Is the Ethereum Roadmap Off Track? | Max Resnick

Is the Ethereum roadmap… off track? Have we lost the plot? Are L2s running interference, intercepting all the users, transactions, and value from reaching the L1? And if all of this is real, and not just FUD, what should we do about it? We have Max Resnick on the show today, he's an Ethereum researcher working at Special Mechanism Group and he’s got some opinions that are contrary to what is typically found out of the Ethereum Rollup Centric Roadmap. Max explains why Ethereum is breaking down on its vision for bringing the world onto decentralized, censorship resistant, permissionless blockchains, and suggests possible alternative directions. ------ 🎬 DEBRIEF | Ryan & David Unpacking the Episode: https://www.bankless.com/debrief-the-max-resnick-interview ------ 📣 SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/57 ------ TIMESTAMPS 0:00 Intro 5:08 Max’s Contrarian Take 12:20 The State of Rollups 17:59 Are L2s Extensions of Ethereum? 27:52 What Needs to Change 44:33 Based Rollups 50:05 The Holy Grail Blockchain 59:02 Scaling the L1 1:05:29 Max’s Incentives 1:09:53 Why Not Solana? 1:14:06 Navigating ETH’s Roadmap 1:18:05 ETH: The Asset 1:22:15 Value Capture 1:23:58 Call to Action 1:26:43 Closing & Disclaimers ------ RESOURCES Max Resnick https://x.com/MaxResnick1 Max Resnick Holy Grail Blockchain Tweet https://x.com/MaxResnick1/status/1826630256008331301 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

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

• 0:00Ryan Sean Adams?

  Max, are you trying to start a civil war here within Ethereum?

• 0:04Speaker 01

  I'm not. I'm just like, if you're saying that you're Ethereum aligned and you're saying that you've been working on a decentralized sequencer, like, do it. Don't like, continue to pass the ball and say it's gonna be next month, over and over and over again, forever. Like, do it.

• 0:22David Hoffman?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today on Bankless, we explore a potential new frontier of the Ethereum roadmap. The question we're asking today is, the Ethereum roadmap off track? Have we lost the plot? Are Layer 2s running interference, intercepting all of the users' transactions and value from reaching the Ethereum Layer 1? Are Layer 2s extensions of Ethereum? How is the current set of centralized sequencer optimistic rollups misaligned with the Ethereum Layer 1? And what are the consequences of this if we let it go unchecked? And if all of this is real and not just FUD, what should we do about it? We have Max Resnick on the show today. He's an Ethereum researcher working at the Special Mechanisms Group. He's got

• 1:03David Hoffman?

  some opinions that are contrary to what is typically found out of the Ethereum rollup-centric roadmap. Max talks today about where Ethereum is breaking down on its vision for bringing the world on to decentralized, censorship-resistant, permissionless blockchains, and suggests possible alternatives for directions for what Ethereum can do about it.

• 1:21Ryan Sean Adams?

  This is kind of a contrarian type of episode, I would say. And David, I gotta tell you, I'm a little bit worried about getting canceled again for putting this one out.

• 1:29David Hoffman?

  Yeah, but when has that ever stopped us?

• 1:32Ryan Sean Adams?

  So we're putting this out. And of course, this is to increase the dialogue in the Ethereum community. Personally, I'm not sure if it's the right direction, but it is definitely an interesting direction to consider. And I think Max brings up some points that the entire Ethereum community should consider and debate. So, without further ado, let's get right to the episode. But before we do, we want to thank the sponsors that made it possible, including our recommended crypto exchange, Kraken. Go create an account.

• 1:58David Hoffman?

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• 4:11David Hoffman?

  And with Cartesi's unique rollup framework, you'll get real-world scaling and computation. No more competing for block space. So, if you're a developer looking to put Push the boundaries of what's possible in Web 3. Cartezzi is now offering up to $50,000 in grants. Head over to Cartezzi's grant application page to apply today. And if you're not a developer, those with staked CTSI can take part in the governance process and vote on whether or not a proposal should be funded. Make sure you're vote ready by staking your CTSI before the votes open. Bankless Nation, super excited to introduce you to Max Resnick, the head of research at Special Mechanisms Group, a research-focused organization that specializes in mechanism design, recently acquired by Consensys. Max believes that Ethereum's roadmap has perhaps gotten a little off track. Instead of prioritizing Layer 2s,

• 4:56David Hoffman?

  we should still be prioritizing Layer 1 and other topics as well that we're going to poke at in Max's brain here today on the show. Max, welcome to Bankless.

• 5:04Speaker 01

  Thanks for having me. Excited to be here again, twice in a month.

• 5:08David Hoffman?

  Oh, grand, yeah. But one of the few Bankless podcast guests that actually started in real life and then moved into the virtual recording studio. It's good to have you in the normal version of Bankless. Max, let's just kind of start with like the contrarian thing that you believe about Ethereum. You're working in Ethereum. We'll talk about like what you're up to. You are an Ethereum. I don't know if you accept that identifier, but you're just working inside of the ecosystem and have for a long time. But you also, you are, you believe some different trajectory is in order, is suited for the Ethereum Layer 1 and overall roadmap. What's, how would you summarize the contrarian thing that you believe?

• 5:44Speaker 01

  Yeah, I think we've basically lost the plot on the roadmap. We decided that Ethereum L1 was good enough, which it was clearly not.

• 5:55Speaker 01

  We've been optimizing for optimistic rollups as the main focus of the last few hard forks. And I think we need to start prioritizing the L1 again, basically making sure that we get to shorter block times and making sure that the L1 is usable for the most popular app on the L1, which is decentralized finance, which I guess is a little controversial these days, considering a few people don't even believe that we should do DeFi at all.

• 6:23David Hoffman?

  But also, just to be clear, you don't disagree with the rollup-centric roadmap for Ethereum? It's just a matter of priorities and order of operations? Is that accurate?

• 6:33Speaker 01

  Yeah, I would say that there's a reason to have rollups to compress transactions that are not super valuable, stuff like paying for your coffee, sending microtransfers and stuff like this. That should all be done on a rollup. But the core Ethereum L1 should be where people transact. And we shouldn't have places like Uniswap wanting to make their own app chain because the L1 is so unusable. And we shouldn't have people forced to transact on L2s that don't provide them any security guarantees when we could make the L1 good enough for that application at least.

• 7:09David Hoffman?

  Would you say that this is aligned with just the, maybe not monolithic or integrated thesis, pick your word, but just like still an emphasis of increasing the capacity by like a pretty wide margin of like what the layer one can do?

• 7:25Speaker 01

  Yeah, I think we need to increase the capacity. We need to increase the speed. We need to become competitive with some of these other L2s. Even if we're not going to be better than them, we're going to have more security, better mechanism design, and ultimately the package of those things can win. For example, specifically against Solana, I think we have a lot of advantages in other areas. But if we're refusing to compete on speed and on throughput, then we're just going to lose no matter what. Because those are like the two core things that a blockchain chain should do. Users don't want to wait 12 seconds to get on chain.

• 8:02David Hoffman?

  So we're going to unpack all of these, but maybe we could also just spend some time illuminating what corner of Ethereum you operate in? Just kind of learn about your perspective, your knowledge base. Maybe tell the listeners what you're up to, what you do, what you focus on.

• 8:16Speaker 01

  Yeah, so my research focuses on MEV, on maximal extractable value. Looking into the dark forest, seeing this order flow supply chain, all of these areas. Is kind of where I spend the majority of my time. But recently I've been branching out a little bit into the rest of the ecosystem. Because I feel like there are things that we need to do to solve certain problems in MEV. That affect or are reliant on other areas of the roadmap to be aligned with those as well. And I think a lot of times in Ethereum research, one weakness that we have is that we don't have different parts of the research stack talking to each other.

• 8:58Speaker 01

  And so like we'll have the consensus people over here doing orbit, single slot finality stuff. And then we'll have the MEV people saying, hey, like if you don't want billions of dollars a year leaking away from users, you have to do this. And the two things are fundamentally in conflict. So basically I've been branching out and saying, hey, we're working on really important problems over here on the MEV part of the roadmap. But we really need your help from the other areas of the research and engineering stack to tackle those things.

• 9:28Ryan Sean Adams?

  Max, if part of your idea is that Ethereum is kind of, the roadmap has kind of gotten off course, I'm curious, I mean, you've been in the space for a long time. Like, when do you think that happened? Why? And like, how?

• 9:40Speaker 01

  I think we've been searching for meaning and we found the wrong thing, basically since the merge. The merge was kind of a huge sigh of relief among core devs. And we accomplished something amazing and huge. And then there was a letdown, adrenaline started to drop. And we kind of took a step back and then ended up coming back to the table and deciding on the wrong thing to prioritize. So I would say since the merge, we've been prioritizing. It's not that these changes are bad or that we shouldn't do these changes. It's that there's a finite amount of resources that we have as an ecosystem. There's only so many things we can work on.

• 10:24Speaker 01

  And I feel we're not prioritizing the right things.

• 10:27Ryan Sean Adams?

  Okay, and so like just for, since the merge, I would say this is from my vantage point, but I want to make sure I understand what you mean. But like from my vantage point, the thing that Ethereum has prioritized is like making L2, you know, blob space cheap, essentially, making L2 transactions really cheap. And that was sort of like the main priority, getting blob space out the door, like proto-dank sharding, all of that has been the main priority since the merge. That, of course, has been successful from the perspective of now L2 fees are incredibly cheap. Is that the thing that you're pointing to and saying like, that's good, but it's just like not as important as other things? Is that what you mean when you say we've gotten off track?

• 11:11Speaker 01

  Yeah, I think we've achieved that. And at the same time, because we waited so long to do other things, we have a completely centralized builder market. The relay market is looking incredibly centralized as well. We have a lot of areas that are becoming derelicts because we have not given them attention. And so we've achieved one thing, which is making blob space really cheap, which by the way, I think is a good thing for optimistic rollups more than it is for ZK rollups. And so I would, I would call this part of the roadmap that we've done so far, a optimistic L2 roadmap, not a ZK L2 roadmap. And it's certainly advantaged one more than the other. And so fees are actually cheaper on the optimistic side than they are on the ZK side right now, which

• 11:56Speaker 01

  is weird because ZK is a superior technology. So I think we've, we've let ourselves be captured by people who, you know, there's a Cordova team that works at one L2, there's another guy who worked on 4844, who works at another optimistic L2. Where are the ZK L2 people in all this? Nowhere to be found. It's all optimistic L2 people pushing the roadmap in a direction that helps them.

• 12:20Ryan Sean Adams?

  Max, do you think that there was like, so my impression of why the decisions were made in the way that they were made was basically like optimistic rollups were kind of like first, right? Of course, ZK rollups are sort of on the heels, but you know, we saw the Unipig demo way back when and there was optimism and so like we sort of knew we could do that, right? And then there was kind of a, maybe a roadmap freak out sometime in like 2020 or 2021, probably 2021. I remember this, this is how it hit me. I don't know what the researchers were like, but like Suzu tweeted like Ethereum has forsaken its users, you know, I have forsaken Ethereum.

• 12:54David Hoffman?

  Circle jerking about the burn?

• 12:56Ryan Sean Adams?

  Yeah, it was basically the idea that, cool guys, you got the merge done, like good job, but transaction fees cost like $50 per transaction. And so Ethereum is like not scaling, right? So my impression is we saw the technology, which was optimistic rollups. We were like, okay, like we can reasonably get, you know, some version of proto dank sharding out the door, at least make transactions fees cheap. So let's go do that because now we'll have some credible path to cheap transaction fees and we'll be able to ship this in like, what, a year, year and a half, two years, whatever that is. And so it was like a pragmatic decision that kind of led us to that point. What do you think about that, that read on the situation?

• 13:37Speaker 01

  Yeah, I think part of that rings true. I think we saw the optimistic path and it looked like the ZK path was further away than it actually was. So like shout out to succinct and some of the other teams that are working on these kind of compiling arbitrary Rusko to ZK circuits. That accelerated the timeline of the ZK technology, which again is a superior technology because it, it compresses the state. So it uses less bandwidth, which is ultimately, I think, the binding constraint in any world is like basically bandwidth. And ZK is the only technology that actually achieves a lot on that bandwidth constraint where optimistic rollups don't. So like we thought that.

• 14:22Speaker 01

  ZK rollups were 10 years away and they were actually two years away. We made some decisions on the roadmap about that. But now we should take a step back and evaluate whether the decisions that we've made, because we didn't think ZK was ready, even though it actually was closer than we thought, were the right decisions. And where do we go from here, basically? We should start, I think, optimizing for some of the things that ZK rollups need. Like, if we want to continue with the rollup roadmap, we need to immediately pivot to making, verifying ZK proofs on chain cheaper, rather than continuing to make data cheap, because it's already free, basically, on the chain. And then I would also say, um, the fee level on the L1 is basically the equilibrium fee level.

• 15:05Speaker 01

  But what really matters, if you're going to launch an app, is what is the fee level if my app does super well and 100 Xs? And right now, I would argue, if you're a app developer, and you're, you have a killer app that you think is going to 100 X, and it's going to bring a bunch of users into the ecosystem, you're not going to launch on Ethereum. Because if you do, in the best-case scenario where you're successful, you're going to break the chain. Like, you're going to make the fees so high that it's unusable. So what really matters is not what is the steady-state equilibrium, but more, how much capacity do we have to expand so that we can attract amazing app developers who want to bring, you know, 100 X more users than we currently have into the ecosystem?

• 15:47Speaker 01

  Right now, where would you build if you're an app developer that has a killer app? Would it be Ethereum or would it be Solana? I would hope it should be on Ethereum.

• 15:56Ryan Sean Adams?

  Max, can I just clarify something? When, when you say, like, um, you're like, um, Ethereum sort of can't support this app that will experience 100 X growth. And where else you, you build? Like, someone would be like, you build on the layer two. And by the way, that is Ethereum. But like, when you say-

• 16:12Speaker 01

  Which layer two? Which layer two?

• 16:14Ryan Sean Adams?

  Okay. Because like, when you say, Bill, like, when someone says, build on the layer two, because that's Ethereum, you say, no, that's not Ethereum? Or like, what, what's, I'm just trying to familiarize myself with how you think of the world. Is that not Ethereum? Because I think, um, basically, the Ethereum answer to that would be like, go build on base, go build on Arbitrum, go build on optimism, or go build on a layer three. Don't build on mainnet would certainly be, uh, like, the answer. But you're talking about, yeah, what, how do you think about that?

• 16:45Speaker 01

  I think the question is really which one, right? There's, there's so many of them. You don't know which one's gonna win. Maybe right now it looks like its base is, is gaining all the users. But at the same time, we all also know that base is very unlikely to ever decentralize their sequencer because they are making a ton of revenue off sequencer fees. So why would they ever want to decentralize a sequencer? And so maybe you say, well, I wanna go to the one that it looks like there's gonna be, uh, you know, decentralized sequencer the soonest, which also doesn't look like Arbitrum because Arbitrum is also trying to monetize their sequencer and they're not gonna wanna give up the revenue. So at the end of the day, you have to choose the right layer two.

• 17:28Speaker 01

  And there's three of them, maybe four of them that could possibly be winning. On Linear, we're gonna be trying to decentralize the sequencer very fast so we can offer that option, but it's like, where do you go? Whereas if you look at Solana, it's like, we, they don't have four different S V M L twos that you have to choose which one to build on. You just build on Solana and you're confident that eventually the scaling is gonna be solved by the L1, at least for your, you know, DeFi app.

• 17:59David Hoffman?

  This is one of the debates that have been, has been going around lately. The, the debate around our layer twos, extensions of Ethereum. Ethereum skeptics will say that layer twos are not, uh, and they are not Ethereum. They are new chains. They have separate state. They have separate transaction ordering rules. They have separate execution fees that is captured by the layer twos, not shared with the layer ones. Ethereum proponents will say that, um, all layer twos will use Ethereum for security, our natural extensions of Ethereum. Does, how do you, how do you think about this, this debate? I, I personally don't think it's such a binary. I think there's, it's, there's more of a continuum here, but where's your position on this, on this debate?

• 18:37Speaker 01

  Yeah, I would agree that it's more of a continuum, but I would say on that continuum, it's more in the direction of these are separate chains right now. So if they want to continue their decentralized road path, they they want to make sure that they're frequently, you know, pushing stuff to L1. They are gonna have fraud proofs, they're gonna have forced transactions. Then they start to move over towards being part of Ethereum. If they start to have, you know, composability features that allow them to compose more easily, that's moving further in that direction. But I think the issue that I would see is the ones that look like they're winning

• 19:21Speaker 01

  have no incentive to do that. And so they're like claiming loudly that they're part of Ethereum and they don't have fraud proof enabled. And they don't seem to be moving towards decentralized sequencing at all. And they're trying to build interoperability within their own ecosystem with the superchain. So it's like, are you trying to be Ethereum? Or are you just trying to leech Ethereum users and mindshare? And build your own thing and launch your own token and pay for gas in your own token?

• 19:57David Hoffman?

  Maybe you could extrapolate your fears outwards, like one, three, 10 years. Coinbase keeps investing in base. Optimism superchain becomes very composed with itself. What are the, if this, if the, if we don't change direction here, what are your fears that will like fester over time?

• 20:17Speaker 01

  Yeah, I'll give the the doomer worst case scenario. And I'm not, I mean, there's a lot of good people working on those things. So I don't want to, I don't want to say that they're evil, but like the incentives are there. There's a corporate governance structure at Coinbase, which is not the same as Jesse. Like, these are two different things. And there's going to be, I work at a big company, consensus. We have a corporate governance structure. You know, the head of Linea and the head of the corporate governance structure are not the same person. But we have certain other interests that we have in the ecosystem that allow us to prioritize moving towards decentralized sequencing. When I look at Coinbase, I don't think that those

• 20:56Speaker 01

  interests are the same because Coinbase is like for us, we have MetaMask. We want people using Ethereum. We want users in the ecosystem. We want transactions flowing and we want decentralization. And our CEO is the, you know, one of the co-founders of Ethereum. So we are deeply aligned with Ethereum. Coinbase, they get a lot of revenue from people trading Ethereum on their centralized exchange, but they aren't linked in the same way. And so my fear would be, okay, we push a bunch of users to an L2-like base. Their financial incentives are such that they don't want to decentralize the sequencer. And then they continue to build user base, build market power, increase their revenue

• 21:38Speaker 01

  to the point where all of the activity is happening on a centralized sequencer. And that's not crypto to me. That's not Ethereum to me. Like it, it's not decentralized at all. It's just a like centralized server sequencing transactions on a box. Maybe they have fraud proofs, maybe they don't. Right now they don't. So that would be my biggest fear is basically market power, network effects happen, and these things become too big to move. Right now, we still have time to change things. In the future, in five years, maybe all the activities there, and it's impossible to claw back those users into a truly decentralized financial system.

• 22:12David Hoffman?

  And maybe you could give the inverse. What's a more happy path look like to you? And what changes might we need to get there?

• 22:19Speaker 01

  Yeah, I think the happy path is, well, first of all, we're going to need some changes. So it's good that you flagged up. But the happy path is, okay, we're all aligned here. We're all building towards the same thing, which is like decentralized finance, decentralized ecosystem, censorship resistance, credible neutrality, Ethereum as money. If those are the things that we're all building towards, maybe we can quickly do the things that we need to do, like getting fraud proofs and forced inclusion. And then we can build some stuff for ZK rollups, which. I would argue have kind of been left behind in the dust right now because we haven't been prioritizing them. And maybe we can get to a point where we do have decentralized sequencing on these optimistic and ZK rollups.

• 23:04Speaker 01

  I think that's like kind of the the golden vision, the best case scenario for the L2 roadmap is like, hey, these guys say what they have been saying they're going to do for five years. They finally do it tomorrow. And then we actually do end up with a decentralized ecosystem. But like, I mean, how long have these guys been saying that they're going to be decentralizing their sequencer? And they haven't done it. It's like, how many times can they move the ball on us before we kind of realize that we're getting rugged here?

• 23:36Ryan Sean Adams?

  Max, are you trying to start a civil war here within Ethereum?

• 23:40Speaker 01

  I'm not. I'm just like, if you're saying that you're Ethereum aligned and you're saying that you've been working on a decentralized sequencer, like, do it. Don't like, continue to pass the ball and and say it's going to be next month over and over and over again forever. Like, do it. Don't, uh, and then we see, I mean, my view of this is if you look at Arbitrum, for example, they're doing something which is time boost, which is probably incompatible with decentralized sequencing. So when when they're moving towards a system that looks to me to be incompatible with decentralized sequencing, and then talking out of the other side of their mouth that they're going to be moving towards like, a decentralized sequencer, that doesn't make any sense to me. And so like, if you're if you're watching closely,

• 24:23Speaker 01

  the behavior that they are doing right now is not okay. So I'm not trying to start a civil war. I'm just trying to put pressure on people who say that they're aligned to actually follow through and put the actions where their mouth has been for the last five years.

• 24:38Ryan Sean Adams?

  Max, pressure is good, I think. And there are forms of social pressure that I think Ethereum is, you know, like, put in place and the community has put in place. And I want to, you know, talk about maybe a softer landing than the one that you illustrate, which is like basically that there's coordination failure across all of these layer twos and kind of there's, you know, a disincentive to basically like cooperate. And leave Ethereum as kind of the federal government. And so they kind of like make their own decisions in their best interests. And I think we should be eyes wide open to that as a possibility. However, the soft landing, I think the typical Ethereum roadmap, layer two roadmap bull would say, okay, like Max, look at layer two B, right? All these layer twos, they start at stage zero. That's how it goes.

• 25:23Ryan Sean Adams?

  There's like training wheels, right? Then you progress, you add kind of like fraud proofs. It's like another step. And then you decentralize the sequencer, right? And like, and then you get, you collect all five of the pie slots on layer two B. And you're kind of like, over time, fully decentralized. And indeed, we are seeing some progress, right? We saw some progress with Arbitrum, which is now kind of like stage one. There's still another like ways to go. We're seeing some progress with optimism as well, which of course is the same code base for base. I'm not sure if we've seen similar progress on decentralizing the sequencer. But basically, the overall message here is Max, just give it some time. Like you gotta wait, these technologies have to bake.

• 26:07Ryan Sean Adams?

  We can't make things fully decentralized before we know it's like safe for users. And like the bear case that you're painting out just is like not going to come to pass. What do you say to this?

• 26:18Speaker 01

  I think the problem is, what if certain ecosystems, certain rollups that don't actually want to decentralize? Like the problem is, do these actually, these organizations, which are profitable, publicly traded companies in some cases, want to decentralize their sequencer? In their own best interest, it's actually better to keep the sequencer to themselves. And so if we let them do that, they're going to do it because that's their financial incentive. Like, that would be my argument is like, look at the money, look at the incentives. The incentives are not towards decentralizing the sequencer. And so the more power and more users and more reliance that we have as an ecosystem on these agents, the less we're able to put pressure on them to decentralize.

• 27:03Speaker 01

  I think I'm not the only one who's a little bit unhappy with the speed of decentralization. I think Vitalik has said as much on Twitter as well, that the decentralization, the progression on the roadmap is, okay, we get to level one and then we sit there. And we sit there and we sit there. And what really matters to me as a MEV researcher is whether we get to decentralized sequencer or not. I think the world looks pretty grim if most. Transactions are happening on Coinbase, on a centralized server on AWS East One. And you know, you can't participate in that if you're Edward Snowden, for example, because like

• 27:43Speaker 01

  you're sanctioned by the US government. I think that's not a great world. That's not a great endgame for crypto, for me at least. Not why I joined the space.

• 27:52Ryan Sean Adams?

  Okay, can we just illustrate, get really concrete in terms of like what you would like to see from Layer 2s? That would sort of disprove the idea that they're kind of like discoordinated and in it for their own like purposes only and they're not willing to decentralize? So if the Layer 2s today, maybe the optimistic rollups, let's say, all get to kind of like stage two on Layer 2 beat and they've got fraud proofs and they're all kind of like permissionless. And that works and you can force inclusion, include transactions, bypassing their sequencers. So you preserve censorship resistance. And also they incorporate some sort of permissionless decentralized sequencer

• 28:32Ryan Sean Adams?

  among their centralized sequencer, like you know, part of the sequencing is done by decentralized sequencers. Would that be in the direction of they are doing the thing that is best for decentralization? And Ethereum and like you would applaud that and you would, you know, somewhat call off the dogs? Call off the alarm that you're raising right now?

• 28:54Speaker 01

  I think, first of all, I don't think that forced inclusion on the L1 is sufficient censorship resistance for an L2 to have. I think the sequencer itself needs to have some amount of censorship resistance and credible neutrality. Because if these apps are going to be there, like if global markets are going to be on chain, global markets on AWS East One box that can be censored at will by the US government, doesn't sound to me like crypto. We might as well just have global markets on the CME or on the New York Stock Exchange or on, you know, wherever else you you might have global markets in London or whatever.

• 29:34Speaker 01

  Like the goal is to have global markets operating on chain and being able to force an inclusion six hours later on the L1 is not going to help you trade if you're sanctioned by the US government or if you're sanctioned by Coinbase, because Coinbase doesn't like you. That would be my argument. So I think they actually need to get to censorship resistant, credibly neutral sequencing.

• 30:00Speaker 01

  On the L2.

• 30:01Ryan Sean Adams?

  And what does that look like? Are there like solutions in place? Or is this just like a, is this an engineering task? Or is this still a researchy thing that we haven't figured out? I'm trying to get to the bottom of, is this a matter of like, we don't have the tech? Or is this a matter of we don't have the, the will and the coordination to do this?

• 30:17Speaker 01

  I mean, you, you just run, you have to have consensus with permissionless consensus that is able to make the L2 blocks, basically. So we have that to some extent on the L1. There's one key aspect, which I think is missing, which we talked about last time I was on, about censorship resistance, which requires multiple concurrent proposers, which I won't get into too much because there's a whole episode on it. But I think like, we know how to do it most of the way because it's just exactly what Ethereum L1 does for block building, which I guess you could argue is not exactly super decentralized these days.

• 30:58Speaker 01

  But I think the end game is you need to get to a block building engine, which is permissionless, which has multiple entities contributing to a single time step on the L2. And I think that's also where we need to go with the L1 as well. But if you want to be part of Ethereum, you cannot say that you're part of Ethereum and then have a centralized sequencer, sequencing all the transactions on AWS East One and charging users a bunch of money to use the service, even though that's not the cost of the L1.

• 31:33Ryan Sean Adams?

  So Max, if there was the will, I just want to be clear on this because you're deeper into the kind of the tech than I am. And you know, someone can independently validate what you're about to say. But like, if there was a will, do you think that all layer twos could get to kind of the decentralized sequencer that you're sort of talking about in, say, six months? If there was the will?

• 31:53Speaker 01

  Yeah, you just, you need like consensus on the blocks. Like you, we know how to do it. It's, it's how blockchains work. Like you can have blocks being built by permissionless entities today. That's how Ethereum works today is that we have a bunch of validators who have the right to propose a block. That's possible today because the technology is there for all blockchains, basically.

• 32:19Speaker 01

  They just, they don't want to do it.

• 32:20David Hoffman?

  Are you kind of implying that you're, you're looking for more of a fractal of layer two to spin off of the layer one? We have the structure of the layer one. We can make that be a layer two. You can stake your OP tokens, you can stake your arb tokens. And then you also have a permissionless validator set, or at least a distributed one. That's kind of the original map of what I kind of thought the layer two landscape would eventually look like on Ethereum. Like these would have, we would have the tokens and you as a user could stake the tokens. And if there's permissionless validation of these layer twos, you could participate in the validation of your preferred network. That's kind of how I imagined the layer two landscape looking in 2019. That's not what has emerged. Is, is what I'm articulating kind of what you're also asking for?

• 33:05Speaker 01

  Yeah, I mean, you just build a blockchain which can post to the L1 to get additional security. That blockchain is the one responsible for producing optimism blocks, for example. I don't think anybody thought that the end game for Ethereum was Ethereum becomes a cheap, undifferentiated DA chain and a bunch of powerful companies build rollups on top of it and harvest as much power as they, as much rent as they can from the monopoly that they have. That's not exactly what I think anybody wanted. And I, I'm not, I don't think I'm the only one who's a little bit frustrated with the

• 33:48Speaker 01

  speed of decentralizing the sequencer. The reason that they're saying, oh, we don't know if we want to decentralize the sequencer, from what I can see is like, okay, they have some guarantees that they want to provide users about execution quality. And it's harder to do that when you're not doing the sequencing.

• 34:06Speaker 01

  Yeah, that's, that's one of the reasons. The other reason is revenue, I would say.

• 34:09David Hoffman?

  So Max, let's say like, we have all the tools available for Layer 2s to become like a decentralized blockchain. I think what you're really saying is like, we'll just look at the Ethereum Layer 1, look at all the tools that we have down there, just copy and paste those tools up to the Layer 2 level. There's a little bit of difference with a ZK proof or a fraud proof, whether we're a ZK rollup or an optimistic rollup, but that's kind of the main difference. But other than that, like the tech stack is largely the same. We know how to do this. It's a known science. Just copy and paste that structure and put it at the Layer 2 level. Like, why aren't we doing this? Say we do actually get to that, that structure, that pattern, where we have like a distributed validator set, sequencer set, at the, at the Layer 2 level. Does that actually change your opinion as to whether or not that Layer 2s are extensions of Ethereum? Because I

• 34:54David Hoffman?

  don't think there's any like additional change in economics, and there's no like, no difference of a relationship between the Layer 1 and the Layer 2. Like, the Layer 2 isn't, you know, burning any more Layer 1 block space. There's not really any, any like, any change in the relationship there. Just the Layer 2s are now decentralized and more like crypto ethos-aligned. So does that change if the Layer 2s did change into this pattern that you want? Would you change your answer about whether Layer 2s are on some like this misaligned part of the continuum of Ethereum alignment?

• 35:28Speaker 01

  Yeah, I would say that they are, would move much closer to being part of Ethereum. I don't know if they would be exactly part of Ethereum. I think it would depend on a lot of things.

• 35:41David Hoffman?

  How, how do you measure that?

• 35:43Speaker 01

  In terms of, of how close they are on that continuum?

• 35:46David Hoffman?

  Yeah. Yeah, like what makes something like equivalent to Ethereum and what makes something like misaligned with Ethereum? Like, how, what is the measure that you're using that would say that like these Layer 2s in this new paradigm are more closely tied to Ethereum?

• 36:01Speaker 01

  I think it's more for me, I'm an economist. I think about incentives a lot and it's really how closely aligned are the incentives? Is the incentive right now of base to basically make Ethereum as good as possible? Or is Ethereum actually competitor to base? And so Ethereum gets better, does that make base lose users, right? That's what I would call the misalignment there. If we're at a position where growing the pie, making the whole ecosystem better is good and all rollups want to succeed together. And they all, I think in particular are not competing with the base, the L1 chain. I mean, right now they're really direct competitors. So how can we call them?

• 36:47Speaker 01

  How can we call a direct competitor to Ethereum part of Ethereum? Doesn't make any sense to me. They're competing for the same user set on the same applications. So somehow we need to. There's, there's no reason that it has to be that way for, for, in my opinion, I think we can build an L1, which is really good for decentralized finance. And then kind of shovel the other types of transactions, the basic transfers, stuff like this that isn't as contentious on state to the L2s. And that can actually be useful because it means that the L2 takes a bunch of load off the L1 and lets the L1 do its job properly. That would be like a symbiotic relationship. But I would say it's more of a parasitic relationship right now because

• 37:32Speaker 01

  the L2s are trying to take decentralized finance away from the L1 and have it on the L2, which again is a centralized sequencer right now.

• 37:40David Hoffman?

  Okay. So say we get into the state of layer twos that like make you happy, right? Like we decentralize the sequencer, layer twos get censorship resistance, the, the happy state that you're asking for. When we pose the question, like are layer twos extensions of Ethereum, the, the skeptic conversation that says they, no, they're not, they're lesser, lesser extensions of Ethereum is that they have like separate state from the Ethereum layer one, they have separate transaction ordering rules, they have separate execution fee capture by the layer two. And if we go down the happy path that you are still illustrated. Still see all of those things happening. Like there's, it's still a separate chain that's separate from the Ethereum layer one that isn't really passing back much value capture down to the layer one. So that's kind of why I'm confused about like whether, why, why does this move the needle on whether

• 38:25David Hoffman?

  layer twos are extensions of Ethereum because they are still completely independent blockchains with like that whole state. How would you respond to that?

• 38:32Speaker 01

  There's a question about power dynamics. If the, if the L1 is this decentralized thing where we have to move slowly because there's a bunch of stakeholders. And we are constrained in what we can provide to users by the fact that we're decentralized.

• 38:52Speaker 01

  Then the competition between whether you do your DeFi on L1 versus L2 is unfair. Fundamentally, because users are gonna optimize for, they're not, they're not going to consider security. Just in the same way, people don't purchase insurance in the optimal quantity. Like users are gonna go to where it looks good in the short term. They're not going to consider tail risk. They're not going to consider decentralization, even if considering those things would be better for them. And eventually all the users are going to leave the L1 and, and making it a level playing field where we're both operating in terms of a decentralized sequencer.

• 39:36Speaker 01

  We both have the same constraints, I think would be better. And then you also provide some of the same credible neutrality that Ethereum has, right? I mean, the more, the more features of Ethereum that these L2s have. They're, they're already inheriting security. They're already inheriting like the finality, right? What if they also inherit the credible neutrality? That would be good. And like the more features we have, the closer they are to Ethereum. But I think there's still a fundamental tension about whether user activity is going to happen on the L1 or the L2. And it's very hard to say that these things are part of an ecosystem when they're competing directly on the users themselves, which is the lifeblood of Ethereum.

• 40:21David Hoffman?

  Okay, so as you think about that like extension of Ethereum continuum, it's less about having like being a one-to-one extension of the Ethereum block space. It's not, it's not about having like overlapping resources. So these things can be independent chains, but if the feature set is like at parity, if the, I think what you're worried about is like a lot of layer twos are kind of like cheating in a way. They're like, you know, centralizing the sequencer. They're not aligned, they're not doing the crypto alignment with censorship resistance, you know, not crypto ethos, and therefore they're kind of like running interference on the value capture because they are not, and they don't have the same like feature set that Ethereum has, which is like decentralization, censorship resistance.

• 41:05David Hoffman?

  And that's what you're saying is making them less extensions of Ethereum.

• 41:10Speaker 01

  And I think still there's going to be substantive difference because if optimism is not Arbitrum, then by the transitive property cannot also be the case that optimism is Ethereum and Arbitrum is Ethereum, because then Arbitrum would be optimism. This is like a fundamental contradiction. It's very clear that the L2s are competing with each other. Right now, it's also clear that the L2s are competing with the L1 itself for users. And we need to get to a situation where there are types of activity that happens on the L1 is very different from the type of activity that happens on the L2. Otherwise, that tension is always going to be there.

• 41:53Speaker 01

  And having, you know, groups of Cordabs who work at an L2 and are influencing the roadmap in a certain direction is, I think, potentially deeply problematic as we look into the future. Right now, everybody's aligned, we're, uh, we're all chilling. It's a, you know, bull market or whatever. We're all...

• 42:16Speaker 01

  People who are here from the start and are trying to build serious stuff, but eventually economic forces cannot be denied. Eventually, the incentives are going to show up. I think they're showing up already in terms of this time boost proposal, in terms of how much base is charging above and beyond the the cost it should be charging based on the L1 cost. Optimism, super chain, like the OP mainnet is actually kind of unique. I don't want to lump them in with those two groups because it looks like from my conversations with them, they're actually more committed to not raking users and more committed to a decentralized sequencer in the short run that has these properties. So I don't want to lump

• 42:59Speaker 01

  them in, but like base and Arbitrum in particular, to me, it looks like the incentives are very strong not to decentralize the sequencer. And that means that they're a direct competitor with Ethereum.

• 43:11David Hoffman?

  New projects are coming online to the mantle layer two every single week. Why is this happening? Maybe it's because mantle has been on the frontier of layer two design architecture since it first started building mantle DA powered by technology from EigenDA. Maybe it's because users are coming on to the mantle layer two to capture some of the highest yields available in DeFi and to automatically receive the points and tokens being accrued by the $3 billion mantle treasury in the mantle reward station. Maybe it's because the mantle team is one of the most helpful teams to build with, giving you grants, liquidity support and venture partners to help bootstrap your mantle application. Maybe it's all of these reasons all put together. So if you're a dev and you want to build on one of the best foundations in crypto, or you're a user looking to claim some ownership on mantle's DeFi apps, click the link in the show notes to getting started with mantle.

• 43:56David Hoffman?

  Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you as a founder and your team and your investors get the most tax efficient outcomes. The Toku team understands the crypto space inside and out and will ensure your token launch is fully compliant while maximizing tax efficiency. Toku can connect you with the best attorneys if you need them to make sure that you have the best advice and Toku can help to optimize your taxes. So you pay the least possible amount of taxes while still maintaining legal compliance. With Toku's guidance, you can Concentrate on building your company while Toku handles the logistics. Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation. Max, I want to bring up base rollups because there's something unique about base rollups to me,

• 44:37David Hoffman?

  which is that the base part of it is part of these rollups basically tying themselves to the mast of Ethereum. They're kind of just like outsourcing a lot of their, a lot of their power to the Ethereum Layer 1. And it's like in a formal, formal alignment with the Ethereum Layer 1 in terms of just like block space overlap and economics. Do you think base rollups are like a viable solution here? Like, what's your take on, on this direction for Ethereum roadmaps, Ethereum rollups?

• 45:03Speaker 01

  So I think there's two things I would say. One is that they are certainly much more aligned from an incentive perspective. Because for a base rollup, if a user goes from the base rollup to the L1, neither side is sad about that. For a Ethereum, for the L1, if, if a user goes from the L1 to a base rollup, neither side is sad about that. So that's like a fundamental alignment that base rollups offer, which is, which is a good thing. The downside of base rollups is that, first of all, the L1 block time is too long for feature parity with other rollups.

• 45:45Speaker 01

  So like you have kind of a, I think it's one second or sub one second block times on some of these other rollups. And if you're a base rollup, you can only produce a block every 12 seconds because that's when the Ethereum block time is right now. So that's an argument for, for lowering, lowering the block time down to four seconds or two seconds, something like that. But the other issue is, again, I keep saying incentives and sorry to sound like a broken record, but what incentive does OP, what incentive does base have? What incentive does Arbitrum have to become a base rollup? When they're extracting a bunch of revenue from the sequencer, giving away the sequencer

• 46:27Speaker 01

  right is like giving away the spice. They're not going to do that. And so maybe if we started out saying, we're going to do base rollups, that would have worked. I think we need either a very strong social pressure, which I don't think we can bring enough social pressure to bear quickly enough to do that, or we need some other kind of solution because the base rollup isn't going to get there.

• 46:49Ryan Sean Adams?

  Max, if all of the layer twos became base rollups overnight, it just like happened for, you know, some reason, would your concerns be like mitigated?

• 47:00Speaker 01

  Yeah, certainly. And I think there's a bunch of stuff that we haven't really explored on base rollups because they aren't super big. But like, if we have some certain feature advantages, like we have additional censorship resistance in real time at the L1, we can kind of maximize an arbitrary objective function for the sequencing role. So right now, if you try to do a base rollup on the L1, it has to basically maximize validator profit. And maximizing validator profit is all like very often directly in conflict with maximizing user welfare. And that's the kind of fundamental tension of MEV in a in a single leader chain.

• 47:39Speaker 01

  But if you had a censorship resistant L1 that could kind of adjudicate arbitrary auctions, it could make kind of super base rollups that are like going to sequence the block that maximizes user welfare. And I think that's like the end game that I would like to see of the rollup roadmap is like every rollup is based, but it is like super base in that it's not maximizing MEV, it's maximizing user welfare. And that's exactly what I think Ethereum should do in the long run is maximize user welfare. And when everybody's aligned on that, I don't, I think I would be comfortable calling everything Ethereum.

• 48:16Ryan Sean Adams?

  Okay, so I'm trying to get, there have been ETH holders, ETH people, sort of pushing the base rollup vision, namely Justin Drake, who was talking about this on Bankless earlier in the year. I'm trying to understand, because it seems like your take here and your philosophy, Max, is like, "Make Ethereum Layer 1 great again," basically, if I were to summarize it in a meme. And I'm wondering how close all the rollups becoming base rollup gets to that end vision. Is that enough? Would that do it? Or is there still more that you're talking about?

• 48:54Speaker 01

  I think there's still more. I think we still need to increase the capacity. Like I said, I'd like Ethereum L1 to be the place where decentralized finance happens. And I think we're increasingly at risk of that happening elsewhere because we have not optimized for it. And partly, we haven't optimized for it because some people think it's not important, even though it's clearly the most used app on Ethereum, and it's the reason that a bunch of us are here today because of decentralized finance. So I think we need to make a bunch of changes. Part of the reason that I would like a base rollup transition, although I don't think it's possible to happen, so I think there's two things I can say, which is, it would be great if that happened. I don't think it will happen. Both of those

• 49:38Speaker 01

  are possible to believe at the same time, and I believe both of them. But in order to make base rollups happen, we would need to improve the L1 a bunch. So as a side effect, because of a base rollup roadmap, we would also be making the L1 really good. And a lot of the same things that you need to make base rollups awesome are the things that you need to make the L1 awesome, which is why I think it's the most aligned path forward.

• 50:05Ryan Sean Adams?

  There's a tweet that you tweeted out not too long ago, where you, I'm going to read it out here. You say, "The goal is not for Ethereum to be maximally profitable for ETH holders. The goal is for Ethereum to be as large a force for good in the world as possible, subject to being sustainable. I do not think the current Layer 1 roadmap is the best way to achieve this." So what do you want to see out of the Ethereum Layer 1? What is it coming short on? And how would you change its directions in order to achieve this goal that you have?

• 50:33Speaker 01

  Yeah, so there's three things. Some of them are symbiotic and some of them have a little bit of tension. One of them, we immediately need to start decreasing the block time. It's actually ridiculous in the year 2024 to have a blockchain with 12 second block times. It's just basically so far from parity with anybody else that we're of course going to get outcompeted if we stay at 12 seconds. The second thing is we need to provide much better realtime censorship resistance. That means not, oh, you can get in if you wait 30 minutes and wait for a solo stake or two, who's not running Medbus to include you. That means you can get in to the next block if you pay a high enough fee.

• 51:16Speaker 01

  And hopefully the high enough fee is not super large that it becomes impossible to do basic decentralized financial activity. So those are the first two. And then the last thing is we need to increase throughput so that if you do build a killer app, we have enough throughput there that can support you. So we need to be able to basically support 100x or even 1,000x in usage so that when people have ideas for amazing apps, they want to build them on Ethereum and nowhere else. I think the first two are kind of very compatible with each other. Actually, moving to multi proposer makes it easier to get to faster block times because you have

• 51:56Speaker 01

  less need for leader rotation, which is one of the most expensive parts of having shorter block times. The third one, which is increasing throughput, is a little bit in tension with faster block times, but I think we can, we're so far from the Pareto frontier of what is possible with the technology that if we actually just tried, we could get extremely far. I think that the issue is, I hate this type of attitude in Ethereum research, which is like, oh, you want to scale the L1, but we don't have the tools today to be able to make it. Process as many transactions as Visa. Well, let's make the tools like it's such a defeatist attitude of, oh, you want to do this thing, but right now the technology isn't there.

• 52:41Speaker 01

  Well, yeah, I understand that. That's why I want to work on the technology to get us there. And it's like I posted this New York Times

• 52:50Speaker 01

  article about flight, which was posted like six weeks before the Wright brothers took their first flight. And they said, the technology for human flight is not there. Maybe in 10 million years, we could get to to human flight. But right now, everybody who's working on this is just wasting their time. And I kind of feel like that attitude that's pervasive in the Ethereum ecosystem of like, why are you trying to work on this problem? It's too hard. It's it's very defeatist. I'm maybe too optimistic for them to say, hey, we have a bunch of smart people here. Maybe we could actually make this happen if we tried to work on it instead of giving up before we even start.

• 53:27David Hoffman?

  So with these changes that you're interested in in bringing to the Ethereum layer one, this would be a boon to base rollups. If we're getting faster block times, all of a sudden, base roles become much more viable in my mind. I know that doesn't really fix any of the incentive problems that you laid out, but it might also allow for new base rollup teams frameworks to emerge and be more competitive with their entrenched counterparts. Is that right?

• 53:53Speaker 01

  Yeah, exactly. And where do you want to be as a user on the chain that maximally extracts value from you? Or the chain that gives you that maximizes your welfare? Well, I would prefer to be on the chain that maximizes my welfare. But if the chain that maximizes my welfare is also 12 second block time and extremely high fees, then that's going to outweigh that. But if we could get to a point where we're maximizing user welfare and we have low fees and we have fast enough block times, I think that would be a winning proposition.

• 54:24David Hoffman?

  When I've had this discussion with other people in the Ethereum community, it's what I've learned is that it's not really the hardware requirements of running an Ethereum node that is the bottleneck to preventing us from getting to two-second block times. Right now Ethereum has 12-second block times. Getting us to two seconds would be a 6X increase in blocks being thrown around the internet and therefore a 6SX increase in bandwidth requirements. And this is actually the bottleneck that would kick a bunch of users off of the network and then why it's often met with resistance. Because we are actually just reducing the Ethereum Layer 1 decentralization, which is generally perceived as blasphemy. We just don't want to have high bandwidth be the reason why anyone can't participate in Ethereum 1 validation. What would you say to this retort?

• 55:09Speaker 01

  Yeah, I think it's perfectly reasonable. I do think bandwidth is the bottleneck. That's why I'm so much more bullish on ZK technology than optimistic technology, because the ZK technology inherently compresses the state, whereas the optimistic rollups have to put the transactions on chain. And maybe they can run a little bit of compression, but it's not nearly the amount of compression you can get with ZK rollup. And so my kind of argument would be we need to start using more ZK technology. And I think there's a lot more we can do than just having a ZK rollup.

• 55:51Speaker 01

  We can start to build ZK compression into the L1 as well. And that would reduce the bandwidth requirements. There's some other stuff going on about these bandwidth requirements as well, but I think that is a fundamental issue. We probably need to increase the bandwidth requirements somewhat. We probably need to increase the hardware requirements somewhat, not to an unreasonable extent like Solana, but just to like, you know, I'm sitting in my apartment here. I have like a computer that I'm talking to you guys on, and it's much more powerful than the minimum requirements for an Ethereum node. So like, we've had eight years of progression in technology,

• 56:36Speaker 01

  eight years of where the internet today is at in terms of bandwidth is actually, you know, you can get consumer gigabit internet in a lot more places than you could back then.

• 56:49Speaker 01

  And so I think we can move with the technology and not be stagnant on those fronts.

• 56:57David Hoffman?

  Okay, and so you're also saying that, yes, bandwidth is an issue. We're still lagging behind that. Maybe not like a massive amount, but we are lagging behind that. But then also just with improvements in ZK and actually incorporating ZK technology into Ethereum blockchain. We can just compress the size of Ethereum blocks that are being passed around the internet. And so we can actually really juice up bandwidth requirements once we get to that point. Is that that's kind of your happy path?

• 57:24Speaker 01

  Yeah, but let me just be very precise that an optimistic roll up does not actually substantially reduce the amount of bandwidth required, at least without P2D. Like maybe with some improvements in the data availability layer, it could do that. I think we could potentially also do that with L1 blocks. Again, I think we kind of go down these paths and we like get very focused on this is the path. And then we, we don't realize that we've invented a bunch of new technology that would be useful elsewhere in the stack. But like right now, you download the blob, the blob has all of the transactions.

• 58:05Speaker 01

  And so from a bandwidth perspective, you have almost the same usage from a optimistic L2 as you would if it was happening on the layer one. And the only thing you're saving is on execution. And I'm not the only one who says this, but execution is not the bottleneck. Maybe if we still had eight year old Raspberry Pi as the hardware requirement. But even if we went to like kind of consumer hardware from the last two or three generations as the node requirements, I think we could easily sequence all of the transactions that are happening.

• 58:40Speaker 01

  Everywhere. So like the execution is not the bottleneck. There is state growth, which is potentially a bottleneck. And then there's bandwidth, which is potentially a bottleneck. But execution itself, which is the only thing that the optimistic rollups are giving you, and they also give you some state siloing, are not like really the core thing that I think we need to optimize for.

• 59:02Ryan Sean Adams?

  Max, on your third part of the the rid map that you'd kind of like change if you could, you're talking about throughput increase of like 100x, right? And so like, we started getting into the contours of the questions that David asked. It's just like, the question of, does this sacrifice solo stakers and solo validators? And I've heard so far, your answer to that is, no, it increases the hardware and bandwidth requirements. But like, they can be increased, and people can still sort of stake at home. So I sort of get that side of it. But like, can we really get 100x in terms of throughput increase without some substantial changes? Or like, what are those substantial changes? Like, do we have to

• 59:41Ryan Sean Adams?

  like redesign, redevelop, reengineer the EVM? Is it kind of like what the monad project is doing? Like, we bring that back to mainnet, something, something like that? And also, I guess, another sort of question or objection to all of this, even if you can do that, even if you get a 10x or 100x, like on Ethereum mainnet, is that really enough for the entire world's like, compute that needs to exist in Ethereum? So anyway, there's a bundle of questions, but I think they're all related. What do you say to this?

• 1:00:16Speaker 01

  Yeah, I think we do need to take some tools from the newer blockchains. One of them in particular is this kind of parallel execution and state storage. So that's how we can kind of, on the L1, increase throughput. That one of the advantages of a roll up is that state is very siloed, right? And so you don't have to have like a big hard drive that stores all the state. Uh, once you get past a certain amount of data, you have to move from like RAM to uh, storage and from storage to slower storage and stuff like this.

• 1:00:57Speaker 01

  Uh, that that's kind of the issue with state growth, but if the uh, state is siloed, then you know which part you have to access. And so you can kind of store the part that you're working on in memory and work on that part. And then take it out of the memory and load up a different part that you're working on. So that's like, uh, one thing that I think is important, which is like this parallel execution uh, and state siloing stuff, which is important. And then the other question is, is this enough? Is 100 Xing enough? So actually I was talking to Vitalik, uh, messaging with Vitalik a couple of days ago. And he brought up this point is like, what if where we actually need to be is 100%?

• 1:01:40Speaker 01

  And we're at 1% and we could do everything and then cap out at 5%. And then we're like, we've just wasted all this time because we tried to get to 100%. We didn't get there. Um, I think there's some element of truth to that. So like, I want to just say that that's like a reasonable point to make. But I also want to say that we don't really know how far we can get unless we try. And we also don't really know where the threshold of when Ethereum becomes usable again. And somewhere where people want to deploy their apps again is. And it might be 100 X, it might be 1,000 X. We don't really know where that threshold is.

• 1:02:22Speaker 01

  There's other places that I think other types of transactions are going to happen that are not Ethereum. And I think the thing we should optimize Ethereum for is basically financial activity. And financial activity isn't just sending Visa transactions back and forth. It's like, uh, contentious state, stuff like this. So I think first of all, it's a reasonable point. I also think it's a defeatist point to say we should not work on unsolved problems because even if we solve them, uh, it wouldn't be enough because we don't know what solutions we would come up with, and they might take us a lot further than we think they would. Again, I said earlier, we thought that ZK was 10 years away. It was two years away.

• 1:03:02Speaker 01

  Right? And once people started working on it, they realized it was a lot easier than it had previously like been suspected to be. And so if we never work on it, how will we know? I think we should at least give it a try because otherwise I think Ethereum is gonna die.

• 1:03:20Ryan Sean Adams?

  Max, the current Ethereum roadmap is, you know, like we've got these five swim lanes, the surge, the purge, the splurge, like on down. We've talked about this. The roadmap and the roadmap prioritizes some of the things that you're talking about, but also definitely prioritizes layer twos and pure DAS and, you know, like cheap blob space moving forward. The roadmap, the different, the tweaks, the changes that you've proposed, how different is that than the existing roadmap? Is it like, you know, 90% different? Is it, you know, 30% different? How would you characterize kind of the, call it a pivot to like make, make the L1 great again? Like, how big of a change is that?

• 1:04:02Speaker 01

  I think the biggest change would be shorter block times, which is not really on the roadmap right now. And I think that would be

• 1:04:12Speaker 01

  a pretty big shift of focus because there was for a while a serious coalition of people that wanted to make block times longer in order to get to single slot finality, for example. And that is clearly a completely different direction than what I'm proposing. So I think that's the biggest thing. I work on MEV related stuff and so I'm most familiar with the Scourge part of the roadmap. I have a proposal which would be achieving the same goals as the Scourge, but in a different way. So depending on whether you think the roadmap is about goals or about

• 1:04:54Speaker 01

  Engineering approach, the answer to your question would be very different. I would say it's achieving a lot of the same goals, but it's in a very different way of thinking about them from first principles and not trying to design a bunch of gadgets and stick those gadgets together. So in my estimation, the Scourge, which is the MEV part of the roadmap, is the part of the roadmap that is most focused on the L1. And so I think we should pivot that part to something that looks like shorter block times and solve all the MEV stuff with multi-proposer.

• 1:05:28Ryan Sean Adams?

  Max, I feel like we should have done this maybe earlier in the conversation because I think a lot of Ethereum folks will hear some of the statements you made and get slightly triggered. Okay, I said civil war and like, you know, part of that was a joke, but part of that is like, kind of serious. Like, basically, get ready for a white blood cell attack. And like, part of the reason is, you use some trigger phrases in this whole conversation. L2s are parasitic, you know, like, stop outsourcing your execution. If we don't make these changes, Ethereum is going to die. And the reason this is triggering, I think, to some of the Ethereum community is because they're used to hearing those phrases from some ETH-killing, you know, alternative Layer

• 1:06:12Ryan Sean Adams?

  1 that make some of the trade-offs that you've been so critical on in the current, like, the current Layer 2 roadmap. I.e., they centralize things. I.e., it's never going to be censorship resistant. And you've talked through this conversation, Max, about incentives and the importance of motivation and aligning incentives. And a lot of Ethereum people who hear alternative Layer 1s and VCs who purport to be very excited about these future Layer 1s, they know that they have bags. They know that they have, like, upside, you know, in kind of shilling this as an Ethereum alternative, right? So they don't trust those incentives. But I feel like we sort of established this earlier in the conversation, but like, let's do it now. What are your incentives here?

• 1:06:57Ryan Sean Adams?

  Like, are you getting ready to kind of launch the Max version of an Ethereum-forked Layer 1? Are you in it for the tech? Do you care about decentralization?

• 1:07:08Speaker 01

  Yeah, what's your deal?

• 1:07:09Ryan Sean Adams?

  Yeah, for a lot of folks listening, this might be the first time they've heard of Max Resnick, and we just like, want to know what your incentives are. Like, what makes you tick?

• 1:07:17Speaker 01

  No, I think, well, partly I am a researcher first before before anything else. I like to fix problems when I see them. So I see problems, I like to fix them. And I see a problem here, which is that I think we're optimizing for the wrong thing. So that's like the the first primal driver of why I like go out and like, go on Twitter and I say, hey, like, I think you guys who who are very educated or

• 1:07:41Speaker 01

  well meaning people are wrong because I I look at it and I don't agree with that approach. I don't think we're optimizing for the right thing. That's the first thing. And then on the financial perspective, like, I don't have any, I've never done any angel rounds. I I have one advisor position, which is with Espresso Systems because and I'm working. It's not a very large advisor position. It's mostly working on the auction itself because I'm an auction theorist and it's it's really about trying to do decentralized sequencing, which I've been talking about on here is like really important. So that's like the one advisor position that I have. And then the rest of my exposure in terms of financials is through consensus,

• 1:08:27Speaker 01

  through consensus equity and through like my future career. So I don't have any Solana. I don't have any other L2. I'm not planning on launching an an alternative L1. I work at consensus. Our bottom line is is based on user activity and the success of Ethereum. So from a financial perspective, the most important thing for me is whether Ethereum is successful and whether it has users and whether those users stay in the system. And for example, if users went to Solana, that would be very bad for me because I work at a wallet that has very low footprint on Solana.

• 1:09:09Speaker 01

  So like, my objective is seriously just to make Ethereum as awesome as possible and get as many users to be on the L1 and even on L2s to the extent that they are using Ethereum and are happy there and basically increase the size of the pie of the Ethereum ecosystem. And like, my, all of my objections are not like insidious. I'm not a CIA operative trying to to like break this apart. I'm just literally looking at our users and what I view as like a slow decline of the ecosystem and saying, hey, can we turn this around? Because like, it would be really great if the only decentralized smart contract chain continued to be a force for good in the world.

• 1:09:53Ryan Sean Adams?

  Max, there's going to be another group that's listening, apart from the kind of the Ethereum bull and the Ethereum advocate. And that's like, maybe someone from another community, maybe, maybe someone from Solana. And they hear you saying things like, L2s are parasitic, and like, execution on the layer one is good, and bring back the users. And you're chanting some of the things that they are chanting, and some of the critiques that they have as well. And so they might be listening, Max, and just be like, hey, you know what you should do, actually, is come over to Solana. You know, like, come over to our L1 that's optimizing all of the things that you say you care about, and we're willing to re-engineer this whole thing and do it, quote unquote, "the right way." So why don't you just do that, Max?

• 1:10:37Speaker 01

  I think there's something, Ethereum is the first kind of ecosystem that I started to work on. I think it's really important that we get it right. I think there's, there's a lot of things about Solana and the way it's architected that I don't necessarily agree with, that are probably too hard to change at this point. For example, Solana doesn't necessarily come to consensus, because there's some issues with the way that votes can be censored. And these kind of things are like, outside of my power to change, even if I went over there and, you know, Anatoly was like, hey, Max, can you come build these things here? It's like, I'm not a consensus researcher. And so, like, the

• 1:11:19Speaker 01

  amount of re-architecting that would need to happen, in some sense, is like, out of my control. Whereas I think the things that need to happen on Ethereum are more like, where my... Mine sure is and like where I can help. Also, like I said, I'm, I'm working at a company that is trying to build for Ethereum. Like, I think there's plenty of people, smart people, who have this vision on Solana. And so if I go over there, uh, how much leverage am I adding? How much am I adding? They, they, they know these things, right? That I'm saying. I'll just be another person over there saying those things. We need people saying these things here because it's important to say this. There's another thread of, of people who will say,

• 1:12:04Speaker 01

  what I'm saying is basically just advocating for Solana. No, I'm advocating for the good parts of Solana. We're in an open source ecosystem. We take good ideas from everywhere. We put them together to build the best thing. And just because Solana is doing something does not mean it's inherently bad. They make, they have good ideas and they have bad ideas. So we should take the good ideas and incorporate them into our roadmap. Just because Monet is doing something does not mean it's bad. We should take the good ideas from Monet and do them on our ecosystem. And I think that would be the best way to really make Ethereum as good as it can be. That being said, if, if, uh, I, I'm gonna try really hard to make Ethereum as good as possible.

• 1:12:46Speaker 01

  And if like, it turns out that the ETH research community just disagrees with me and I can't get anything done, then maybe the best place for me would be another ecosystem where they're more receptive to new ideas. But as of now, I have faith that, that Ethereum research and Corda community actually considers and is, is very much focused on what is the best thing to do for Ethereum. And so I'm gonna stay as long as I think that's the case. And I, like I said, I absolutely believe that everybody who's working and spending all of their life on Ethereum is not here to, to do anything evil. We're all here working on the same goal, which is to make Ethereum as awesome as possible. And my job is basically to convince those other people

• 1:13:31Speaker 01

  that the things that they think are gonna make Ethereum awesome are not gonna make Ethereum as awesome as the things that I'm advocating they do. Cause again, I, I think. These things are all in the priority queue and we need to reorder them in order of priority and do them all eventually, but there's finite bandwidth in terms of what we can tackle. And so my, my argument is basically, hey, we know we want to do all these things, but the things that you put in, you know, let's do in five hard forks should be in one hard fork and the things you should, said we should do in one hard fork should be in five hard forks. So more of a reorganization of that priority queue.

• 1:14:06Ryan Sean Adams?

  Yeah. Speaking of that priority queue, I, I feel like what you're advocating for in the most like harmonious, like interpretation of what you're advocating for is like a little bit of a swing of the pendulum. And so the Ethereum, it started very much with layer one execution. I mean, that was the thing, right? It's like program, the EVM is like not Bitcoin, but do Bitcoin, except to make everything programmable, right? Turn complete smart contract platform. That was the thing. And then we sort of scaled that to the level that we could. And then the roadmap, the Ethereum roadmap swung the pendulum to, to layer twos. And we said, now that's the thing. There's been a lot of focus and development on layer twos. I don't think anyone can argue at this point in time, 2024, that layer

• 1:14:49Ryan Sean Adams?

  twos haven't hit escape velocity. They certainly have. This wasn't that clear three or four years ago, whether layer twos would actually pick up, but like they have, and in a pretty major way. I think that's been a success story for Ethereum. Now I think what you're advocating for is now we got to shift the pendulum a bit back towards the layer one. And I don't think that's discordant with the overall Ethereum kind of like roadmap at the highest level. Maybe it is with some of the details and what we're discussing, but I remember having like episodes years ago with Justin Drake, where we talked about Ethereum's sci-fi roadmap. And he was talking about concepts of, yeah, let's, let's go let layer twos kind of like innovate and build and they'll build out a ZK EVM and

• 1:15:33Ryan Sean Adams?

  maybe we'll bring back some of that tech to the layer one and build an enshrined like ZK EVM. I mean, that, that was always part of, of the vision from that perspective. It's just, that's not now in sight. We know it's something we want to do. I think you're calling to make that type of thing a bit more. Concrete, but but I would say that there might be some harmony here in that like this has always been the plan. First you swing one way and you're focusing on the layer one, then you go to the layer two and you reach escape velocity there. Then you go back to the layer one. And if you do this and you fully execute this, then you've got like the best of all worlds. What do you think of that? Am I like harmonizing things a bit too much? Or is that, does that resonate with you?

• 1:16:19Speaker 01

  Yeah, let me say, I think the good thing is if we have a bunch of places where people can try things. And we have incentives to build new technology, then the new technology will get built and then we can figure out what to do. About the L1 with that new technology and and maybe, for example, like, hey, OP mainnet is trying out priority priority ordering. So like, maybe that's a really good idea that we should take for the L1. So like having these L2s out there is like potentially a live testnet where real financial activity is happening because that's the one thing that we don't get on our testnets is like MEV. So like it's a it's a chance to dog food these ideas and see if they work and then bring them into the L1.

• 1:17:03Speaker 01

  I think the issue with the harmony is that there's a fundamental resource that we're competing over, which is bandwidth. And we're all using bandwidth and and the ZK rollups are using less of it than the optimistic rollups, but everybody's using bandwidth. And if we want to scale the L1, we're going to need the bandwidth. And so if the if the roadmap, which is what it currently looks like, is to keep increasing the number of blobs. Although I think there's been some pullback on that now that we see that the current amount of blobs that we have isn't being used. But if the if the roadmap is like, let's really lean hard into the L2s. And we use up all of our bandwidth, which again is the most limited resource. Then somebody coming along in two or three hard forks when we have 10 blobs a block.

• 1:17:45Speaker 01

  Is going to have a much harder time advocating for exactly the same things I'm advocating for. We need to do maybe all of these things. But to the some extent, we're all competing on this one scarce resource of bandwidth. And I think that that might be where the tension is, that and the users themselves.

• 1:18:06Ryan Sean Adams?

  Max, one last stone to turn over here is the conversation around Ether, the asset, and its value accrual and the paradigm that you just said. Of course, right now, at this point in time in the market, a lot of ETH holders are like, why are we underperforming? This shouldn't be the case. And like, if you look at the Bitcoin ratio and even the Solana to ETH ratio, it's like, things are not looking good. So what does your narrative and your tweak to the roadmap do for Ether, the asset, and its value accrual? I mean, the layer two story has been like, yeah, sure, we'll trade off some cash flow, right? The capital asset type of take.

• 1:18:48Ryan Sean Adams?

  But in exchange, Ether, the asset, will propagate in all these layer twos, and Ether will be more of a monetary asset. And I think that's true, and I'm hopeful that's true, and that's playing out in some ways, but it may not be enough. What does your narrative and your push in these roadmap changes do for Ether, the asset?

• 1:19:07Speaker 01

  Yeah, I think if Ethereum L1 becomes the place where people transact, then Ethereum becomes valuable because people want to transact on it. And that's the simplest thing. Like, I think everything else, like Ether has money, Ether has a store of value, are much more ephemeral and like harder to justify. And like, just the idea of like, hey, you want to transact on Ethereum, you want to do this, you pay Ethereum. Like, that's Ethereum as oil, as digital oil. That's the simplest and most resonant to me of like, why is Ethereum going to be valuable? Is because we're going to make it useful. And like, one way to make oil valuable is to like, build things that require a bunch of energy,

• 1:19:51Speaker 01

  like, anything that requires a lot of energy, trains, et cetera, basically build.

• 1:19:58Speaker 01

  Infrastructure that needs Ethereum, needs Ethereum as a gas token to work. And so like, the more you do of that, the more valuable the asset would be. There's some argument that L2s are about making Ethereum a monetary phenomenon, basically, because people are going to pay on the L2 for their transactions in Ether. But first of all, it's not clear to me that that's the long-term equilibrium of this situation. There's a lot of discomfort with the performance of the L2 tokens. You want to talk about like, the performance of ETH is bad, but like, talk about the performance of Arbitrum and Optimism as tokens, it's even worse.

• 1:20:42Speaker 01

  And so there's some discomfort there, and it looks like there's some movement to try and increase the performance of those tokens by allowing them to capture MEV or fee revenue, etc. One thing you might do if your L2 token is underperforming is change your L2 to like, allow you to pay for gas with the L2 token. And I think that's a big worry that I have in terms of where do these things like really become their own blockchain, is if they start having, you know, Arbitrum pay for gas or OP token pay for gas. That would be like extremely unaligned behavior, and they might have enough power to do that if we keep shoveling all the users to them.

• 1:21:26Speaker 01

  I think there's, there's probably been some discussions behind closed doors about that at certain rollups, and that's a real, real risk. I also think it's like, hey, it's such a weird argument that we need L2s to pay for data availability in ETH so that ETH is a, like, is money. Well, why don't they just pay for execution on the L1, then ETH is money as well? Like, it's, it's a weird kind of like circle jerky argument of like ETH has money. And I think it's, I'm kind of newer to the ecosystem, but like, ETH as money is not as compelling to me as ETH is useful so that you can do cool things with it, like transact, like swap on Uniswap, like, you know, take a loan

• 1:22:10Speaker 01

  out. ETH as oil is much more compelling to me as an argument.

• 1:22:15Ryan Sean Adams?

  One thing you stumbled upon that I feel like I have to ask you though, if you can make sense of this, because like I currently can't. I call this Samani's paradox, which is like basically people who say layer twos are parasitic, right? And that all of the value from Ethereum is layer one will be siphoned to layer twos are also often the same people that tell me that layer two tokens are like going to zero as well and have no value. And so like one question I have is where does the value go, right? Isn't it either in the layer one token or in the layer two? So let's say layer two is kind of siphon off all the usage and the cash flow, then you would be actually be bullish on layer two tokens, wouldn't you, relative to Ether?

• 1:22:56Speaker 01

  Yeah, I mean, I think there's some, some other issues that they have to get over in terms of the issuance that they've done. And I think part of the reason for the underperformance is basically fundamental issues with how many tokens they gave out and whether people want to hold those things for the long term or not. And there's just like a lot of selling happening. Like if there's more selling than buying, then the token price is going to go down. But one way to fix that is, is to say, hey, actually, we're gonna start driving value to these L2 tokens. And if the people who are building the L2s, who are the ones who decide whether to drive value to the L2 tokens have majority of their net worth in the L2 token, which is underperforming, you don't have to be

• 1:23:40Speaker 01

  a genius to figure out that they're going to do certain things which are not aligned with Ethereum, but are aligned with the L2 token value. And I do think that's a direct place where L2s and L1 are in conflict is over the value of their, their native token.

• 1:23:58David Hoffman?

  Max, this has been great. I've learned quite a lot. There's a bit of a call to arms here. There is a part of the Ethereum roadmap that you think is, deserves more attention, more energy, more minds looking at it. What kind of call to action do you have for listeners that have been motivated by this, or other researchers that are now peaked by this? How can you call for help? What do you want to hear from out of these listeners?

• 1:24:23Speaker 01

  The first thing I would say is, call your senator, and by senator, I mean your core dev, and say, "Hey, we need shorter block times." Especially if you're an app developer, and you're considering moving off of the Ethereum L1 because the block times are so long. Call up, you know, one of your core devs, and tell them that you really need shorter block times in an upcoming hard fork, or you're gonna move off of the L1. So, that's something that I think a lot of app developers feel a little bit helpless because it doesn't feel like they get listened to, but I think they do get listened to, they just don't say very much to the core devs.

• 1:25:06Speaker 01

  So, call your core devs and tell them you need shorter block times. The second thing is, if you're a solo staker, please share that you probably have an internet connection which would be able to support more bandwidth than you have right now. I think a lot of times we like hear this abstract argument about solo stakers, and then the solo stakers in the comments are like, "Actually, I stake on, like, pretty good hardware and I have a pretty good internet connection, and this wouldn't really be an issue for me." So it's sometimes like, I don't know, it reminds me of those issues where like, people are like, "Oh, well..." They'll go into the black community and ask whether people have IDs, and then there'll be like politicians that are saying like,

• 1:25:52Speaker 01

  "Oh, we can't have voter ID laws because people in the African-American community won't be able to vote." And then you go to the community and they're like, "Oh yeah, I have my ID. I wouldn't mind if you had to have an ID to vote." It kind of feels like that kind of dynamic where there's the people who are complaining about the quality of life for solo stakers, and then there's the actual solo stakers who just want ETH to be good and have reasonable hardware because they're tech nerds. And you don't really become a solo staker if you're a starving artist in Brooklyn. You kind of become like a solo staker if you're super into the tech. And you also probably stake 70K of ETH. And so you can probably afford a $2,000 box and a $60 a month internet connection

• 1:26:36Speaker 01

  to participate in consensus if you want to do that. So those are my two call to arms, app developers and solo stakers.

• 1:26:43David Hoffman?

  Max, this has been great. Thanks for joining us today on the podcast.

• 1:26:46Speaker 01

  Thanks for having me. This was a lot of fun.

• 1:26:48David Hoffman?

  Bankless Nation, you guys know the deal. Crypto is risky. Changes to the network are risky. Maybe not having changes to the network is also risky. You can lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we are glad you are with us on the bankless journey. Thanks a lot.