versus execution layer. But I mean, you know, the funny thing is, is that unless you really kind of like want to get into the weeds of this stuff, like everyday users don't need to understand this at all. Like I see some people complaining sometimes, oh, this is all too complicated for end users. It's like, well, this is not something the end users should even be thinking about. Like if they're just casual users of Ethereum, they, they don't have to worry about this. The whole point is that like the, you know, the, um, the core Ethereum community does this stuff, upgrades the chain, uh, comes together, comes to consensus on things, stewards the chain, you know, basically.

• 14:13Speaker 01

  Uh, so that the end users can enjoy it. And that's exactly why the merge is such a seamless process where it's not like, oh, the network's going to be offline for 24 hours while we do these change. No, it's going to be literally one, one block to the other sort of thing. So. Uh, yeah, exactly. Exactly. And there's no, there's kind of no kind of, uh, you know, if it's, if it's, if it goes well, there's no disruption at all. There's nothing that, that changes for the end user. They're just processing their transactions as normal and we're now on proof of stake instead of proof of work. So yeah, I know I rambled a little bit about that, but I think it's important to understand all the little differences there.

• 14:43David Hoffman?

  Right. And so there, there's a two like dynamics that you said that you said it's like important to understand. And then you also said, like, regular users don't need to understand. And I think what, when people make the claims of like, um, this other L1 can scale. Well, okay. Well, then you just put yourself by saying that you just put yourself into the camp of somebody that needs to understand this. Uh, and this is kind of what, what we wanted to talk about today. When we talk about, um, this concept of like modular blockchains for any of the listeners that were listening to the, the weekly roll up today. And, and also Anthony's content for like the past week or so. Modular blockchain just means that there are a number of things that blockchains do.

• 15:25David Hoffman?

  And it's easier to and better to do those things if you can separate the division of labor out into different modules, right? One of these modules is the consensus layer. One of these modules is the execution layer and another module is the data availability layer, which is actually the same as the consensus layer. And so like when you separate these through which these are the three things that blockchains do, and it'll take a while to explain why it's just those three, but if you take it on, take it for granted that those are the three things that happen, it's like, okay, make transactions and somebody does that computation to do that transaction. The state of that transaction is stored in the data layer and then there's a consensus

• 16:09David Hoffman?

  system of what is true, as in what is the data that is stored. So these three things make up a blockchain. And when you separate these things out into different components, you can actually optimize each one so that each one is maximized. And when you talk about like proof of stake, reducing Ether issuance like by 90%, what you are saying is, hey, we've been able to like modularize proof of stake, the consensus layer to Ethereum by pushing the execution layer onto rollups, like prioritizing rollups as the execution layer and then putting the consensus, optimizing for the consensus layer. And what this means is that you don't need big blocks, which big blocks are an unoptimized

• 16:54David Hoffman?

  consensus property. Small blocks are really, really good at making consensus because the packets of information can move all around the internet really, really freely and easily and that what makes a chain identify itself easily to all the nodes. Small blocks, good for consensus. The way that you have small blocks and scale is that you push the execution layer to the layer twos, right? You let people execute their transactions on the layer twos. The rollups compress a lot of the data and make all the data in the layer twos a very, very small footprint so that when it actually does come time to deploy a transaction onto the Ethereum L1, it's actually like 10,000 transactions at once. And so you get to have small blocks because you've compressed 10,000 transactions into

• 17:38David Hoffman?

  a small little bundle of information. And then we are able to retain. Very, very strong consensus by having small blocks and by having small blocks, you actually also generate high fees. We see this on Ethereum. I don't feel like I have to justify that. We all know that the limited amount of block space creates high fees. And when you create high fees, you also create ultrasound money because those high fees are collected and they burn the ETH. When Ether is ultrasound money, you actually have to issue less of it to incentivize security of Ethereum. But there's like this flywheel effect by modularizing all of the components that make up a blockchain and optimizing for each one individually. And

• 18:22David Hoffman?

  each one of those things benefits all the other things. It's such an elegant system. And like, the reason why you've been hitting on this and we hit on this this week at Bankless is because, like, I think the Ethereum community has finally just learned the way to illustrate this and like why the Ethereum roadmap is the roadmap that it is.

• 18:42Speaker 01

  Yeah, I mean, if, as you said, like, if people have been watching kind of my content or reading my newsletter over the last couple of weeks, I've been talking a lot about this. And it was actually Paulina, a kind of Twitter user and also Reddit user. They've got a different username there called Duberzist that pioneered this and really kind of, I guess, aligned my thinking on all of this and taught me a lot that, I mean, I already had all the pieces in my head, but they brought it together for me, for kind of like, lack of a better term there. But essentially, I mean, you're right. Like, I think, what people, I kind of want to focus on what people kind of maybe get wrong and don't understand is that Ethereum Layer 1, being where most users sit, is a temporary phenomenon. It is not supposed to be the end goal. It was never meant to be

• 19:24Speaker 01

  the end goal. Yeah, exactly. It's basically an accident of the Layer 2 is not being ready yet. Or like, I mean, up until recently. So the fact that we now have these Layer 2s and you can use them and they're still rolling out, it's still early days. But you said it, like, the Layer 2 basically compressed the transaction. So they're happy to pay the high fees to secure those transactions on Layer 1, because essentially what they're doing is they're just bringing lots of small kind of like transactions together and then adding them all up. And it's kind of like, in aggregate, it pays the Layer 1. Fee, but they only have to pay one fee to get to process the chain. It's not like they have to pay a massive fee that that kind of like individual users do because they've done the heavy lifting off chain.

• 20:04Speaker 01

  It's kind of like the analogy I like to use is like a zip file, for example, like when you zip something up into a zip file, you have to do heavy computation on your PC to do that, right? So instead of doing that.

• 20:14David Hoffman?

  But just you are one PC, just one.

• 20:16Speaker 01

  Yeah, exactly. Just your one PC. Like, imagine doing that across, you know, the globe and having to stay in the consensus with every other node out there to do it all at once. And, you know, it it's it's it's costly and it's hard. And that's why the fees are high and all that sort of stuff there. So, uh, you know, you zip it on your kind of like PC, but then you would put that zip file on to kind of like the chain, for an example, and that is like a compressed version of it. Now, if you wanted to unzip that, you can't. This is the beautiful thing about, uh, true rollups is that you can actually download it locally if you want, and you can run this code yourself to make sure that everything was fine, that all the transactions processed as they should have.

• 20:52Speaker 01

  And you can actually verify the information, but because of the the compression technique that is used by the the cryptography that is used, you don't need to, uh, you know, you don't need to do that. Like, you can if you want to, but you don't need to do that. You can actually have, um, the assurance that, uh, you know, through zero knowledge cryptography, that everything happened as it should have off-chain. Which is the real breakthrough here. There's your, you know, this is why people are so excited about CK rollups is the fact that, the fact that you can have certainty that something happened without actually knowing it happened. Like, it's it's actually, it's like black magic, zero knowledge stuff. It really is because you can, like, the Ethereum layer one chain can know and with with kind of certainty that something happened off-chain, um, uh, that that was correct and that that was actually following the rules.

• 21:35Speaker 01

  Which is, you know, it's it's really wild to think about, but that is the key breakthrough here. And that is why people are so excited about the fact that we can now have basically everything we want. We can have the most decentralized and secure data availability layer that is Ethereum layer one. Um, and we can have an execution layer, which is the layer two, uh, system where users can have very, very cheap fees and, uh, for their transactions and basically instant transaction confirmation, not finality. That's a called, that's a different thing. Your transaction isn't actually. Final until it's kind of like posted to the layer one, but you get like very, very cheap fees. And we can start experimenting with things as well because at layer two, you're not limited to the EVM. You're not limited to solidity. You can do anything like uh DOID X is built in Cairo, which is a language Starkway came up with.

• 22:19Speaker 01

  And he's running on this uh on on um Stark X, which is like their their kind of like new virtual machine that they built uh as part of Stark OS. So and it still verifies itself on Ethereum. It uses Ethereum as its security and consensus layer. Uh so this is why people are getting so excited, I think, about the modular blockchain revolution. Because we're shifting from these kind of like, as Paulina likes to call them, monolithic layer ones that try to do everything. Like this is why I'm bearish on something like Solana, because I actually don't think you can scale to the world uh at layer one. And I don't think, no, not, not, not just for decentralization purposes, because you know, we can already see that. That Solana is definitely not decentralized because it's got a, you know, it runs in superna- uh it runs in data centers like supernodes and everything like that.

• 23:00Speaker 01

  Regular users can't kind of like verify the chain and stuff like that, um or at least it's very, very hard to. Um but like, I'm not even talking about that. I'm talking about actual scale. Because for them to scale up to millions of transactions per second, they're not going to be able to do that all at layer one. They're going to have to do um, you know, different kind of like uh techniques like load balancing. They're going to have to uh do kind of like, um things like um uh quality of service or Q O S control, which means actually filtering out transactions that are considered spam. Um and

• 23:27David Hoffman?

  Which is subjective, by the way.

• 23:29Speaker 01

  Which is extremely subjective, right? Like, so, you know, when you kind of like take all this together, you have this beautiful grand design that I like to call it. Which I I actually wrote about this in the in the Daily Wave Newsletter a couple of weeks ago, and I called it the grand design because we've basically figured out how to invert the scalability trilemma or kind of like the uh the the trilemma that says you can't have all three scalability, security and decentralization. And we've basically said, well, no, you can have all three, and the more decentralization you have, the better your scale. Because in with proof of stake, with uh with the consensus layer, the more validators you have, the more shards you can have. Which means the more data availability space you have for layer twos, the more scale you have. So we've basically, you know, we've solved blockchains essentially, like I don't want to get too ahead of uh ourselves here, but we've

• 24:13Speaker 01

  Basically solved that kind of like scalability trilemma in such a grand way that I can't help but be excited about it. And that's why I've been talking about it so much lately is that it finally all clicked for me in my head where I'm like, holy shit. We are there like we can do this. It's going to take, you know, a few years to fully roll out and things like that. But we've got the design now and we have the path forward and the, you know, everyone's kind of like in sync on that, which I, I'm, you know, super excited about, obviously.

• 24:38David Hoffman?

  I, I think the one thing that I really want to hammer home as much as possible is that like this whole like grand design that Anthony is talking about. This is a like a politically neutral construction. This isn't tribalism. This is technology. And Ethereum is working towards a specific like construction. That is not just like, oh, this is the Ethereum construction. Like, no, no, no, no, no. This is a construction that is inherently politically neutral. It's, and it's just a piece of technology. And Ethereum is working towards that. And like, one thing I'm fearful on is like, this design construction that Ethereum is chasing is going to be branded as like the Ethereum maxi like choice, right? Like, no, no, no, no. There are certain principles that guide us.

• 25:24David Hoffman?

  And then we go in that direction, but it's not out of some, it's not like whatever, like rollups are inherently not an Ethereum piece of technology. And we know this is true because we're seeing Tezos and Near go after the same basic construction, right? Like different flavors of the same basic construction. But it's a, it's the construction that we are going for, not that it's some sort of like ETH maxi political movement. Like it's actually the technology that we're going for.

• 25:52David Hoffman?

  One, one thing I wanted, wanted to say is when you were talking about like the, the zip files. And I, I cut in and said, like, it's important that just one computer runs the compression. Like, and when you're talking about monolithic blockchains, imagine this like, it's actually, if we can find a way, this, this is the, the simple way to illustrate the revolution of L2s. Instead of having every single node of the network all run the transactions. We've are able to use the power of cryptography for one computer to run the transactions and then submit a proof, which is a zip file. To all the other computers that they did it correctly. And so this is the whole concept of P equals NP, which is that like Sudoku puzzles, for example, hard to do, but easy to verify.

• 26:36David Hoffman?

  And this is what is a ZK, uh, ZK proof is. It's like, it actually takes a decent amount of computation to compute it. But once it is computed, it is extremely verifiable that it's actually the right thing. Right. And so instead of having a monolithic blockchain like Solana, where all super nodes compute all of the transactions and they all check each other's work by doing all the raw computation. Instead, we can compress labor, we can compress computation by just having cryptography, create this zero knowledge proof thing from one computer, which we're not supposed to trust one computer. That's, that's sin. You don't trust one computer. But be, because cryptography enforces correctness. One computer says, hey, I did the computation.

• 27:18David Hoffman?

  I did also, by the way, I did it by the rules that we all said that we were going to do it by, which is zero knowledge proofs. Here's my proof. And then all the other computers were like, oh yeah, that is the proof. Look at that. Let's, let's accept it. And so we've actually reduced computation from all nodes to one, or just a handful of nodes. And this is, again, pairs very, very nicely with the optimizations of proof of stake, which is optimizations in a completely different direction for completely different reasons. But these things pair so nicely with each other. That is what Anthony here is calling an elegant design or a grand, grand, grand design.

• 27:53Speaker 01

  The grand, grand design. Yeah, yeah. Um, I call it the grand design because that's normally what people refer to as kind of like God's creation. Right? Like it's creating like the perfect.

• 28:02David Hoffman?

  That's what I'm saying. Like it's the, it's a logical conclusion. It's not the Ethereum vision. It's a conclusion of like crypto economics and cryptography.

• 28:11Speaker 01

  Mm hmm. Exactly. Exactly. And you know, the funny thing is like, people may be wondering, well, okay, if, um, if only one computer does it, can't that lead to censorship? And it can. This is the thing, like the, the trade off with L2s is that if you only have one computer verifying, uh, all kind of like one node and one validator, one sequencer, processing the transactions, then they of course can pick and choose which ones they want to process. But the thing is, is that once these L2s mature more, they're going to let anyone run a validator and anyone run a sequencer. So anyone can collect the, the kind of like transactions, process them, and then put them on layer one. So essentially, we, we have, uh, we can have decentralization at layer two as well, or at least, sorry, censorship resistance at layer two as well.

• 28:54Speaker 01

  Cause that's commonly something that people bring up as kind of a concern. That is definitely a concern, but that I don't think it's a long-term concern either. And on top of that, like, uh, you'll think, you were talking about, I guess, like, um, you know, uh, the, the compression and kind of like the ZK technology. The funny thing is, we can bring that to layer one as well. And there's actually a blockchain called Mina Protocol that does this right now, where they basically compress everything using, uh, I think STARKS, maybe not, not STARKS, uh, it's like ZK SNARK, which is a bit different. I'm not sure about the differences within the cryptography, but I know that they're doing it right now. And I don't think you need a whole new blockchain to do this. I view them as kind of like, you know, Mina is basically a research project into can this actually be done, which it can be, which means you can have an extremely small footprint at layer one. Um, and then even with like statelessness as well,

• 29:39Speaker 01

  where you don't have to keep the state for, for, forever. And you kind of like, we, uh, kind of like, uh, you know, cycle out the state as time goes on. And you have kind of like, uh, light, proper light clients and stuff like that. Like the next, kind of like, this is all going to be rolled out over the next five to 10 years. But essentially, we're going to get to just such a great, a, a great design where we keep the kind of like consensus layer, the layer one, the security layer decentralized and secure. And we do, we, we scale to the world, uh, via kind of like layer two. So I don't, I mean, I, I, and, and the thing is, like you said, you, you kind of like said that people, oh, this is going to be like the eat maxi design. Well, I mean, this has been the design that's been talked about for years. Like this is not anything new. All that's new is that someone like Polly now came along and gave it a name, right? And brought it all together elegantly.

• 30:22David Hoffman?

  And like, you know, illustrated how it actually works in ways that non devs can comprehend and digest.

• 30:27Speaker 01

  Exactly. He, you know, they just came along and said, okay, well, this is what I'm calling modular blockchains. And this is how it all works. This is the separation of concerns. And this is why it makes sense. But like for years prior, there had been disparate kind of like parties working on this. Sharding has been in the pipeline since basically day one Ethereum, staking, uh, layer twos as well. Rollups were just a kind of, I guess, like a natural extension of plasma, which has been in the works for quite a while. So it's not like any of this stuff is new and that Ethereum has just pivoted to this to be like, oh, well, you know, we're better than these other chains because we can do it this way. This is the culmination of years and years of research and development to get to this point. And that's why a lot of us in the, in kind of like Ethereum community, get a little bit kind of like offended by these other chains.

• 31:09Speaker 01

  Who are like, well, we can do everything at layer one and we can remain decentralized and whatever. It's like, no, you can't like, that is not true at all. Like I would actually wager if kind of like um, nation states wanted to right now, they could shut down most of these other chains, especially the monolithic ones. Because all you need to do, especially something like, I mean, I don't want to flood kind of like any one project too hard. But like I, I use Solana as an example because it is on the extreme side of let's just like scale everything at layer one. Now for, for to shut down Solana, you just like all the validators that can halt the chain, the 19 validators that can halt the chain. They're all registered businesses. They're all public, right? You just go to them and say, hey, you know, we need to be shut down. Or you go to Amazon and AWS or like whatever data centers these are on and say, you need to shut this down.

• 31:54Speaker 01

  This is not, uh, this is not legal. I'm not saying that I want nation states to do this, but I'm saying that we are building a system that is supposed to resist the final boss, which is a nation state. Um, and especially with something like the US. And if you don't have a system like that, where it's just, you know, where it becomes very easy to shut it down. Then everything else you build on top of, of it is pointless. And it's not, you know, and that's just a decentralization aspect. As I mentioned before, there's also the fact that you hit the limits of scale if you're trying to do everything at layer one. Because you're doing everything um, with, with hardware and hardware doesn't um, uh, doesn't improve like it, like it has in the past. Like Moore's law is pretty much dead. It is not going to improve exponentially, but software will, zero knowledge technology will.

• 32:34Speaker 01

  The, the, you know, the, the extra kind of like capacity that we're adding via sharding with horizontal scaling will enhance that even further. And uh, we'll get to millions of transactions per second, uh, uh, you know, in a, in a few years. And you know, maybe by the end of the decade, we can get to billions of transactions per second using all this technology. So. Software in my mind beats hardware on this front because you and the thing the thing is though hardware isn't like inconsequential either. The better the hardware gets, the more stuff you can do at layer two, because the more powerful the layer two hardware becomes, the more powerful the computers are. But the thing is, as we mentioned before, you don't need thousands of these things, right? You only need realistically, you only need one, like, yes, that's not very sensibility resistant, but you only need one. And they can do like all this, you know, processing and process like tons and tons of transactions per second,

• 33:19Speaker 01

  as long as I can post it to layer one with sharding. So, I mean, yeah, I don't know, like, I just feel like it's not an ETH maxi thing. It's the logical conclusion. And you mentioned Tezos and NEAR, which are projects that are kind of pivoting to this design, or have been, you know, gone on this same roadmap, like NEAR did sharding. NEAR to me is pretty much like ETH two's design. They just did it earlier because they didn't have to kind of like inherit Ethereum.

• 33:42David Hoffman?

  They did it earlier without and forgot about the community.

• 33:45Speaker 01

  Yeah, yeah, pretty much. And then Tezos, it seems to have like its own little community going there. I haven't kept up with what they're doing. They seem to get some hype around NFT stuff, but they've pivoted to the roll up centric roadmap as well, which is like doing scaling via layer two, which is which is cool. But, you know, I think some of these L ones will actually be just being L twos on Ethereum as well, which is a very controversial thing. The other day, actually, Justin Bram, on his YouTube channel, he asked Do Kwon, the founder of Terra, this question. And it wasn't a question that came from me directly, it's just something I spoke about on the refuel. And then Justin kind of like asked me, hey, can I ask Do this? And I'm like, okay, that's fine. So he asked him, he's like, would Terra ever consider becoming like a layer two on Ethereum? And outline the reasons why that actually would be beneficial for Terra as well. And they don't have to give

• 34:29Speaker 01

  up the Luna token or anything like that. And Do didn't answer it. He said, I'd rather not answer that question. He straight out didn't answer it. So, yeah, so it's controversial to even talk about this, because people just assume you're being an ETH maxi, when in reality, we're just kind of explaining how this technology is just better. Like, it's got nothing to do with Ethereum and being an ETH maxi or whatever. It's just better technology. So, I mean, I was kind of shocked that he didn't even bother answering that. You know, I know the reason. He probably thought in his head, oh, Anthony Sassano, this ETH maxi, you know, I'm not even going to bother applying to this. But the thing is, is that I think Just go by, it's just going to become undeniable that you're going to get a better kind of like experience on the technology side by just simply being a layer two and outsourcing your consensus and security concerns to Ethereum layer one instead of doing it all yourself.

• 35:14Speaker 01

  Um, I don't know. I feel like, you know, the next five years, we're going to see plenty of L two spin up. The L ones, I think the L ones are done. I don't think we're going to see any new L one spot, maybe one or two, but like barely any. I think that kind of chapter is closed now and the L two's are going to be the new thing.

• 35:29David Hoffman?

  Hundred percent. You know, you know that, uh, the meme of the, the man, the guy feeling his face feels, feels good meme. That's going to be what happens when like all of this energy to spin up an Ethereum killer or an alternative L one. When all of the monetary incentives to do that, which has been true since like 2013, even before Ethereum was around. All of that energy gets like redirected towards spinning up an Ethereum L two. Like an Ethereum L two generates as much economic incentives to spin up as the L ones of the last four or five years. It feels so good. It feels so hot. Finally, finally some tailwinds behind Ethereum.

• 36:08Speaker 01

  Hmm. The narrative is going to shift pretty, pretty drastically. I think, uh, there, it really doesn't make sense to bootstrap a new layer one anymore because, uh, as I said, like you can still keep your token. Like you don't have to use, um, like, kind of like ETH, you can use ETH for just gas fees on your network, whatever, or kind of like the fees that will be on your network. But you can use your token as the same that a lot of these kind of like things use their token as an staking token, right? Or kind of like their economic unit for their kind of like chain. And there's going to be, all the L two's are going to have tokens and everything like that, like stark where optimism, arbitrum, you know, uh, Z K C. I mean, Polygon already has a token, Matic, but obviously their POS chain is in an L two.

• 36:46Speaker 01

  But that token is going to play a big role in their L two rollout as well. So, yeah, I don't know. I think, as you said, the economic incentives are definitely going to be there on the L two side. Once people figure out that, hey, okay, you know, launching an L one is actually redundant at this point. It's more work than it's worth. And we actually basically have to compete with all the other kind of L ones. But why not just like build an L two and then all you have to compete with is, is, is kind of like the other. The other kind of like ecosystems, but you compete with them with Ethereum at your side, essentially.

• 37:15David Hoffman?

  Totally. And like, I actually really, really, this is exactly where I wanted to go next. Before we go there, however, we are a little bit over halfway through this live stream, through this Friday semi-regular Bankless Daily Great live stream. So if you guys are enjoying this conversation, you're watching it on the Bankless YouTube, but go ahead and go and click that link that I just dropped in the comments to go to Anthony's YouTube, where he talks like of stuff of this nature, five days a week, plus a few extra bits of content every now and then on the weekends, and also writes about it every single day as well. Okay, so you talked about how

• 37:46David Hoffman?

  you get Ethereum on your side if you, if your token spins up an L2, right? And there's, there's a very significant dynamic as well as why that would be good, right? What's it, what does it even mean to have Ethereum on your side? And this goes back to the whole monolithic blockchain concept. If you have a monolithic blockchain where the execution environment is also inside of the L1, rather than it being on a separate roll up on an L2, what that mean, and you also want to scale, what that means is you have to open up block space really, really far and wide. You need a lot of supply of block space. And the reason why consumers like this is because a large supply of block space comes along with cheap fees. And, and so like Solana, or this is also true for Polygon also,

• 38:32David Hoffman?

  is actually like issuing an insane amount of inflation as a ratio of how much fees are being captured. And the way that that is how Solana and, and these other like scaled chains are surviving is because there is a large amount of issuance going on to the validators while there's only like, you know, there's like a half a million dollars of days collected in fees. I think Solana is even as low as like $20,000 of fees collected per day.

• 38:59Speaker 01

  They're subsidizing the cost with issuance, essentially.

• 39:01David Hoffman?

  Exactly.

• 39:02Speaker 01

  They're moving the cost from the users to the validators, essentially.

• 39:05David Hoffman?

  Right. And we saw the same model with EOS, where EOS like, hey, free transaction fees. Well, you actually just pay it in a much more insipidous way via inflation, right? And so, uh, so like there's three Solana issued per block on the Solana chain, and then there's 0.02 Solana collected in transaction fees. If you have an economic monetary unit that issues like 96% issuance and 4% fee capture, that is just inflation. And the reason why it works in the short term is that there's an insane amount of speculative fervor. It's like, oh, is Solana the future? Is Solana the future? Uh, maybe if it's the future, I'll buy, I'll buy the bags, right?

• 39:44David Hoffman?

  But like, if there's that ratio, that insane amount of ratio of issuance versus fee capture, it is literally the opposite of what is ultrasound money. It's money that just leaks itself in order to sustain the actual costs of, of validation and security. And so this is why Solana can't be, have any sort of monetary premium is because it comes at a, at a rate of insane amount of inflation. Uh, and it's, it's something like five to 10% per year, whereas Ether, under proof of stake, after the optimizations of the modular blockchain revolution actually reduces by 2%, right? And so you lose all the monetary premium and the value of the native unit that's issued to secure the blockchain.

• 40:28David Hoffman?

  If that's higher, you actually need to issue less, which makes it even more ultrasound. If the monetary premium is lower, you actually have to issue more, which makes it even weaker. So there's a negative feedback loop towards L1 issuance if you just expand the supply of your block space to really, really large. And so that's why Ethereum with small blocks makes Ether ultrasound money. And going full circle to what you said, you want to ally with, ally with Ethereum as an L2. If you, instead of Solana being an L1 or Avalanche being an L1, it can just be an L2 and not have to pay for security. All of the security is paid by the decentralized L1.

• 41:09David Hoffman?

  And so you actually don't have to issue so much because you have already outsourced security to Ethereum. Uh, and so like

• 41:18Speaker 01

  I mean, you, you technically you're paying, but you're not paying through inflation. You're paying, uh, the, the transaction fees to post to layer one.

• 41:25David Hoffman?

  Right. You're paying the minimum amount. Of the actual data that you actually create, right? Rather than just having like 75% empty blocks, just in case there's extra scale. You just literally pay the bare minimum and that actually allows for better value capture. Because all of the economic activity that happens on Solana, which is a lot, could actually be meaningfully captured in the Sol token because they don't have to issue so much because they put it on the alt.

• 41:52Speaker 01

  Yeah, and I know an analogy that I like to use is, you know, with the subsidization thing in mind is Uber. Remember when Uber first came out, the rides were like really, really cheap. Everyone was like, oh my God, it's so much cheaper than a taxi, like taxi industry is a scam, blah, blah. And do you know why those rides were cheap? Because VCs were subsidizing it. They were throwing hundreds of millions and billions of dollars into this company because they knew it would be big. Right. And they knew they could be able to be able to cash out eventually when it IPO'd. And they were subsidizing these rides. Now you look at Uber, it's the same.

• 42:23David Hoffman?

  Term called penetrative, penetrative, penetrative, oh gosh, penetrative pricing. Can you say that for me?

• 42:28Speaker 01

  Yeah, yeah. Penetrative, yeah, God, you're mixing me up now.

• 42:32David Hoffman?

  Penetrative, God, penetrative pricing.

• 42:35Speaker 01

  Yeah, yeah, yeah. Um, but, uh, yeah. And now when you look at kind of like the Uber prices for the rides, they're basically the same, if not more than a taxi. Because there's no more subsidization going on, right? So when you kind of look at, and I think what's, what's most important for people to kind of look at is the use of the block space. Because right now, not only is kind of like a Solana paying, uh, you know, an insane amount for kind of like to secure the network or to kind of like, um, pay the validators, their blocks are empty mostly. There's 50,000 transactions per second, right? Uh, in, in the blocks, but right now they do 2,000 transactions per second. And that's most of those transactions are validator related. They've got nothing to do with anything except the validator stuff.

• 43:20Speaker 01

  And they're the only chain that does this, by the way, where they include validator, uh, kind of like voting and rounds and in the transactions that are happening on the kind of like execution side. So, um, their real TPS is probably much lower than that. I haven't looked lately, but it's much, much lower than that. So they're basically paying all this kind of like, uh, issuance for these validators to run a network that is 99% empty right now. And when it does, if it does eventually fill up, um, you know, the fees are going to go up. The fees are going to go up anyway. But then what happens is that if they want to keep the fees low, they have to increase the capacity. They have to double it or triple it or whatever. But what happens when you do that? Exactly, by making the hardware requirements even more kind of like beefy.

• 44:01Speaker 01

  So, and this is what I mean, like this is something that's really technical and a lot of people don't understand, they just see cheap fees. But the thing is, is that cheap fees come at, you know, the costs are just shifted. There's no free lunch. You guys aren't getting something for free. You're paying through it for it through other means. And as you said, David, you're paying through it through inflation of the native token to secure and like really lots of inflation. Um, for this sort of stuff. So, uh, yeah, I don't know. I think people see cheap fees like in the short term and they're like, oh yeah, this is so much better than Ethereum, blah, blah. And that's fine. But like Ethereum layer two is just going to take the kind of market share back. You can't compete with the layer two ecosystem, especially ZK rollups and stuff like that when they're fully rolled out. Because they're going to be near free transactions with sharding.

• 44:46Speaker 01

  They're basically going to be sub sent transaction fees here, which people are happy to pay. I mean, who's going to complain about a one cent transaction fee? No one, right? Like, um.

• 44:55David Hoffman?

  And also like it feels good to pay a fee, even if it's, even if it's minor, even if it's trivial. It feels good to pay a fee because that means no one owns you. You paid for your freedom that way. It's not Facebook where like signup is free. It's not, it's not like the classic web two.

• 45:10Speaker 01

  Even those like things are like, you know, Facebook free, Reddit free, Twitter free. I mean, it's ads, right? Like, and they're harvesting your data too.

• 45:16David Hoffman?

  You're just extracted from in a roundabout way.

• 45:19Speaker 01

  Exactly. And maybe some people don't care about that, but like I certainly do, um, you know, and but the thing is like, I would love to see decentralized alternatives to those pop up. But it's very hard. Like there's a lot of network effects around something like Twitter. So there's kind of trade offs to be made here. But, you know, in saying that, we shouldn't make those trade offs for things like, like blockchains, I think. And that's why, you know, you and I, a lot of us in the Ethereum community fight back against this sort of stuff is because this is not the design that we think should be the sediment layer for the world. It should not be the backbone of a new financial system. It should not be the thing that kind of wins. And not saying that these other chains don't have their own kind of like use cases and they don't appeal to their own users. They do. But the thing is, is that what Ethereum is building for is very different to what these other chains are building for.

• 46:04Speaker 01

  And I think that's fine, but I wish these other chains would be more honest about this because a lot of them and a lot of the community say, oh, it's going to kill Ethereum. It's so stupid. Like it's literally the dumbest thing you can say. It was going to kill Ethereum. It's not going to kill Ethereum. It's not even competing with Ethereum. Like it's not competing with Ethereum's layer one. If anything, it's competing with the layer two ecosystem on the execution side.

• 46:24David Hoffman?

  So we just recorded a podcast with Ravi Roon Christensen after he wrote out that tweet thread about how like a multi-chain future is a multi-sig future. Multi-sigs, like, they're great for a lot of reasons, but not for inter-blockchain consensus. That's not what they're supposed to be for. Multi-sigs is just basically like, if you put your assets on Ethereum and then you send them over to Solana via a multi-sig, well, congrats, you've gone from like Ethereum's 10,000 nodes to a five of seven multi-sig. Like, that's your new security paradigm. Shit, where else did I go with this?

• 46:57Speaker 01

  It's like, it's like giving up an army for a personal guard, right?

• 47:00David Hoffman?

  Right.

• 47:01Speaker 01

  Like, that's, that's what you do, right? Like, oh, no, I don't need this army. I'll just have my one personal guard and I'll be fine.

• 47:08David Hoffman?

  And so like, the, the narrative that like minority blockchains, blockchains with lesser adoption, needs to tout is like, they, their game theory suggests that they start talking about how it's a multi-chain world. Like, if you are a minority chain, you want like, oh, there's gonna be lots of chains. We're one of them. There's gonna be economic activity everywhere and it's also gonna be with us. But then as soon as you become like the dominant activity chain, the game theory flips. It's like, well, once you're the dominant chain, the game theory is like, well, no, it's gonna be a power law distribution. The dominant chain is gonna like, take the majority of everything. Like, don't bother paying attention to the minority chains. Like, we're just gonna eat, eat their lunch, right?

• 47:47David Hoffman?

  And so like, for all the, the, and this is almost like explicitly a part of like the Solana strategy is like, oh, maximalism's broke, maximalism's dead, like they're gatekeepers. Like, you, you have to accept Solana because we're gonna be in a multi-chain world. Well, as soon as Solana in some hypothetical universe that we're never, ever gonna be experienced, if Solana actually does take the lead, you can bet your ass that all of the like Solana people are gonna be like, well, Solana is just gonna eat everything, right? It's gonna eat the whole world, it's gonna be one.

• 48:14Speaker 01

  There already are Solana Maxes, if you wanna call it that, right? People who are just like on Twitter, basically, you know, shitting on every other chain, saying, Solana's the one, it's gonna win everything. And this is just natural as communities get bigger and as people get more entrenched in their views, you become, I mean, I think maximalism is the wrong word, but you become like, you know, a part of that thing. And like, that thing becomes. Your identity, you you want it to win for various different reasons. It means a lot to you. So that's naturally going to happen with anything that gets big enough like that's unavoidable. Not everyone's going to be like that, but it's going to happen for for the people that are closest to the metal. And I don't think it's necessarily a bad thing. I think it's actually needed. I actually put out a tweet a few months ago, I think. Where I said maximalism, why I basically implied is maximalism actually needed for these kind of things to

• 48:59Speaker 01

  to survive long term. And I think there is, I think there needs to be even just a small group of people that would like are basically the last line of defense against all this kind of stuff and can basically, uh, you know, be, I guess, more maybe um forward about this sort of stuff than other people will to fight back against this because it's like my my kind of like army analogy there. The army that fights for a country, right? They're basically, um, you know, they're called nationalists in that kind of like respective, but like unless you're unless you defect, unless you kind of, I guess, um, you know, uh, betray your country, you're fighting as a maximalist of that country technically, right? Like if you're in the US Army, you are a US maximalist, right? You're like, well, my country is the best. I'm going to protect my country and I'm going to go fight for it. And obviously there are people that kind of like, uh, you know, traders and whatever, but like I'm talking about the majority here.

• 49:45Speaker 01

  Um, and it's the same for for a crypto community. If you're fighting for something you believe in and and something you want to protect. Well, I don't think that's a bad thing. I think that's just the way it is. And yes, there's nuance and maybe, okay, the nation you're fighting against is actually um right in in the war and that you're wrong. But that doesn't change what you are. You're you're fighting for for kind of like what you believe in, wait, you know, where you were born for for from various different reasons as well. So I think that analogy plays plays pretty well into this sort of stuff as well.

• 50:12David Hoffman?

  Yeah, that's also a component of a book that's like really, really big in the crypto space, which is the uh the sovereign individual. There's a chapter in there that talked about like when two armies would go head to head.

• 50:24David Hoffman?

  The bigger predictor of who which army was going to win versus like over over the size of the actual army was like which army has more to lose, right? And so like you would have like the invading army from some far off distant land go against go up against like the natives, the the uh indigenous, the actual people that had the land. And had everything to lose. They were fighting for their home. They were fighting for what they believed in versus these foreign invaders, right? And the foreign invaders would be like better equipped, better armed, and the indigenous native cultures would be like less equipped. There would be fewer of them, but they cared 10 times more, right? And like the, it's crazy, the, one of the, I can't remember the stats, but like the, in the book, they talked about how like

• 51:07David Hoffman?

  the people that fight for something that they care about will show up with way more energy and way more just commitment to fighting the fight. More than the people that are like a bigger army that are better equipped, right? Like if you believe in it, you'll fight far more strategically with far more energy than in any other circumstance.

• 51:26Speaker 01

  Hmm. Exactly, exactly. Sorry. I think I was about to sneeze there.

• 51:31Speaker 01

  It's spring here. So, hey Fever, um, but no, I, I totally agree with you. I think, uh, yeah, the, you know, it's different. Like when you have people just being like, okay, well, you know, to your analogy, we're going to go invade this, this specific place. And oh, well, okay, it's just another place we're invading. Who cares, right? We can just be blasé about it, but the people that are being invaded are not going to be blasé about it. They're going to be like, holy shit, like I'm about to lose everything. Um, you know, we've got to fight. Um, and you know, people might, may think to kind of like, uh, the movie 300, where like the 300 Spartans were kind of like, these Persians have like a massive army. If they come here, they're going to destroy our way of life. We're going to be wiped out. And they kind of like fought and they were better at fighting than the Persians were because the Persians were kind of like, uh,

• 52:13Speaker 01

  you know, they didn't really believe in it. Um, they were kind of like, just like subsumed into this thing, to this, this thing that was kind of like, um, uh, going and just killing everyone and everyone that didn't want to be killed, kind of like became a slave. Whereas like the, you know, the 300 were just kind of like fighting for what they believed in, fighting like much stronger, much stronger to your analogy. So, you know, I think people may sometimes be like, oh, that, that sounds silly, like blockchains aren't like that. I was like, blockchains are like that, guys. Blockchains are the modern nation states. Like they are the modern kind of like, uh, uh, you know, uh, country, the modern kind of like land. And if Ethereum sees kind of like quote unquote invaders, like other chains being hostile, I mean, like we're going to take over Ethereum. Why would the Ethereum community sit back and be, and take it?

• 52:52David Hoffman?

  Oh, you are? Oh, okay. All right.

• 52:55Speaker 01

  Yeah, I'll just lie down and take it.

• 52:57David Hoffman?

  With with every single L one, the way that it's constructed impart some sort of values. Like you actually can't get away from that. You can't code a valueless blockchain. That is itself values. And so when you align with a certain blockchain, you are aligning with a certain set of values. And if you do that like intentionally, well, then that means that you actually believe in those values. And so you're willing to fight for them. And then if you start a media company, you might find yourself on a Friday night weekly livestream with Anthony and David. Yeah.

• 53:30Speaker 01

  And you know, the funny thing is as well is like something else we we haven't kind of like touched on. We alluded to is the monetary aspects, you know, the fact that we have like bags of of ETH, right? Rather than bags of some other chain. Of course, we're going to protect our investment, just like anyone would. And and you know, I think like that accumulates over time and you become more entrenched over time. But in saying that, like, it's not just all ideology, it's technology as well. If I believed Ethereum's technology or its kind of like path, you know, to to kind of like improving over time was actually inferior. Then I would for sure kind of like, you know, pivot from the Ethereum ecosystem to something else. Based on the technology, but I actually don't, I just don't see that. I don't think that at all. I don't think that the other kind of like chains are solving anything that Ethereum is not kind of like working to solve just in a different way.

• 54:15Speaker 01

  It's just different design philosophies, different architectures, and ones that I don't personally agree with or align with. For me, it's got nothing to do with, I mean, okay, maybe subconsciously it has some stuff to do with bags. But really, at the end of the day, like I am a tech maximalist. I want to see like the best tech win. And the best tech when it comes to blockchains is the Ethereum roadmap right now. It is not doing everything at layer one.

• 54:36David Hoffman?

  Right, no, and then that goes back to what I was trying to say earlier. It's like this whole technology, like rollups, not actually an Ethereum technology, like modular blockchains, not actually an Ethereum technology. Ethereum is choosing that path, but when I

• 54:50Speaker 01

  And it's best positioned to to to go down that path as well.

• 54:53David Hoffman?

  A hundred percent. And and when I come into the crypto space and I come in with my certain set of values, I'm looking for a a certain expression of those values. And I will find a blockchain that expresses those values. I think Ethereum expresses those values. As soon as it doesn't, I'm out, I'm elsewhere, right? Like, I I'm I'm aligned with the values, not with Ethereum. The only thing that I'm really kind of aligned with Ethereum on is that it tends to express those values better than any other blockchain. And committed to the same values that I have.

• 55:21Speaker 01

  Yeah, by far. Nothing even comes close. Like, I have studied all the other chains. I have looked at all of them. I looked at their communities. Nothing even comes close. Like, I, I, I don't think there's any other community that I actually kind of like vibe with that I, like I do with Ethereum for various different reasons. Like, for, for Polkadot, for example, they have on-chain governance and they're very governance-heavy, whereas I'm governance-minimalized. I want the layer one to be governance-minimalized. I don't want it to be, have like token, uh, token, um, voting or whatever. And Polkadot's kind of architecture as well, I don't think is ideal. Um, Solana, I mean, I just don't vibe with that community. It's very, very different to the Ethereum community. Um, you know, BSC, I mean, do they even really have a community? It's more like a kind of like a DGEN town. And again, I don't align with that community either. And you go down the list and, you know, you know, the funny thing is, I actually felt like I aligned a little bit with the Terra community out of all of them.

• 56:10Speaker 01

  And then I saw Doe not answer, you know, anything and like, basically just say that. I was like, ah, okay, this is, this is really shitty. Um, because that was just one that I, I kind of like really like aligned with. But yeah, it's, it just all comes down to that at the end of the day. And I've looked at other things and I just, I don't, you know, I, I really don't. Ethereum is, is it for me at this point in time. Maybe there's something else in the future, but I don't know. The longer that Ethereum survives, the more Lindy it gets, the more entrenched people become, the more people build in it, the more network effects it kind of like, uh, is, uh, kind of, um, gets. And yeah, I don't know. Maybe in 10 years, something else is, is, is, it overtakes Ethereum. But at this point in time, I just don't see it happening.

• 56:48David Hoffman?

  Hundred percent. I think like the last thing I want to leave the listeners with is like, when you come into this space and you see crypto, you see all these like merits that crypto is going to bring for this world. It's like self-sovereign money, peer-to-peer transfers, all these great technologies. And like, you hear me and Anthony talking about like values and like alignment and like tribes of this physical blockchain. Well, if you don't think in those terms, you're, you're A, ignoring a very significant part of crypto, which is, which is the way that the code impacts the society that comes around it. And if you don't think in these terms, you're going to You're going to allow, perhaps at worst case, allow other people to think in those terms for you,

• 57:29David Hoffman?

  but you're also just going to accidentally align yourself with values that you forgot to consider. Right? And so like, this is not something that you can actually opt out of. You actually have to consider the ways that these systems impact society by their very design and nature. And that's what I'll leave with.

• 57:47Speaker 01

  Yeah, no, totally. And I think people who say, oh, you know, crypto is too tribal, or like tribalism is going to lead to crypto losing. I really need to go and study human history and how humans came to where we are today, and how nation states performed, and how humans actually were able to kind of advance as societies. It's all tribalism, guys. It is in our DNA. We're never getting away from that. There is toxic tribalism, then there is healthy tribalism. There is definitely distinctions to be made, but you're fooling yourself if you think that tribalism is going away ever. Like unless humans kind of like remove it from our DNA and remove kind of like the things that make us tribal, it's never going away. So you need to kind of like deal with it and operate within that reality.

• 58:29Speaker 01

  You can't just like simply ignore it because eventually, as you said, David, you're going to be kind of like, it's going to be forced upon you anyway by people if you don't embrace it yourself.

• 58:39David Hoffman?

  As Kevin O'Walkie says, it's all coordination and it always has been. And like what tribes are, are the first manifestation of coordination, right? And like some tribes are trying to coordinate for bigger tribes. And actually to become such a big tribe that like, it's actually just the whole entire human population all at once. Like tribalism doesn't mean that there's an out group necessarily. It means that we were actually just trying to get people all coherent to like the same, same, like literally the same protocol, the same like the same rules for operating how you live in a life, right? And once we can get everyone like abiding by the same rules, we can actually unlock like the next phase of humanity. Because like all, almost all of humanity, in my mind, there's two phases of history.

• 59:24David Hoffman?

  We're in the first one and the first one is like, hey, guys, can we all get on the same page? And then the second one is like, all right, guys, now that we're on the same page, what do we do next? Right? Now that we're all here, where should we go? But like humanity's still in the first phase, like, hey, guys, like, we're all trying to get coherent. Can we all, can we all make one tribe rather than have all the other tribes? And like religion turned into nation states now turned into blockchain protocols. We're getting closer and closer to everyone being on the same rules, which is really, really bullish. Once we get everyone on the same rules, on the same protocol, we can now answer the question like, all right, guys, now, now that we've all got, I've gathered you all here today, what should we do next? Like, that's what's happening.

• 1:00:01Speaker 01

  Yes, yes, exactly, exactly. I agree with that. But I think, you know, we've come up on time here, so we'll leave it at that for now.

• 1:00:07David Hoffman?

  All right, guys, uh, thank you for tuning into this Friday semi-regular bankless daily way, weekly livestream. Uh, I just put Anthony's daily way YouTube channel in the chat once again, so you can go ahead and subscribe to his YouTube if you want to hear more ramps and ramblings about this. Uh, Anthony, I will see you perhaps next Friday, maybe three in a row, uh, not committed to that one, though.

• 1:00:26Speaker 01

  We'll see, we'll see. But yeah, uh, we'll, uh, we'll see if we, if we do one next week.

• 1:00:30David Hoffman?

  All right. Cheers, everyone. Thanks for tuning in.

• 1:00:33Speaker 01

  Cool. Thanks, everyone.

• 1:00:34David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast and community as a bankless premium subscriber to get the most out of your bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content, and even the bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the bankless community is where you want to be. Click the link in the description to become a bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders,

• 1:01:15David Hoffman?

  Ask Me Anythings and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the bank.