210 - Endgame 2.0: A Guide to Vitalik’s Ethereum Roadmap with Mike & Dom

✨ DEBRIEF | Ryan & David unpacking the episode: https://www.bankless.com/debrief-endgame-vitalik-ethereum-roadmap ------ Welcome to Part 2 of Vitalik’s Endgame, where Vitalik’s nominees and Ethereum Foundation Researchers, Mike Neuder & Domothy walk us through the updated Ethereum Roadmap. This roadmap is composed of 6 urges: - The Merge: Proof of Stake - The Surge: Improve throughput and DA - The Scourge: MEV - The Verge: Running validator anywhere with Verkle Trees - The Purge: Eliminate technical debt - The Splurge Fix everything else We dive into all this and more as we wonder what’s next for Ethereum. ---- 📣SUI | Register for Sui Basecamp https://bankless.cc/sui-basecamp ------ 🎧 Listen On Your Favorite Podcast Player: https://bankless.cc/Podcast ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 💸 CRYPTO TAX CALCULATOR | USE CODE BANK30 https://bankless.cc/CTC —— TIMESTAMPS 00:00 Intro 5:39 Dom & Mike Background 7:56 Dencun Upgrade 11:13 The Ethereum Roadmap 19:56 The Roadmap Ecosystem 23:25 Ethereum Core Values 25:32 The Merge 27:37 Single Slot Finality 31:26 Max Effective Balance 35:40 The Importance of Finality 40:56 Proof of Stake Trade-offs 50:37 The Surge 53:51 Getting to Full Danksharding 58:01 DA Sampling 59:43 DA Self-Healing 1:01:41 The DA Market 1:07:25 Rollup Coordination 1:09:32 The Scourge 1:13:38 Inclusion Lists 1:17:11 Encrypted Mempool 1:22:02 Proposer-Builder Separation 1:32:40 The Verge 1:34:58 Why Run a Node? 1:41:50 Verkle Trees 1:51:31 Snarks 1:55:07 The Purge 2:03:04 The Splurge 2:09:57 What’s Next 2:15:07 The Endgame 2:21:02 What Could Go Wrong? 2:24:43 ETH: The Asset 2:28:56 Time Horizons 2:31:38 Closing Thoughts ------ RESOURCES Mike Neuder https://twitter.com/mikeneuder Domothy https://twitter.com/domothy Endgame with Vitalik Buterin https://www.youtube.com/watch?v=b1m_PTVxD Vitalik’s Endgame Article https://vitalik.eth.limo/general/2021/12/06/endgame.html Blobspace 101 with Dom https://www.youtube.com/watch?v=dFjyUY3e53Q MEV Burn with Dom & Justin Drake https://www.youtube.com/watch?v=nb7x7n8Ga3U ------ 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://www.bankless.com/disclosures

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

• 0:00Speaker 00

  For me, I think the most important feature is censorship resistance. In my mind, being the ecosystem that prioritizes censorship resistance above all else is the most important feature because it's the most differentiated compared to Web 2. In Canada, your property rights, you don't think about them until during the protest, the truckers' bank accounts are turned off. Everything seems fine until it's very not fine. And I think Ethereum prioritizing censorship resistance above all else is the right way forward.

• 0:29Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. What is Ethereum's end game? One of the most important computers humanity has ever made, David and I have argued before, is Ethereum. This is a property rights system for the internet. So what's happening next? What's the roadmap? What is the end game? This is the sequel to an episode that we recorded just over two years ago with Vitalik. It was also entitled "Endgame." And I think this episode represents the most comprehensive overview of Ethereum that's probably ever been recorded. This is the next three to five years of Ethereum's future.

• 1:11Ryan Sean Adams?

  Strap in, this is a long episode, but I think every minute is worth your time.

• 1:16David Hoffman?

  Towards the end of last year, Vitalik tweeted out an updated diagram to the Ethereum roadmap. This diagram Vitalik made a little over two years ago, which was the main motivation for "Endgame," the first episode that we did with him. And it is just this completely comprehensive overview of the six different paths of the Ethereum roadmap, all happening in parallel. It was the main subject of the last episode. And since he updated it, because, you know, two years have progressed, the roadmap diagram has two years of progress in it, he updated it. So I took that tweet, took it to Vitalik and said, "Hey, Vitalik, do you want to update the episode that we did two years ago? Or do you want to elevate some newer researchers inside of the Ethereum Foundation?" And Vitalik was very excited about that.

• 1:57David Hoffman?

  And so he nominated the two guests that you see on the episode today, Dom and Mike. Domathy has been on the podcast before, our MEV burn and blog space episodes. Mike has also been on the podcast before as my co-host for an Eigenlayer resinging episode that we did with Stryram. So both past guests, and they return to walk us through some of the deep parts of the Ethereum roadmap.

• 2:23Ryan Sean Adams?

  Dom and Mike are great. They are the David and Orion of the Ethereum research ecosystem, guys. So strap in, enjoy this episode. We'll get right to it in a minute. But before we do, we want to thank the sponsors that made this episode possible, including the place you can convert your fiat to Ether. That is Kraken, our number one recommended exchange for 2024.

• 2:43David Hoffman?

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• 3:24Ryan Sean Adams?

  Head on over to kraken.com/bankless to see what crypto can be. Not investment advice. Crypto trading involves risk of loss. Cryptocurrency services are provided to US and US territory customers by Payward Ventures EK, PVI doing business as Kraken.

• 3:34David Hoffman?

  Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world, driving real-world use cases like mobile payments and mobile DeFi. And with Opera MiniPay as one of the fastest-growing Web3 wallets, Cello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now, Cello is looking to come home to Ethereum as a Layer 2. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the Cello Layer 2 to build upon their stacks. Why the competition? The Cello Layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability secured by Ethereum validators, and one-block finality. What does that all mean for you? With Cello Layer 2, gas fees will stay low, and you can even pay for gas natively using ERC20 tokens,

• 4:18David Hoffman?

  sending crypto to phone numbers across wallets using social connect. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forums. Follow Cello on Twitter and visit cello.org to shape the future. Ethereum. Are you launching a token? Is it already live? How are you managing the legal and tax obligations for providing token grants to your team? It's no secret that token management gets complicated. Between learning all the legal language and tax obligations in every country that your team is in, token grant management can feel like an obstacle course. But it doesn't have to. That's where Toku steps in. Toku provides practical tools to handle token grants, allowing for effective oversight of token distributions and payroll tax compliance for employees, contractors, advisors, and investors.

• 5:01David Hoffman?

  They also handle tax withholdings through their real-time tax calculations that can be done by Toku or integrated into any payroll EOR providers in any jurisdiction. Toku is a trusted provider of Protocol Labs, DYDX Foundation, Mina Protocol, and many more. Get started for free and make token compensation simple at toku.com/bankless. Bankless Nation, I'm super excited to introduce you to both Mike and Dom, researchers at the Ethereum Foundation. Both Mike and Dom are working on various parts of the Ethereum roadmap. Both are previous Bankless podcast guests and both are overall great guys that we are excited to have on the show here today. Mike, Dom, welcome to Bankless.

• 5:38Speaker 00

  Thanks for having us.

• 5:38Speaker 03

  Thanks for having me.

• 5:39David Hoffman?

  So Dom, we'll start with you. Where, what on the Ethereum roadmap have you been focusing on? Mike is about to answer the same question. The roadmap's very, very robust. So Dom, just like introduce your area of focus as it relates to the Ethereum roadmap.

• 5:54Speaker 03

  I've been all over the roadmap in terms of educational content, mostly the surge with the upcoming EAP 4844. Otherwise, I've participated a little bit in the concept of MEV burn, like introducing the concept and working toward that with Justin.

• 6:10David Hoffman?

  Beautiful. And Mike, same question to you. Where along the roadmap are you focused on?

• 6:15Speaker 00

  Yeah, I'm a little bit all over the place too. So mainly have been working in the MEV space, which is called the scourge in Vitalik's roadmap. And yeah, just want to kind of thank you guys again for having us on the show. Big time listener to the show. And I actually have the Vitalik roadmap as my phone background. So.

• 6:32David Hoffman?

  It's been that background as long as I can remember.

• 6:36Speaker 00

  Yeah, it's been that for like probably two years now. So to be hosting the, or to be like the guest on the show for this episode is really a treat.

• 6:43David Hoffman?

  So actually, part of the story for how this episode came together is it's been a year since our original episode with Vitalik covering over the same thing. Some updates to the Ethereum roadmap have happened and Vitalik's actually nominated you two to take the reins over the guides of the Ethereum roadmap. So it's a very large responsibility, also very high honor.

• 7:05Speaker 00

  Well, maybe there was just no one else available.

• 7:10Ryan Sean Adams?

  I was gonna ask Mike if, if having the roadmap is your background, if like that is kind of haunting for you. Is that inspiring to you? Or is that a little bit of like pressure at all times?

• 7:21Speaker 00

  I think it's been it for so long that I don't think about it actively anymore. You know, like once, once you see the image enough, but it definitely is nice to be able to like, if you're in a conversation with someone, be like, hey, this is on the roadmap. Like, check it out. Like, we're thinking about this.

• 7:34Ryan Sean Adams?

  When they ask you, why aren't the devs doing something? You just show them the background of your phone.

• 7:39Speaker 00

  Yeah, exactly. Woke up feeling bullish.

• 7:41Ryan Sean Adams?

  Dom, how about you? Do you have this printed in real life somewhere?

• 7:45Speaker 03

  I just printed it for this episode, but I got it bookmarked and I locate it all the time. I refer to it.

• 7:51Ryan Sean Adams?

  I'm looking forward to the tattoo that you guys can sequentially like update over time.

• 7:56David Hoffman?

  Okay, guys, Dencun is upon us. When this episode goes live, it'll be about the week before Dencun. So this is the very near term upgrade to the Ethereum Layer One Protocol. It has some, some updates that are related to much many parts of the roadmap, some prerequisites for future upgrades. Let's start there. We're going to get into the famous urges, which is this diagram that Vitalik put together that now is the one that we're talking about on Mike's, Mike's phone here. We're going to get into that one right after this, but first, since the Dencun upgrade is so close, let's talk about that. What are the most significant EIPs, Ethereum Improvement Proposals, that are inside of Dencun? And how will it change Ethereum? Mike, I'll throw this one to you.

• 8:38Speaker 00

  Yeah, sure. I guess probably makes sense to highlight two of the EIPs that are in this fork, because those two are kind of the most visible in terms of how they how they change the network. So the kind of main star of the show is EIP 4844. This is a big part of the the sharding, the data sharding roadmap for scaling Ethereum in terms of throughput of data.

• 9:01Speaker 00

  This has been in the works for a long time. And yeah, we've kind of successfully hard forked three test nets up to this point. And blobs, which are these new data, data objects that flow through the network, are are going on each of those test nets. And so there's high confidence that we're ready to do it on mainnet. I think the date was set yesterday for May, or sorry, for March 13. So yeah, that's it's very exciting, very, very timely to record this.

• 9:30David Hoffman?

  Yeah, and I will say that with the content of that, this topic 4844, Blob Transactions, Blob Space is a podcast in of itself, which we've done with Dom a number of months ago. So if you want to like dive down into that part of the roadmap, there is a previous Bankless podcast, it'll be linked in the show notes for people to understand Blob Space. It's a very big deal. But that's not the only thing that's in Dencun. There's also EIP 4788. Well, what is that? What does that do?

• 9:58Speaker 03

  It's basically adding the beacon route inside the EVM. So in Lehman's term, it's having the the EVM be aware of what's going on on the consensus layer on the beacon chain. And the main benefit for that is relying less on trust and more having trustless protocols for proving stuff against the beacon chain. So you can imagine like something like Lido or Rocketpool today, they have to have oracles that tells the EVM what's going on with their staking balances and stuff like that. But after this EIP is rolled out, you can have the contract be guaranteed to have it right about the balances and such. So you don't have to rely on trusted oracles as much. That would be the main benefit.

• 10:41Speaker 00

  Yeah, another another protocol that really benefits from this is anything that has to do with restaking. So Eigenlayer kind of depends Tends on some information about the consensus layer, right? Like you have stake there, you need to know if people got slashed. You need to know if that stake is being withdrawn. All of these kind of data points are stored in the beacon chain side of things, which is the consensus layer. And accessing that data from the execution layer is important for Eigenlayer in particular. So that is all fully enabled trustlessly with 4788.

• 11:14Ryan Sean Adams?

  So guys, that is March 13th. So that is coming right up. That is the next Ethereum upgrade. We call it the hard fork. And there are some hard forks that are being scheduled after that. But of course, it takes a while to kind of formulate all of the various features that those things will ship. But now let's go to the meat of the conversation, which I think today is an opportunity for us to zoom out and see where we are in the roadmap of Ethereum, the end game of Ethereum, if you will. So we've recorded an episode just over two years ago. This came out in January 2022 with Vitalik Buterin. It was called Endgame. And for the first time, this was on the back of him

• 11:59Ryan Sean Adams?

  for the first time, putting together the diagram, the diagram we were just talking about that Dom, you have printed out and Mike, you have as the background of your phone. And this is the very first time, and if you're watching this in video form, you'll see it on the screen right now. This, at least for me, I think for many in the Ethereum community, was the first time we saw it sort of organized and stacked in terms of Ethereum's roadmap for a long term future. And this is essentially the end game of Ethereum. Multi hard fork, multi year. I don't know, maybe multi decade. I'm not sure how long this will all take to play out, but we've made some progress on the last two years. And this roadmap has adapted and evolved.

• 12:43Ryan Sean Adams?

  And at the time when Vitalik kind of like put it out there, he gave each category of features a name. And these are what has become known, I think, as the six urges. All right, so if you hear us talking about urges, that's what we're talking about. Talking about the these horizontal swim lanes of Ethereum functionality that are all grouped and accomplish some purpose. So I think we're going to go through this episode and talk through each of the six urges, maybe one by one, and have this be the sequel from our end game episode that we recorded over two years ago. But in order to set up the context for this, I think, Mike and Dom, you guys have to explain the high level urges,

• 13:26Ryan Sean Adams?

  because each of them are named differently. They all end in urge and they have a specific theme. Mike, could you kind of take us through the at the highest level? What what is kind of the central goal for each of the urges? Like, take us through those one by one?

• 13:41Speaker 00

  Yeah, for sure. I think I'll do the first three and then pass the second three off to Dom. So for the merge, I guess I like to think of it as the kind of continuation of proof of stake evolution for Ethereum. So the merge itself happened in September of 2022. So this is kind of like a year and a half ago. But that doesn't mean that like the proof of stake mechanism that we use is in its final form. So figuring out how to make it most robust and most like long term and stable is the key goal of the topics in the merge. The surge is all about DA and Dom is a super deep expert in this too. So when we go deeper in, he'll definitely be invaluable.

• 14:25Speaker 00

  But the idea here is that Ethereum should provide DA that the the kind of roll up centric roadmap depends on, right? As roll ups scale Ethereum, that's a huge part of of the vision for for how we get transactions way cheaper, how it's accessible to many more people. And roll ups depend heavily on this data. And scaling Ethereum in terms of scaling the data itself is is kind of a key piece of the puzzle.

• 14:50Ryan Sean Adams?

  So Mike, just just to recap so far, we've got the merge, which is really focused on kind of like consensus and consensus activity needs to happen post merge, right? Wasn't didn't just end at the merge. And then we also have the surge, which you said is DA. And that stands for data availability, right? Which is the the second layer of the Ethereum stack. If consensus and settlement is kind of the innermost layer, what we're talking about in the surge is data availability. And that is important as well. Yes?

• 15:16Speaker 00

  Yeah, absolutely. Yep. And then the the third lane is called the scourge. And the the kind of new idea here is is how do we deal with the long term implications? And the long term reality of MEV, right? So MEV is this this hot topic that we've been addressing over the past year and year and a half, and figuring out how to avoid kind of the negative externalities associated with super sophisticated actors extracting as much as they can from ordering transactions in the Ethereum protocol. That's the scourge. And I think it's called the scourge because I think it's easy to view these MEV actors as kind of bad guys, like trying to steal from regular users who are just interacting with the chain.

• 16:01Speaker 00

  I don't I don't know if that like, I think it's more of a mnemonic thing that like, it's one of the urges. But yeah, I think the scourge is because it kind of came out of nowhere and is impacting the protocol in a really meaningful way. And we're trying to kind of defeat that that boss, I guess.

• 16:15Ryan Sean Adams?

  And we should say the surge, the one you were talking about right before the scourge, right? The reason it's called the surge, I would imagine, Mike, is because we're surging our ability to support bandwidth, trustless bandwidth, like transactions per second. Is that is that the genesis here?

• 16:31Speaker 00

  Yeah, yeah, I think so. Again, I think this is mostly a mnemonic. I like to think of it as just like the data, the data scaling of Ethereum and surge, like surging forward of of data into the into the block space.

• 16:44Ryan Sean Adams?

  All right, so we've got the merge, we've got the surge, we've got the scourge. Take us to the high level for the last three swim lanes here, Dom.

• 16:53Speaker 03

  So first, we got the verge, which the main thing is vertical trees, but also the the unifying theme is that verifying blocks should be easy, even though we got sophisticated actors due to MEV, which we've kind of accepted as being an unavoidable reality of the end game. So we make it very easy to verify blocks with things like vertical trees and leveraging zero knowledge text like STARKS and SNARKS. And basically, the whole point of the verge is we have super light clients that are as trustless as full nodes are today and very easy to run, either on your phones or, as Justin said on a previous bankless podcast, you can verify the whole chain on your smartwatch

• 17:36Speaker 03

  once we have all these zero knowledge magic into the blockchain.

• 17:40Ryan Sean Adams?

  So verge for a vertical tree?

• 17:42Speaker 03

  Yeah, basically, the main item is vertical trees. I think verge came from from that.

• 17:48David Hoffman?

  Okay, so the next one, Dom, what comes up to this?

• 17:50Speaker 03

  The purge after that is to simplify the protocol as much as possible by eliminating technical debt mainly via history expiry, so that the clients can be much more simpler and easy to code and understand by not having all the technical debt from previous hard forks. Once we have like fast syncing and stuff like that, we'll come into more technical details later on. And the last item is the splurge, which is just miscellaneous. Everything that's like good to have, but doesn't really fit in any of the other urges go in there. So like tweaking EIP 1559 so that it's a better algorithm for pricing the layer one

• 18:32Speaker 03

  EVM and stuff like account abstractions and all the other deep cryptography stuff that we have that we are currently researching, but not ready to implement that's going to go in there as well.

• 18:44David Hoffman?

  When I look at this graphic at a high level and just look at all the urges, I actually kind of see the first four as adding new features, adding properties, adding capabilities. And then the fifth, which is the purge, is actually removing technical debt, removing things, cleaning cleaning up the fridge. And then the the last one, the sixth, is kind of like a miscellaneous category. Is that a fair categorization of everything?

• 19:09Speaker 03

  Yes.

• 19:10David Hoffman?

  And then one thing I think is actually worth pointing out about all of these swim lanes that Ryan's called them is that they are all happening in parallel. I think intuitively as people are looking at this diagram, they are thinking, okay, first merge, then surge, then scourge. And it's more like all of these things are more or less happening in parallel. Like actually in the splurge, the very last one, the miscellaneous is EIP 1559, which happened, you know, centuries ago. And so like all of these things are happening in tandem in parallel. These are all progressing forward, both in both with relationships with others. There are some cross threading going on, but mainly independently, they are all progressing forward.

• 19:49Speaker 00

  We should ask Vitalik to make the next one in a different order.

• 19:52David Hoffman?

  Just cuz.

• 19:54Speaker 00

  Just to keep everyone on their toes.

• 19:57Ryan Sean Adams?

  Another thought I have as we get into this and sort of explain the urges too is this is not basically the EF doing all of the development here, right? I mean, so what we're talking about, this roadmap is the entire ecosystem of Ethereum core developers, client implementers, even like rollups and layer twos are getting involved. Can you just go over like broad strokes? Who are the participants actually doing the work on all of the urges and making Ethereum happen? Because just the EF is just a kind of a tiny fraction of those, almost like the coordinator of all of this activity. The activity happens well beyond the bounds of the EF. I would call

• 20:38Ryan Sean Adams?

  that the entire ecosystem is bringing this roadmap to life here. So how would you describe who's working on these urges?

• 20:47Speaker 00

  Yeah, that's a really good point, Ryan, and I'm really happy you brought it up because I think one of the most unique things about Ethereum is just like how decentralized both the roadmap work and kind of governance over the whole process is, you know, like there's this all core devs call that's led by Tim and Danny. These are members of the EF, but you know, all these core devs are contributing on different EIPs and like they're the ones actually building the software. They're kind of in the weeds, in the technical details. So like, so we can talk about it, you know what I mean? So like, there's so much value being created and added by like people across the ecosystem that that's so much a team sport. And I think just the scope of the roadmap shows you that like no single team could could do that all on its own, you know, like this, we're building something

• 21:32Speaker 00

  that is like much bigger than than what a single team could could ship quickly. So.

• 21:37Ryan Sean Adams?

  It's kind of weird and cool. Like, anybody can get involved too, right? It's just being built out in the open, like in kind of a completely permissionless way. So like, the destination is somewhat known, but it's not entirely clear how we get there. And everyone kind of like brings their part to the table. I mean, I don't know that I've, I guess, to be fair, I haven't been involved in other large open source communities. Like, I haven't, you know, seen the genesis of Linux as a project, kind of like being born and birthed into existence. Existence, but this is just not how commercial software development works like a company like Facebook does not build software out in the open to this extent. I don't know if you've ever seen anything

• 22:19Ryan Sean Adams?

  like this, or you just now you kind of like take it for granted, or this is kind of like the way Ethereum is built. And that's like a lot of the experience here. But does this strike you as weird, odd, cool in any way?

• 22:32Speaker 03

  It's beautiful.

• 22:35Ryan Sean Adams?

  What makes it beautiful, Dom?

• 22:37Speaker 03

  Just everyone just kind of shows up and works on what they want. And the pivot to the modular blockchain is very interesting because then we have like these little parts that are connected loosely, but all come together to make it like a beautiful blockchain ecosystem in all these various aspects. And you can see all the developers on the all core dev calls that all argue with each other about priorities and what should be done and like how it benefits one team and stuff like that.

• 23:06Ryan Sean Adams?

  There's almost like something quasi organic about it, right? It almost feels like sort of a life form in a weird way. I mean, like, we don't have to get too, too, too deep on this metaphor in the episode, but just the way it's growing is incredibly cool. And yeah, beautiful is a great word for it, Dom. I, I want to ask another question about this before we get into the individual urges in this. What's the actual point? Like, so I think I'm trying to recall the episode. I haven't listened to Vitalik's Endgame episode in a while, but there are some core values as to the why we are accomplishing all of these different urges. And I'm wondering how you would articulate those core values. Is it about decentralization?

• 23:51Ryan Sean Adams?

  Is it about censorship resistance? Like, what are all of these urges actually working towards in the, in, in kind of like the fullness of this roadmap?

• 24:01Speaker 00

  Yeah, I mean, it's, it's a good question. And I think after we go through the urges, we'll kind of take another step back and, and hopefully like summarize clearly what the, what the long-term vision of the, of the Ethereum ecosystem is from, from our perspective. But yeah, for me, I think the most important, the most important feature is censorship resistance, right? Like, in my mind, Being the ecosystem that prioritizes censorship resistance above all else is the most important feature because it's the most differentiated compared to Web 2, right? Like, anything that's centralized is, like, by definition gate-kept by some controlling entity. And I actually think of censorship resistance as almost like this black swan

• 24:42Speaker 00

  thing, right? Like, it doesn't matter, and to kind of just paraphrase that, it's like, censorship resistance isn't important until it's the most important thing, right? So, you know, in Canada, your property rights are, like, kind of, you don't think about them until during the protest, the truckers' bank accounts are turned off. You know, it's like, everything seems fine until it's very not fine. And I think Ethereum prioritizing censorship resistance above all else is the right way forward.

• 25:13David Hoffman?

  Ethereum has always taken the longest-term time horizons, to its advantage, to its benefit, to its detriment as well. Sometimes that leaves room for other people to cut corners and move faster. But this has always been something that's attracted me to Ethereum, is thinking about things at their logical conclusion and working backwards from there. Let's dive into the first urge, the merge. And the merge itself, the event, is actually in the rearview mirror. And so this thing is starting to, like, wrap up, for the most part, still some things to check off the box. Just to reiterate, the merge is all about very robust proof-of-state consensus while preserving the abilities of solo staking

• 25:53David Hoffman?

  by all means. But Mike, maybe you can kind of update us on where we are in the merge? How much complete are we? And what are the boxes left to check in the merge? How do we get this thing to 100% completion?

• 26:06Speaker 00

  Yeah. So, I think the first thing to highlight is this idea of finality, right? So, the way that the current Ethereum consensus layer works is there's kind of this two-phase process by which blocks are produced, and then they're finalized by this other thing, which we call a finality gadget. And, you know, the reason for this is kind of historical, so I won't get into the details, but... The idea here of the fact that a block can be produced but not finalized kind of is a weird intermediate state that is kind of non-ideal. So the end game in terms of a proof of stake system is this thing called single slot finality,

• 26:48Speaker 00

  which means that instead of the blocks being in this weird kind of produced but unfinished state, the minute they're produced, they get finalized in the base case. And this is especially important because, you know, settlement assurances are what the blockchain is trying to provide. And when a block is produced but not finalized, there's a chance that it could end up not in the chain, right? So your transaction could be on the chain. And then what we call a reorg could happen, meaning that block gets removed from the canonical chain. And suddenly that settlement assurance that was provided by the blockchain for that transaction is like no longer there. So yeah, single slot finality is like the key end game goal here.

• 27:29Speaker 00

  And that's a big part of what all of these kind of sub projects within the merge are contributing to.

• 27:37David Hoffman?

  Famously, there was this non-finality event not terribly long ago, three, four months ago, maybe longer, six months ago. And this happened because we don't have single slot finality, correct? Can you explain a little bit more of like the mechanism of how single slot finality actually works?

• 27:55Speaker 00

  Yeah, sure. So the kind of notion of finality that we use today is this idea that a block will be considered finalized if more than two thirds of the stake in the consensus layer votes for that block to be on the chain. Right? The reason why blocks take a long time to get finalized right now is because we have this kind of second time horizon, which is called epochs. There's 32 slots in an epoch. And the

• 28:26David Hoffman?

  A slot is a block?

• 28:28Speaker 00

  A slot is the opportunity for a block.

• 28:30David Hoffman?

  Opportunity for a block. Okay. And is usually filled by a block. Sometimes people miss their block proposal and so a block doesn't go there, but there could have been.

• 28:40Speaker 00

  Exactly. Yep. And so the way it's divided up now is you take all of the stake and all of the validators, and you split them evenly over the 32 slots. So like as a solo staker, I only am sending a vote once per epoch rather than once per slot. So that means it takes all 32 of these epochs to collect enough stake up to getting to that 2/3 threshold for us to be able to call a block finalized. So that's kind of this two-phase thing, and that's why it's not instant finality in the way that other blockchains might claim that.

• 29:14David Hoffman?

  How does this impact like just the topology of the network? Maybe not topology, but is there increased messaging, increased bandwidth usage? Why can't we have this right now? What is the constraint? Or is it just more of just like an engineering thing?

• 29:29Speaker 00

  Yeah, super good question, because this leads directly into the next point here, which is this whole max effective balance thing. And max effective balance, it's a very technical topic. So I don't think it's too important to get into the weeds. But the key detail here is that it results in there being a very large number of validators in the network. So right now, we're at 925,000 validators in the network. Each of those validators has 32 ETH staked. But the reason there's so many is because that 32 ETH is the hard cap for each validator to have.

• 30:03David Hoffman?

  You cannot have more than 32 ETH inside of a validator. You also can't have less. You have 32.

• 30:10Speaker 00

  Yeah, exactly. And what this results in is basically Coinbase, who runs like 15% of the Ethereum network by, in terms of like ETH-denominated units, they also have to run like 100,000-plus validators, even though those validators are all kind of controlled by a single entity.

• 30:26David Hoffman?

  And many of them are likely of single computer, right? So like, I don't want people to think that there's different computers. There's 32,000 like computers all over the world. There's probably just a small handful of computers that are running many, many instances of validators, correct?

• 30:40Speaker 00

  Yeah, exactly. So kind of the, the reason why we can't just do single slot finality today is because 900,000 validators have to, would have to cast a vote during each slot. So instead of throughout the course of the epoch, you'd have to do that within one slot. Right now that's a 12 second time window. And verifying those signatures just is not possible in that time, in that 12 seconds, right? Like you have to kind of go through, do the cryptography, check that they, they voted for this block and check that that signature is valid. And that whole process is not possible, given the current size of the validator set, which is why we can't just do single slot finality as is today.

• 31:20Speaker 00

  Cause we already have the algorithm we want to, to implement. It's just the, the number of validators that's the limiting factor.

• 31:26David Hoffman?

  Okay. And this is because there's just too many messages going around because too many validators exist, even when it's many, many validators exist all on the same computer. How does max effective balance change this?

• 31:37Speaker 00

  Right. So max effective balance allows validators to consolidate onto fewer kind of entities from the perspective of the consensus layer. Right? So like, as you were describing before, Coinbase might be running, let's, let's just use 10,000 for an easy round number. They could be running 10,000 validators on a single computer. So this is kind of 320,000 ether of stake, all controlled by a single computer. That could be represented in theory by like a single validator with a single signature. So instead of having 10,000 signatures to verify, if, if the effective balance of that validator could be 320,000 ETH, then that could be represented by a single signature that has a lot more weight than each of those 10,000 individual signatures.

• 32:22Speaker 00

  Right? So the idea here is to, um, instead of every signature having the same weight and you have multiple, multiple signatures for a heavy validator, or for someone who has a lot of stake, you have a single signature that, that is kind of backed up by a lot more ETH. And that signature kind of carries more weight as a result of this change in the effective balance.

• 32:42David Hoffman?

  So this upgrade is called max effective balance. The max balance is talking about that 32 number. We can increase the max effective balance of a validator from 32 to a higher upper bound. What is that upper bound? Or does it propose upper bound?

• 32:57Speaker 00

  Right now, we have it set to 2048 ETH, just because we like powers of 2 and because it's kind of a intuitively fine number. But yeah, there's kind of no, there's no real reason you couldn't take it much higher than that.

• 33:09David Hoffman?

  Okay.

• 33:10Ryan Sean Adams?

  But Mike, is this, this is not a centralizing force because there are already, like if you're a Coinbase or something, you're already running all of your validator instances on the same machine anyway, and you still are essentially like one entity here. Am I missing something? Or does this have some kind of like downside with respect to a disadvantage to, for solo stakers relative to the larger whale stakers?

• 33:37Speaker 00

  Nope, it doesn't change anything. Yeah, it's, and that's kind of the beauty of it. One, one important thing to note here is that the minimum effect, like the minimum balance to become a validator would still be 32 ETH. So right now, the minimum and the maximum are both the same. All we're doing is change, is keeping the minimum at 32 and making the maximum much higher. So there's, it's really an accounting detail and like, we don't even have to spend too much more time on it now because it's frankly like quite, quite simple when you actually like think about, oh, validators should be able to have different amounts of stake in, from the view of the consensus layer. Like that's the

• 34:11Ryan Sean Adams?

  So long as that amount is greater than 32.

• 34:13Speaker 00

  Exactly.

• 34:14David Hoffman?

  Right. And it's just like a very intuitive thing. This is kind of how you would think in protocol like Ethereum would operate. Like, why do we have to have 32? Why do we have to have a rigid number at all? One, one thing I want to add, just like before we move on from max effective balance is there's actually a marginal improvement to the quality of life for solo stakers, because solo stakers can compound their interest at a faster rate, where previously they would have to stake enough in order to accrue another set of 32 ETH. But with max effective balance, solo stakers can actually compound their yields and remain competitive with larger institutions like Coinbase, because they can compound their ETH and then re-stake their ETH rewards faster, rather than having to wait for 32 ETH. And

• 34:56David Hoffman?

  so this is a marginal improvement to the compounding interest rates of solo stakers. Mike, this is all correct? And is there anything you want to add to that?

• 35:04Speaker 00

  Yeah, I guess the only thing to add here is that beyond just auto compounding, it also allows solo stakers to stake kind of at a more granular level, right? So let's say I'm a solo staker and I have 40 ETH instead of 64. Like, under today's constraints, the only thing I can do is stake 32 of it, and then I have 8 ETH that I have to figure out something else to do with. Like, maybe I swap it for steeth, maybe I deploy it to a rocket pool, mini pool. But in the future, with a different max effective balance, I could just have a 40 ETH validator, right? So that just gives me like more flexibility over the amount that I'm staking, and that's an important solo staking feature.

• 35:40David Hoffman?

  Okay, so max effective balance is a prerequisite towards achieving single slot finality. Can we actually just zoom all the way back out and talk about like, why is finality important and why is having more of it faster, better? Why do we care so much about finality?

• 35:56Speaker 00

  Yeah, so finality is what I like to call a confirmation rule, right? So it's a way of thinking about how strong the assurances are that a transaction will be immutable and like remain on the chain. So if you think about, you know, me sending you, let's say, 100 ETH transaction, before you accept that transaction is valid, you're going to want there to be economic security backing up that transaction that's greater than 100 ETH, right? Because if it's less than 100 ETH, then someone might be incentivized to, like, I could try and roll back the chain so that the 100 ETH I sent you kind of no longer exists from the point of view of the blockchain.

• 36:40Speaker 00

  So finality is just this term we use to describe the total amount of economic security behind a transaction or behind a whole block. And the kind of shorthand it's for is for 2/3 of the total Ethereum stake. So that's why, and so getting it faster just means I have better settlement assurances at a faster rate that my transaction is going to stay in that blockchain forever, and the history is like set in stone. Because you could kind of think as there's like, there's all these blocks being built on top of the one that Contains my transaction, the more blocks I have on top of it, the more I can be sure that the economic security is just like bulletproof, rock solid, and you can accept that transaction as part of the history.

• 37:24David Hoffman?

  Okay, we've talked about a settlement insurance a number of times throughout Bankless history, super important concept in the context of property rights, which is one of the main core things that we have invented in this whole entire crypto space. A single slot finality just means that Ethereum is placing all of its economic security that it can, that it ever will, in a single slot, AKA a single block. So it's all of Ethereum's economic security coming in inside of one block or one slot. And so it's just like, it's like, kind of think of it like the full faith and credit of the Ethereum system, the Ethereum protocol, is putting its weight behind that one block, the assurances that your transaction is final.

• 38:02Ryan Sean Adams?

  That one block every, how many minutes again?

• 38:05David Hoffman?

  Second.

• 38:05Ryan Sean Adams?

  Remind me? Seconds?

• 38:07Speaker 00

  There's one block every 12 seconds.

• 38:08David Hoffman?

  Okay.

• 38:09Ryan Sean Adams?

  So every 12 seconds, we get that level of

• 38:12David Hoffman?

  The maximum level of Ethereum security.

• 38:14Speaker 00

  If we had single slot finality with 12 second slot times, then we would get 2/3 of the total stake backing up the economic security of that transaction.

• 38:24Ryan Sean Adams?

  That's a lot. That's in contrast to say like a proof of work type network. If you've ever transferred Bitcoin, like to say, like to something like an exchange, like a Kraken or Coinbase, right? Then there's a kind of like a deterministic finality, like they have to wait until a certain amount of proof of work, blocks are, it's never actually finalized, right? It's just like

• 38:47David Hoffman?

  There are 2 to 3 block rollbacks on Bitcoin at a semi-regular occurrence.

• 38:53Ryan Sean Adams?

  Right, right. And so, like, if you look at, inside of, you know, an exchange, you have to wait some number of minutes usually, depending on the chain, sometimes hours. You ever try to move like Ethereum Classic or something?

• 39:06David Hoffman?

  I don't know. They just, well, they just, many exchanges have delisted Ethereum Classic because it was 51% attacked too many times, so there is no finality on Ethereum Classic.

• 39:16Ryan Sean Adams?

  Yeah, yeah, yeah. And so that's, that's in the proof of work world where that finality, it never becomes final, but you get like kind of more

• 39:24David Hoffman?

  More and more economic weight for those settlement assurances. But in Ethereum, we get it in seconds inside of an entire block. The full weight of that two thirds happens in that block.

• 39:35Speaker 00

  Once we get single slot finality. Right now, that full weight is spread out over 32 slots. And that's why it takes a longer time. Like, it might take six minutes approximately for a transaction to get finalized in the current version of it. And that's why single slot finality is like a huge level up in terms of settlement assurances.

• 39:53David Hoffman?

  This just has second order effects, downstream effects upon Ethereum's layer two ecosystem. Because what are layer twos doing? They are settling on Ethereum now where they have single slot settlement. What are the positive second order effects that this creates for the layer two ecosystem? Dom, you want to take this one?

• 40:10Speaker 03

  Yeah, so from the perspective of layer one, you can kind of view a layer two transaction as being like a big batch of a lot of many, many layer two transactions onto a single layer one transaction. So that can quickly become a very high value transaction. So like to take Mike's example of 100 ETH, you could have rollups just settling like 1,000 ETH of value. So you don't want that to be reorg. Because in order to mess with layer two, you need to mess with layer one first. And if you have these, a lot of high value transactions going on to layer one, you want them to have like settlement assurance as fast as possible, which is going to be a great experience for rollups to have on top of today's assurances

• 40:52Speaker 03

  with the softer confirmation rules before finalization.

• 40:56David Hoffman?

  And this is the last two bits. Max effective balance leads to single slot finality. And then merge is, for the most part, wrapped? Is that correct?

• 41:05Speaker 00

  So I guess one other thing that's, that's kind of worth tying in is this, this kind of crypto economic view of what proof of stake is, right? And importantly, it's very critical that we evaluate the amount of stake that we want and the level of economic security that Ethereum has, right? So there's this idea that There's some amount of the current Ethereum supply will go to the security budget of the network. And the payment here is in terms of issuance, right? So the Ethereum protocol creates new ETH based on the amount of total ETH staked, and it distributes that to the people who are staking in the network. Now, the current version of the issuance is essentially,

• 41:50Speaker 00

  it scales like 1 over square root. So it kind of decreases, but it never goes to zero. And so what that means is actually, we don't have a very opinionated view on how much of the Ethereum supply should be staked. Because even if you're at like, let's say, right now, just for context, we're at 25% of Ethereum supply staked.

• 42:10Ryan Sean Adams?

  We just hit that for the first time.

• 42:11Speaker 00

  Just hit it. Yeah. Yeah. This is like as of two days ago or something. And let's say we're all the way up at like 98% of Ethereum supply staked. Even then, in that like very, very extreme example, a new validator still has positive rewards for joining the staking set. Because this thing never goes to zero, it never goes negative. Like 100% of the Ethereum supply could be staked. And this is potentially an issue. There's like many downstream effects of having all of the ether in existence locked into the beacon chain. This is a super hot, active area of research from Anders, Casper, Onsgar, Barnabé, lots of people. And also,

• 42:54Speaker 00

  outside of the EF, there's, there's people at Lido and all of the different staking pools that are thinking a lot about this. So it's a super active area of research. But I'll just say that the issuance curve and thinking about the total amount of the ether supply that we want staked is also part of this end game proof of stake that we're building towards.

• 43:13Ryan Sean Adams?

  Okay, so can you just like touch on this? Because we're starting to get more upward pressure, I think, for staking. In particular, one thing we've been exploring on Bankless, of course, is this whole restaking phenomenon, right? And using ether as economic value to other applications, like I can layer stacking AVSs and that sort of thing. And so that is putting some more pressure and some more... More like value for stakers to stake their ETH and then reuse that. And we also see other networks, non-ethereal proof of stake networks. They are upwards of like 70% plus in terms of their supply that is already staked. And so there's a lot of question as to like, where does this end? Right? We're at 25%. Do we go to 50%? We go to 70%? We go to 80%?

• 43:58Ryan Sean Adams?

  This is not, we don't have to have an exhaustive conversation today. But Mike, you just alluded to some problems or like downsides. If it gets above, if it gets too high, let's say, and I don't know what that number is. But like, what are the downsides? Why not? Why is 98% of ETH staked bad? Everyone gets more yield? Isn't that, isn't that great?

• 44:17Speaker 00

  Yeah, so there's a new post that's going to be published, I think, today. And it covers all of this in like really great detail. So I'll, I'll refer the interested reader to that. This is from Onsgar and Caspar. I think in my mind, the biggest issue with this 100% ETH staked world is the fact that some of the properties, the moneyness properties of Ether, the asset are diluted in that world. Right? So one of the kind of important things that Ether serves as beyond the consensus layer is its role in DeFi, right? It's collateral. It's, you know, a unit of account that people exchange with. They pay for gas. They might price NFTs in it.

• 44:59Speaker 00

  All of these properties are really important to have kind of this raw ETH component to it that we would want the application layer to still have some amount of raw ETH in it. Additionally, if all of the ETH gets staked, there's a kind of a big centralization concern here, which is that especially if it's all staked through a single liquid staking protocol. And that staking protocol is controlled, let's say, by a DAO that's controlled by a token that has like a very top-heavy distribution. Then you essentially get a version of on-chain governance, right? Where one DAO might control the entire Ethereum consensus layer and might control all of the Ether staked even, you know, and all of the Ether supply in general.

• 45:39Speaker 00

  So that type of situation, I think we just view it as a very centralizing and uncertain world.

• 45:47Ryan Sean Adams?

  I see. So if you had like 90% ETH stake, there's all solo stakers spread, distributed throughout like the world, does like, that's less of an issue. But if then the more likely scenario that staked ETH is being used as kind of like a monetary instrument and starts to accrue a disproportionate percentage of the supply, that it becomes kind of a another centralization vector that is like extra protocol outside of the Ethereum protocol itself. And that is a problem potentially.

• 46:15Speaker 00

  Yeah. And there's, there's kind of another nuance here, which is, okay, let's take the case where, let's say all ETH is solo staked, but 100% of ETH is staked. Right? In this world, everyone is essentially getting diluted at the same rate. So the issuance rewards are essentially zero, right? Everyone's ETH is inflating at 3% and there's no differential between like ETH outside of the protocol and ETH in the protocol, because all of the ETH is in the protocol. Now, in that world, we're actually subject to these kind of variabilities of MEV, because the only real rewards are actually coming from MEV now. All of the other rewards that are coming from the protocol, like this 3% yield or whatever, is kind of fake, because all of the supply is getting diluted at that same rate.

• 46:57Ryan Sean Adams?

  I see. So the tail starts wagging the dog. And when we're talking about, we're just not just talking about MEV, we're also talking about restaking, of course, and all of the yields from restaking. And that starts to become the driving force of like the Ethereum economy, I suppose, not so much the issuance.

• 47:14David Hoffman?

  Maybe you said differently, when 100% of all ETH is staked, the incentives from the, the power of the incentives from inside the protocol approach zero. And then in contrast, the power of the incentives outside of the protocol are become much larger by comparison. And then all of a sudden, the protocol is no longer in control.

• 47:35Speaker 00

  Yeah, exactly. And I mean, this is why, like you guys had the, the kind of panel after Vitalik wrote the post, don't overload Ethereum consensus. I think this is the kind of thing that feels concerning, right? Like restaking is a really exciting opportunity, but it also kind of distorts and could potentially become a driving force in terms of. Why people are staking and like you mentioned, Ryan, there's this kind of recent uptick. And I saw a data point recently that one fourth of inbound validators are using Eigenpods as their withdrawal credential. Right? So that means 25% of inbound stake is restaked stake.

• 48:12Ryan Sean Adams?

  Yeah.

• 48:13Speaker 00

  And so like, it's getting weird.

• 48:15Ryan Sean Adams?

  It's, it's just, I mean, think of like analogs, we've seen the world too big to fail. Right? It's, it's that type of like feeling you don't, you only want to have one dependency. And that should be the Ethereum protocol. It shouldn't be some extra protocol, too big to fail type of entity. And that problem can crop up in a number of ways. All right, we'll put a pin on that. That's a whole subject in and of itself. We'll look for some posts. Kick the can down the road, but I think like some sort of countermeasure for that would be a part of the merge scope. That's essentially what you're saying, Mike.

• 48:47Speaker 00

  Exactly. Yeah. The end game proof of stake should account for these questions and should have a clear answer to them.

• 48:52David Hoffman?

  It sounds like the answer for the sorry, we need to move on to some point because we are still stuck in the merge. But this has been really, really interesting. It sounds like you, the answer that you're, I think you're alluding to, Mike, is actually changing the issuance curve of Ether. Changing the monetary policy of Ether, which is a big deal.

• 49:10Ryan Sean Adams?

  Maybe, or capping, capping, you could do it in all sorts of ways, right?

• 49:14Speaker 00

  Right. I do want to say, I agree that issuance changes should not be taken lightly. But there is a historical precedent for this, which is before the merge, when we were in the proof of work regime, every hard fork changed the issuance, right? And, and these issuance changes were kind of arbitrary. It was like, okay, 50 Ether per block down to 25, like just cut it in half. Like these types of changes are continually something we're like, kind of driving towards figuring out the ideal. And this whole idea of we don't want to overpay for security. We want to have the right amount of Ether backing up the, the proof of stake protocol.

• 49:50Ryan Sean Adams?

  I remember in the early days, we used to call that minimum viable issuance. Minimum necessary issuance.

• 49:55Speaker 00

  It's still called that. It's coming back.

• 49:59David Hoffman?

  Okay, so the hypothesis is that we would actually allow the issuance curve to approach zero more aggressively in order to solve some of these warped incentives. Is this correct?

• 50:11Speaker 00

  You could even imagine it going negative, right? So that obviously is a weird world. This has actually happened in traditional finance, like Japan had a negative real interest rate.

• 50:25Speaker 00

  Yeah, again, I'll defer to this to the post that's going to come out today, but there's a lot of interesting research being done here.

• 50:32David Hoffman?

  All right, guys, just don't tell the Bitcoiners, okay? They can skip this whole section of the episode. All right, let's get into the surge. So we're bringing Dom, putting you in to front and center here. Dom, the surge, the spirit of the surge is for Ethereum to be the best DA layer in terms of security per byte without, of course, without compromising on decentralization. I think we can tag that line without compromising on decentralization to all of the urges. This one, the surge specifically, is just really about throughput and data availability. We talked a little bit about EIP 4844 coming in March. We're all very excited. This unlocks blob space, which we've done an entire episode, like I alluded to. So that would be the rabbit hole here. So Dom, let's just assume that we are in a world where 4844 is integrated into the

• 51:17David Hoffman?

  protocol. It's successful. That whole, the Dencun is shipped and upgraded, and that's the world that we are now in. What are the next steps in the surge after that point?

• 51:26Speaker 03

  The EIP 4844 is basically the baby steps towards opening the floodgates for rollups to have a lot of data throughput to publish on because today is very limited and very expensive in terms of call data, the execution layer. And what 4844 does is add this blob space with three blobs per block. And it sets all the technical groundwork is basically done after 4844. All we need to do is figure out ways to increase the blob count so that rollups just passively have more data, more cheaper data. And that's what we're going to be doing progressively through like 4844, which today is like every node checks every blobs, every blobs. So it has to stay limited for decentralization sake.

• 52:12Speaker 03

  But after we get something like PIRDAS, then we have more scaling, more blobs, but without casting too much requirements on nodes. And that's the stepping stone towards full dank sharding, which is gonna increase the block count dramatically until we have all these nodes verifying data availability for rollups. Which at that point, like you see on the roadmap, there are training wheels for both optimistic and ZK rollups. And once that's gone, then we have basically the end game of the rollup-centric roadmap for Ethereum scalability.

• 52:45David Hoffman?

  Okay, so 4844, everyone's really excited because it introduces blob space. And what you're saying is that that is actually the primitive that is introduced to Ethereum that starts the game. And the game is now that we have blobs, now let's scale the blobs. And so we only have three blobs per block once 4844 is in. And now you're saying like there's another explosion of innovations to bring into Ethereum. Once we just have 4844, the primitive rudimentary Stone Age version of blobs and we want the sci-fi version of blobs. You talked about a number of innovations here in order to get to sci-fi blobs. PIRDAS was one of them. What is that?

• 53:26Speaker 03

  It's more complex than 4844 where it's like checking the data availability is as simple as just did I receive the blob? But PIRDAS is a little bit more complex. It's like in between 4844 and full dank sharding. It's a stepping stone where the nodes just share sampling for full columns of blobs or something like that on a technical level. It's not quite dank sharding, but it's also way better than 4844.

• 53:51David Hoffman?

  So we will get more blob space, more total blob space with PIRDAS.

• 53:54Speaker 03

  Yeah.

• 53:55David Hoffman?

  And PIRDAS is a peer, like peer-to-peer, and then DAS is data availability sampling?

• 54:00Speaker 03

  Yes.

• 54:01Ryan Sean Adams?

  And we get that sooner Dom than full dank sharding, yes? So it's like an interim step. So it's between, so in the beginning of the next hard fork, there was blobs. That is EIP 4844, that's the start. And then we get better blobs and that is PIRDAS. And that happens sooner than the sci-fi blobs that David was talking about, the super blobs of full dank sharding. So there's kind of like three steps here?

• 54:26Speaker 03

  Yes, so it's basically having 3X increase for four years in a row to get us to full Danksharding. That's the plan for scaling the blob space of Ethereum and having super cheap transactions on roll up like 100,000 DPS and beyond.

• 54:41Ryan Sean Adams?

  Wait, wait, 3X increase, four years in a row.

• 54:44Speaker 00

  Yeah, I can jump in here.

• 54:46Ryan Sean Adams?

  How?

• 54:46Speaker 00

  So this is, this is kind of like more of a meme than actually like a guarantee. But I think it's a nice heuristic to kind of aim for as we're thinking about data scaling. And, and the idea here is that 4844 is this first 3X. So we kind of, in, in the year 2023, kind of approximately, it's, it's a little past the end of 2023. But we 3X Ethereum's block space by, by creating these three blobs. PeerDAS is kind of a second 3X.

• 55:14Ryan Sean Adams?

  Second 3X on top of the first 3X, so it's three times three.

• 55:17Speaker 00

  On top of the first 3X, exactly. Because like we expect that as nodes roll out this PeerDAS thing, we can scale up the number of blobs to potentially like many more than 4844. So right now we have three blobs per block. We could potentially do like nine or eight or whatever we choose, approximately 3X times that amount with PeerDAS. Then kind of further improvements to PeerDAS and getting all the way to, to full Danksharding probably would take another two years. Like the uncertainty here is, it's like a little more unclear because this is farther into the future. But there's potentially like another order of magnitude or two more 3Xs on top of what we already did to get to the full Danksharding.

• 55:59Speaker 00

  And, and if that's the end game, then we've kind of, over the course of four years, done a 3X each year on compounding that and getting to like the level of DA that, that is necessary.

• 56:09David Hoffman?

  The message I'm hearing here, just kind of like how Dom introduced it, we have the primitive. Now we are just in the phase of squeezing all the juice out of the primitive, layering on innovations. And full Danksharding doesn't even have an EIP, if I'm remembering correctly. It's just a concept that we are getting towards. We know the destination, we just don't know how, what the path is like to get there. And Mike, you're just saying like, well, in the path to get there, there's like this two to three year period where we probably have a handful of more 3Xs in order to get to that full Danksharding point. Is that a fair way to articulate this?

• 56:42Speaker 00

  Yeah, exactly. And I think it's important to kind of set the expectation that Ethereum is never going to scale in terms of DA as fast as alternative DA layers. And that's an intentional design decision because Ethereum is prioritizing decentralization, right? Like, sure, if you, if you want to make the hardware and bandwidth requirements higher, then like you can get higher DA throughput. But doing this kind of gradual 3X per year approach, more incremental, but still like having a clear vision towards getting the end game scaling that we think is necessary for rollups is like an important, I guess, expectation to set for, for looking forward.

• 57:23Ryan Sean Adams?

  Right, because we should be clear about what the purpose of these blobs are, who the big consumers of these blobs are. This is, BlobSpace is really, really great for rollups.

• 57:37Ryan Sean Adams?

  Yes.

• 57:37Speaker 00

  The B movie.

• 57:41Ryan Sean Adams?

  So, uh, yeah, and I, I wonder how many people listening got that joke, dude. I, I hope a lot of you did. Anyway, um, so this BlobSpace is, is going to be key for getting, uh, transactions cost down, or at least supporting increased throughput for our rollups. That's why we're, we're, we're going through all of these steps.

• 58:00Speaker 00

  Yeah, exactly.

• 58:01David Hoffman?

  There's a couple innovations here that we have in our notes, DA sampling and efficient DA self-healing. What are these things, Dom? What mechanisms do they bring to the table? What do they do for Ethereum?

• 58:13Speaker 03

  So the, the main benefit of the data availability sampling is that each node only samples a very tiny bit of the data, which to confirm that the, the whole entire data is there. So by making a few samples, you can be sure with very, very high guarantees that the, the entire data is there, even though you didn't receive the entire data. So that's the, the magic of the AS that's coming with PIRDAS, but we don't have with 4844. And this is the key that unlocks availability of the data availability to prove that a rollup did publish the data onto layer one to have the same guarantees on layer two as we have on layer one.

• 58:52David Hoffman?

  This is the spiritual successor to sharding. This used to be sharding as a concept. We always knew we were going to shard Ethereum somehow. And this is it. And so, once we have DA sampling in Ethereum, the original 2017, 2018 promise of like, hey, we're going to shard Ethereum. I actually think we get to say that we did that. Is that, is that correct? Is that fair?

• 59:14Speaker 00

  Yes.

• 59:15David Hoffman?

  Love that. Okay.

• 59:15Speaker 00

  And also, it's worth saying here that this kind of sampling technique, this magic kind of cryptography, moon math stuff, is the exact same technology that's underpinning alternative DA solutions. So there's nothing that the alternative DA layers provide that Ethereum doesn't. It's, it's more about getting to the point where we're comfortable with the requirements for running a solo staking node being, you know, low enough to still support the decentralization that Ethereum prioritizes.

• 59:43David Hoffman?

  Okay, Dom, and the other one, efficient DA self-healing. Sounds pretty cool. What is it?

• 59:48Speaker 03

  Yeah, so like I said earlier, you have every node downloading a tiny piece of the data. So you don't have access to the entire data, but the network as a whole does. So if you, as a, as a node, you want the whole data that was previously sampled by other nodes, then you, the idea of self-healing is that if you lose part of that data, like imagining some kind of malicious validator that just decides to censor part of that data. Then, one, they can't do that because of the magic of sampling that we went into in the BlobSpace episode. And two, they can get away with censoring some of the data, but we have guarantees, like if you have more than 50% of the data available,

• 1:00:32Speaker 03

  then you can reconstruct the entire data and just validate the chain on your own. If you want to really have the trustless guarantees there, that, and that if sampling doesn't cut it for you as a stakeholder of the chain, then you can go through this DA self-healing process, which is A topic of research today, you can see on the roadmap, it's not quite there yet, but that's the idea. You just have a peer-to-peer broadcasting system that all the tiny samples come together and then you reconstruct the whole data.

• 1:01:02David Hoffman?

  Maybe to put this into a visual, think of a Sudoku, a very, very large Sudoku, and we are sharding that Sudoku so that nodes only have to account for a part of that Sudoku, and that's their role. And then somebody's malicious and they're withholding their version of the Sudoku, they're withholding their data that they have, which is preventing people from being able to withdraw their assets or do something with their money. And so DA self-healing is like, okay, guys, let's put all of our Sudoku's together so that we can fill in the data that we have that's missing, because this is how Sudoku works. You fill in incomplete information using the mechanism.

• 1:01:41Ryan Sean Adams?

  Okay, so let's talk about when the surge is actually kind of complete. So full dank sharding, that gives us a lot of additional DA that we don't have today. David called them sci-fi blobs. I love that. Super blobs. We've got super blobs. And I'm just curious, Mike, is something you said, right, is we're going to have super blobs. There will be other networks that sort of specialize in DA. I mean, we're seeing some of these right now, like Celestia for, like, example, Eigen DA, these are other sort of alternative DA systems. Do you think Ethereum is going to have the best super blob space on the market? Will

• 1:02:22Ryan Sean Adams?

  it be like the most pristine? Will it be always a bit more expensive than some of the other blob space? A little less cutting edge, but like maybe more secure? Just curious, because we're starting to see this DA infrastructure layer evolve across other crypto networks. Where do you think this ends at the end state? Maybe I'll throw that to Dom and then also, Mike, get your commentary.

• 1:02:44Speaker 03

  At first, I would say blob space for Ethereum right now is more data than what rollups are using, but it won't take that long for rollups to squeeze the entire value of 4x for blob space. And then, at that point, alternative DA solutions become attractive because it's cheaper. So it becomes more of a weakest link kind of things. If you rely on Ethereum for settlement, but you rely on something outside of Ethereum for DA guarantees, then that's kind of your weakest link if it's not as secure as Ethereum. So bad things can happen if that alternative DA layer gets censored or is malicious or things like that. So that's kind of what we're gonna see with various stuff like Valideums and Optimiums.

• 1:03:29Speaker 03

  If it's low value enough that you don't mind this weakest link, then that's fine. But if you're a rollup, you want the full guarantees of Layer 1, then you're gonna use Ethereum Layer 1 DA until it's like too expensive for your purposes. But the hope is that the 4X year over year is gonna be catching up in terms of rollup needs for data as they fill up all the blob space.

• 1:03:53Speaker 00

  Yeah, I had two things here, very briefly. The first is that DA seems like something that's not very sticky, right? As a rollup, I get to choose where I post my data, but it's very easy for me to just say, okay, I'm using this alternative DA layer. Okay, now Ethereum is cheap enough. I can kind of lift and shift and start posting my DA to Ethereum. Lift and shift.

• 1:04:13Ryan Sean Adams?

  Lift and shift.

• 1:04:14Speaker 00

  I like that. This is, yeah, whatever. Sorry. I'm an asshole.

• 1:04:23Ryan Sean Adams?

  Great commentary, dude.

• 1:04:27Speaker 00

  So, yeah, I could foresee a world in which rollups move potentially to this alternative DA source in the meantime, but You know, by the time Ethereum DA becomes cheap enough, they're like fully able and willing to move back and get back to the like, strong guarantees that are provided by having their data on Ethereum. The second is, is kind of this analogy that I've been tossing around, and I think it kind of extends this idea that you guys have, have put out before, which is, Ethereum should be this Manhattan of block space, right? And I, I also think it should be the Manhattan of blob space, right? So, the, the blobs that land on Ethereum should be

• 1:05:07Speaker 00

  the highest value, the blue chip kind of rollups. Um, there might be long tail of games and stuff that can, that have like way different trust assumptions, but we want like, the best of the best to use the best security properties, and that would be using Ethereum DA. And I have this kind of extension of the metaphor, which is that currently Manhattan is under construction, right? Like, there's a lot of work being done on Ethereum's scaling, and right now it's like, maybe a less desirable place to live. And we need to make sure that we kind of get done with the construction fast enough, that all the people don't leave Manhattan and, and move to Brooklyn, right? So, I think it is important to prioritize the DA roadmap, but still making sure that Manhattan as an island is like the best place to be, and that is by having like the best censorship

• 1:05:51Speaker 00

  resistance guarantees, and the best decentralization. Blue chip sci-fi blobs. I love it.

• 1:05:57David Hoffman?

  Ironically, Mike and I both live in Brooklyn. I'd rather just people live in Manhattan or Brooklyn versus something like San Francisco, but you know, that's, this is my favorite.

• 1:06:05Speaker 00

  Oh, you guys are on a Manhattan layer two then?

• 1:06:08David Hoffman?

  Yeah, we are, we are the Manhattan layer two.

• 1:06:10Speaker 00

  We're on a, we're on a rollup, yeah. New York rollup.

• 1:06:13David Hoffman?

  Blue chip though. Blue chip rollup.

• 1:06:14Speaker 00

  He's still got a bridge. It's still a bridge. He's got a bridge. Oh my God, this analogy works so well.

• 1:06:20David Hoffman?

  So Justin Drake always talks about Ethereum block space being World War III resistant. And Mike, what you're saying is that we are going to extend that concept, extend those security measures to Ethereum blob space. World War III resistant blob space is challenging, expensive, and hard, but ultimately worth it, and like, in our opinion, noble, because that's where, that's the goal that we're trying to get to. Um, and then there's going to be like the alt DA Players who are maybe like not so World War III resistant because they've had made some compromises in order to scale. But like what you're saying over time is like we are being able, we are going to be able to scale out World War III resistant blocks, a blob space.

• 1:06:59David Hoffman?

  So that all as many blue chip layer twos that want to consume that, that luxury blob space will be able to consume that. Is this a fair regurgitation?

• 1:07:09Speaker 00

  Yeah, perfect.

• 1:07:10Ryan Sean Adams?

  I'm not going to say World War III resistant sci-fi blob space that is also blue chip.

• 1:07:16David Hoffman?

  It's also a blue chip.

• 1:07:18Speaker 00

  Does blue chip because it's World War III.

• 1:07:20David Hoffman?

  Because it's.

• 1:07:23David Hoffman?

  Is, does this wrap the surge?

• 1:07:25Speaker 00

  Yeah, I guess one more thing I just wanted to call out quickly is that the kind of coordination and governance layer associated with the rollup centric roadmap is continuing to evolve. And one really cool kind of instantiation of this is what's called the rollup improvement proposals, RIP calls. And actually, I think the call itself is called roll call and then RIP is a rollup improvement proposal. So this is a call that kind of parallels the all core devs, which is the, the main coordination vector, the shelling point for Ethereum mainnet upgrades, but doing it for the layer twos. So I think as, as we kind of settle into this future of rollups and rollup centric roadmap, et cetera, like the coordination and discussions will move largely to that call.

• 1:08:08Speaker 00

  And they're able to kind of iterate and move faster along, like pushing the future of, of the EVM, maybe considering alternative virtual machines and like, there's kind of lots of sci-fi stuff that the rollup teams can afford to do that can't be done in normal all core devs governance process of Ethereum. And there's kind of a new space for that that's being developed. And I think if you're interested, like you should definitely listen into those calls and, and participate.

• 1:08:32David Hoffman?

  Also in the surge, there are these two progress bars that are below most of the content that we've been talking about. One is optimistic rollup fraud provers and ZK EVMs. This is more for the layer twos out there, the people who are building out the security measures to fully decentralize layer twos. We need more fraud provers on our layer twos, notably Arbitrum has shipped theirs. optimism, the OP stack still needs to ship theirs, but it's on the way. And then this would provide security to the layer twos that are actually leveraging this blob space that we've talked about. There's also the ZK EVM progress bar and listeners of Bankless will know this. This is the Polygon ZK EVM scroll, Tyco, ZK Sync, all are working on building out their version of the ZK EVM.

• 1:09:18David Hoffman?

  I want to put a pin in this because this actually links back down to something we'll talk about later at the verge. So I'm just putting a pin in that for now, we're going to come back to how these ZK EVMs might work its way back from the layer twos into the layer ones. But next is actually the Scourge. So I'm moving us to the Scourge, we are in the next urge, three of six, hour and 10 minutes into the podcast. We're almost halfway through the urges. Let's just reiterate the purpose of the Scourge. This is more of an economic supply chain blockchain value transfer, part of the Ethereum block production. And it's really about MEV. Mike, just run us through the vibe of the Scourge one more time and talk about like what's coming up first.

• 1:09:59Speaker 00

  Yeah, and hopefully the, the rest of the urges can probably be a little faster. Those first two are the real heavy hitters. So, right, the Scourge is, is all things MEV and in particular, kind of figuring out how to avoid the centralizing tendencies that result from MEV. I guess at a very high level, the reason MEV is centralizing is because of its inherent complicated nature sophistication. And like resource requirements that are needed in order to be successful at it, right? So what we have now is this, this kind of out of protocol proposer builder separation world. This is built using a software called MEV Boost that was developed by Flashbots.

• 1:10:39Speaker 00

  And ever since the merge, we've kind of entered this regime where most of the blocks are being built by a very small set of centralized parties, right? These are called the builders. They're generally like the high frequency trader types. They're really good at extracting value, conducting arbitrage, figuring out like how to, how to do things as fast as possible. Like latency is a very important metric here because of how fast prices move. On centralized exchanges and how fast those arbitrage opportunities appear. So yeah, I guess, looking at the at the items in the in the scourge box, all of these things are directly attempts to kind of address the centralization associated with proposal builder separation

• 1:11:23Speaker 00

  and a small set of actors controlling almost all the blocks, building all the almost all the blocks in the protocol.

• 1:11:29Ryan Sean Adams?

  So this is this the scourge is entirely about manage the protocol's ability to kind of manage MEV. Because MEV can be a scourge on any chain that doesn't manage it well. It can be a source of centralization, a source of corruption to the thing that we were trying to get to, which is a censorship resistant compute platform.

• 1:11:48David Hoffman?

  You said can be Ryan, I just want to change that. It will be, it will be a scourge on all chains that do not manage it.

• 1:11:56Ryan Sean Adams?

  Oh, okay. Why, why, why, why do you feel the need to say that subtle difference? You're just like, it's so inevitable.

• 1:12:01David Hoffman?

  It's so inevitable. If you are a smart contract system chain, even if you're not Bitcoin also has MEV. That is a scourge on Bitcoin. So if you plan on being a successful chain, you need to have an MEV solution. Mike, check my reason on that.

• 1:12:16Speaker 00

  No, for sure. And I think the reason MEV has been, there's kind of two reasons I see that MEV has been such a hot topic in Ethereum where other chains kind of haven't had to deal with it as much. The first is that Ethereum has longer slot times. This 12 second thing is mandated by the solo staking thing that we keep coming back to. But as a result, there's kind of a lot of time for the price on Binance or Coinbase to diverge from the price that's represented by the blockchain like in the uniswap pools. So that 12 second thing is like a very big issue that blockchains like Solana with like 400 milliseconds or whatever, it's they just like don't have that issue. The second thing is Ethereum actually has like meaningful DeFi activity.

• 1:12:58Speaker 00

  Right. And you know, this isn't meant to be a dig, like all other chains are building towards that. But the amount of MEV that's extracted on the other chains is just orders of magnitude less than Ethereum because there's like much less MEV or DeFi activity generally on those chains. And once the DeFi starts ramping up, I think we even saw this. Recently with, you know, Solana having a spike in activity, there's also like a massive spike in MEV. The, the network starts performing in different ways, like all of this adversarial PvP stuff that happens in Ethereum is going to happen everywhere else. It's just like Ethereum is maturing faster. It has more value. It has more DeFi activity that, that lends itself to create these opportunities.

• 1:13:38David Hoffman?

  What would you say is the first notable EIP or incoming EIP that's part of the Scourge?

• 1:13:44Speaker 00

  The EIP that I'm most excited about for this is actually something that we're considering potentially to put in the next Hard Fork, the one after Dneb, which is called Electra. And that's this idea of inclusion lists and inclusion lists are a way to bring back some of the censorship resistance properties of Ethereum block space. Even if the blocks are being constructed by the special set of builders. So you can kind of think of it as like the validators taking back some control over the block space without sacrificing all the rewards of getting MEV from external block production. So inclusion lists, I won't go into the details. There's like a ton being evolved and, and written on them in the current meta.

• 1:14:26Speaker 00

  But yeah, I think in my mind, the biggest issue with MEV centralization is the fact that you have censorship occurring at the builder level and at the relay level. So this is kind of happening today. We see between like 60 and 80% of blocks being censored. It's kind of hard to tell. But in that order, in that range, and we think that with inclusion lists, we can kind of get really good improvement in terms of what Ethereum censorship resistance story is moving forward.

• 1:14:54David Hoffman?

  An inclusion list, just to really just define that very, very simply, is a list of transactions that will be included in the next block. That's, that's how I understand it. What, what more needs to be added to that? It's like forced. Forced inclusion at the layer one.

• 1:15:09Speaker 00

  Yeah, exactly. It's forced inclusion and importantly, the builders don't have a say over if they can exclude that transaction or not. So right now, the builders can like potentially look at a list of transactions or a list of addresses that they don't want to touch for whatever reason. Maybe it's part of a government list or maybe even, you know, we don't have to kind of think too hard about what could be causing this. But if they choose to exclude those transactions, the validators can say, hey, sorry, like you can't produce a valid block without including this transaction. And that's like, if you don't want to do it, you're just going to have to not build a block for that slot.

• 1:15:47Ryan Sean Adams?

  And they have this power today. They are excluding today. Some of them, some of the builders, some of the relayers are excluding today.

• 1:15:53Speaker 00

  Yeah. Of the four biggest builders, three of them are currently censoring. There's only kind of one builder that's currently actively including all transactions that they see.

• 1:16:02David Hoffman?

  And the spirit of this inclusion list is of course censorship resistance. It is a promise made by the Ethereum protocol, by the spirit of Ethereum. And this is that promise being manifested into code and eventually merged into the layer one. So that there will all be for like inclusion for all types of transactions, no matter what the nature is.

• 1:16:22Speaker 03

  Yeah, one way to view it is basically taming the centralization aspect of MEV. Because right now, today, we have this wild beast that are block builders that are like very centralized and they have control over which the transactions they want to censor or not, which is a big hot topic issue. But with inclusion lists and other little gadgets, you can have a decentralized validator set that are very simplistic and say, okay, fine. You're going to be a centralized builder, but you have to include these transactions no matter what. And basically, all the negative aspects of centralizations are gone. And the positive aspects, like very like fast block building and stuff like that. We keep the beginning of benefits, but without any of the downsides of centralization.

• 1:17:06Speaker 03

  And we remain like permissionless blockchain censorship resistance and all that good stuff.

• 1:17:11David Hoffman?

  Also in the scourge is encrypted mempools, which I think is a very, very big subject. Mike, explain what an encrypted mempool is and how it changes this, the nature of the transaction supply chain in Ethereum.

• 1:17:22Speaker 00

  The point of encrypted mempools is to, again, kind of as Dom mentioned, tame this centralization power of MEV. Because you take away the power of information from the builders, right? So now, instead of seeing the transaction, using the information in the transaction to make a sophisticated decision, all they see is this encrypted ciphertext thing. They have basically one bit of of choice. They can either include that transaction or they can exclude it. There's kind of various degrees of privacy and programmable encryption that that can be expressed, and that's actually kind of what Suave is. Suave is this project being built by Flashbots. It's an acronym, but I always forget what exactly.

• 1:18:07Speaker 00

  A single unified auction for value extraction or something like that. Value expression. And yeah, I think the idea that like some amount of data might be given to the builders while like maintaining some autonomy over the the rest of the data in that transaction to avoid them exploiting too much about it. So yeah, in general, encrypted mempools are, I think they're they're a little farther out in terms of what we could enshrine in the protocol. But teams like Flashbots and other folks are thinking about how we can use the cryptographic primitives we have today and in the next three years or whatever to to really improve kind of the immediate term properties of the of the mempool.

• 1:18:47Ryan Sean Adams?

  Basically, this means that builders don't get an unfair advantage and kind of like seeing it and, you know, I guess tilting their inclusion process, tilting things in their favor, extracting some profit on something they see in the mempool. Is that right?

• 1:19:02Speaker 00

  Yeah, exactly. And in in the best case scenario, something like Suave would kind of serve as a builder in its own right. So everyone would send these encrypted transactions to the Suave nodes. These things are running in what's called a trusted execution environment, a TEE. And this hardware is the only place where the decryption can happen. So it's kind of like you have one trust assumption, which is you trust the Intel hardware, the SGX, but it's a lot better than the trust assumption we have. Now, which is basically, we trust everyone because we broadcast it into the in the clear in the open. And if Suave is able to get enough transactions flowing through these T E Es, these trusted execution environments,

• 1:19:45Speaker 00

  then they could potentially produce an entire block that was never decrypted, except inside the trusted execution environment itself. So it's almost like a distributed block building mechanic. This is like the long term vision, the sci fi vision. I think it's, there's still like a lot of engineering that's going into it, but that's the goal of the project.

• 1:20:06David Hoffman?

  I think one maybe the a way to articulate the net effect of an encrypted mempool. It's long been theorized that ultimately M E V leakage will cease and it will be plugged at the point of its creation. And it can, that can be done in a variety of different strategies. Applications can learn how to tame its own M E V and make sure it doesn't leak. But also this, I think, is going even earlier in the supply chain and saying like, just not even disclosing to the block builders, what the value is available to be extracted. And it's just like, do you want to include this unknown packet of data that you don't, that you can't see, or do you not? And the assumption is that they're all going to elect to include it because there's a bribe, a fee, a reward for doing so.

• 1:20:49David Hoffman?

  But they don't get to know how is it touching Uniswap, is it touching Ave, what is it doing? They don't know. It's just binary include or not include, correct?

• 1:20:57Speaker 00

  Yeah, and I think one of the kind of most pernicious things about M E V is, like you said, if you try and plug the hole at a level that makes it so that there's a centralized choke point, then it's kind of like throwing the baby out with the bathwater, right? So I think Uniswap X is a good example of this. You know, I think the Uniswap team is doing super interesting stuff. But essentially, essentially what Uniswap X does is before the transaction goes on chain, it's run through an auction essentially. And like, it can just get filled off chain without ever touching the chain in the first place. And that's kind of defeating the point of using the blockchain in the first place because you could just go to, you know, the NASDAQ or some other centralized exchange and get

• 1:21:42Speaker 00

  Your your order filled there. Not using the blockchain for DeFi activity is like a really bad outcome and trying to figure out how the the chain can support and minimize the effects of these MEV opportunities is really important to get people to to trust the chain instead of trusting these off-chain centralized parties.

• 1:22:02Ryan Sean Adams?

  One thing I really like about the the scourge is we talked about this entire roadmap is being developed with the community, right? And so one of the main parts, we talked about the role that rollups are playing in kind of pushing CK EVMs and execution environments forward. Well, here, we also have the the help of like groups that are focused on taming MEV like Flashbots and Phil Dianin team and Bankless listeners will recall an episode that we did on on Suave with with Phil. And so they're working in parallel to try to tame the MEV beast on Ethereum's behalf in some ways. And then some of the features that they create will be enshrined in in the protocol itself. And I think this is the case with maybe another part of the scourge, which is proposer builder

• 1:22:47Ryan Sean Adams?

  separation, EPBS. Wondering if you could talk about that and then how MEV burn might relate to that, Mike?

• 1:22:54Speaker 00

  Yeah, for sure. I I kind of laugh a little bit because probably, I don't know, 70% of my waking minutes over the past year have been thinking about EPBS. So like this is very near and dear to to the heart.

• 1:23:08Ryan Sean Adams?

  That's a lot.

• 1:23:09Speaker 00

  Well, okay, maybe my my waking working minutes will say that. Right. So so PBS at a very high level is an auction that takes place during every slot, right? So we talked about this validator set when we're thinking through proof of stake. As a solo staker, I have kind of a choice to make when it's my turn to propose a block. I can either build that block myself based on my local transactions that I see I got downloaded from the P2P layer, or I can outsource my block production to these like centralized builder market, which we were talking about before. Now, the reason I would outsource it is because on average, the blocks that the builders create are going to be much, much

• 1:23:52Speaker 00

  Much more valuable than the blocks that I create locally. And that's because of the sophistication. This is kind of one of those centralization, like efficiency of centralization things that we were talking about before. So PBS is just defining this auction, which is I'm a proposer. I have a slot. I want to sell my slot to the highest bidding builder. Currently, that auction takes place out of the protocol through this MEB boost thing. And this idea of EPBS is enshrined PBS is how could we like internalize that auction into the protocol itself, right? So now, instead of the proposer going and calling some software out of band and getting their block produced for them, they'd actually have a way to express through the protocol, hey, I want this builder to construct my block.

• 1:24:37Speaker 00

  And this is the bid that they put into the auction and that I'm willing to to sign as the winning bid and they'll produce their block. So that's kind of the high level. The, the way this relates to MEB burn is that once you have the auction in the protocol, you essentially have what you can think of as like an MEV oracle, right? So the value of the bids in the auction basically say, hey, this slot approximately produced this much ETH worth of MEV. Let's just say like one ETH for a square number. So if, if the builder is willing to pay the proposer one ETH of value for their slot, then that means that the builder extracted one ETH worth of MEV.

• 1:25:18Speaker 00

  And the nice thing about having this oracle is it's something that you can actually get rid of. You can be like, okay, like let's, this is kind of what 1559 does, right? It's, it's saying, how much are you willing to pay for a transaction inclusion? Okay, now that we know how much that is, we're just going to burn that.

• 1:25:34Speaker 00

  There's kind of downstream effects of this. Remind us, why, why do we want to burn it? So the reason to burn the MEV is to basically distribute some of that value created back to the holders of Ether. And the reason this is kind of important now is that right now MEV is extremely spiky, right? So one slot might be only 0.1 ETH worth of MEV. And the very next slot could be like 100 ETH or 1,000 ETH. And as a result, The value of being a proposer in the system can vary greatly among just the luck you get by which slot you get allocated. And this is a super centralizing force because as a pool, as someone who might control 10%

• 1:26:17Speaker 00

  of the stake, you get all of the range of this MEV allocated to you in the non-MEV burned world, right? So you have like much better exposure and you have a higher probability of getting one of these super high value slots. Versus a solo staker, I've been solo staking for like five months and I haven't proposed a single block. On average, I should be getting like one every four days, or sorry, one every four or five months. So like I'm kind of due for one, but the odds that my three slots a year, one of them is like a thousand ETH slot is very, very low. It's kind of like buying a lottery ticket. Like I just don't think that is something I can plan around where the pools can actually plan around winning 10% of the super high value blocks.

• 1:27:02Speaker 00

  And that's like an additional incentive to join one of these staking pools.

• 1:27:04David Hoffman?

  You talked about, Mike, why we want to burn ETH and you said we want to give it back to the ETH holders. Can I provide a, I think I have a different perspective that I'd like to elevate. ETH holders, it's not like the intent of increasing the scarcity of ETH, but it's just simply the easiest, most credibly neutral way of destroying MEV, destroying the value captured. It has to go somewhere. Holding ETH is the minimum viable hurdle that one would get over in order to have that MEV being recaptured by you. And so it's simply just the largest pool of people that is the easiest to distribute the value of that MEV back towards.

• 1:27:41Speaker 00

  Yeah, exactly. And kind of calling back to our tail wagging the dog thing, this actually means that the rewards that the validators get from the consensus layer are more meaningful, right? So if you think of, as a validator, I get rewards for participating in consensus, but I also get rewards for producing blocks. And right now, the producing block reward could be way, way higher than the amount I get from just participating in and doing my kind of civic duty of voting on which block is the head of the chain. So by destroying that MEV, we have a lot more, a lot more fine-grained, precise control over how much we're paying to the validators to participate in the, in the network.

• 1:28:21Speaker 03

  I'd also jump in and say there's a security and stability aspect to this. As Mike mentioned, it's very spiky. If one block is 0.1 ETH and the next block is 100 ETH of MEV. Like if you're a large taker with a large control of the validator set, you have kind of a distorted incentive where you can try to pretend you didn't see that block with 100 ETH when it's your turn to grow the next block. And then you can reorg and steal that MEV. But one good reason for why we should burn it is that sure, you can try to pretend you didn't see that block, but you're still going to be burning 100 ETH. So your best bet is just to go ahead and propose the next block on top of the previous one, which is what we want.

• 1:29:02Ryan Sean Adams?

  Have you ever seen the Reddit posts of somebody like, oh, I fat fingered, you know, like some ETH and some validator, some pool kind of collected it. And they're like, can I get that back now? Is that possible? So this kind of eliminates that problem, I guess.

• 1:29:15David Hoffman?

  Yeah, yep, it would just get burned. Um, well, one way I think I can also describe this is like, we don't really want to power Ethereum security via lottery tickets. We want to power Ethereum security via a very fine controlled trickle of gasoline. All right, just like slow and steady burn into the engine. You don't want to just randomly dump a bunch of like nitrous into the engine when you're, when you aren't expecting it and aren't, aren't ready for it. That's kind of how I would explain this. Not Mad Max Fury Road. Yes, exactly, yeah. Mantle, formerly known as BitDow, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network, a brand new, high-performance Ethereum Layer 2 built using the OP stack,

• 1:29:57David Hoffman?

  but uses Eigenlayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 onboarded, like Game7 for Web3 gaming and Bybit for TVL and liquidity and on-ramps. So if you want to build on the Mantle Network, Mantle is offering a grants program that provides milestone-based funding to promising projects. To help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at @zeroxmantle.

• 1:30:43David Hoffman?

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• 1:31:25David Hoffman?

  developers can write smart contracts in Rust, C, C++ and many more coding languages. Arbitrum empowers you to explore and build without compromise. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app on Arbitrum. It's everyone's favorite season in crypto: tax season. And Crypto Tax is always an absolute headache, especially for all you D gens out there. But it doesn't have to be a nightmare. That's where Crypto Tax Calculator comes in. The software built for D gens by D gens. As Coinbase's official global tax partner, Crypto Tax Calculator focuses on making complex transactions into easy ones, supporting over 300,000 currencies across Ethereum, Arbitrum, Optimism, as well as 1,000 other integrations as well.

• 1:32:08David Hoffman?

  It's as simple as connecting your wallet, pulling in all your transactions, and following the automated suggestions to quickly and accurately calculate your tax obligations. Plus, for all the airdrop farmers out there, Crypto Tax Calculator has your back as they are consistently adding support for new and upcoming Layer 1s, Layer 2s, and all the airdrops that you're currently farming. 2024 is the year where the D gens do their crypto taxes with speed and confidence. Make taxes this year easy and affordable with Crypto Tax Calculator. Sign up at cryptotaxcalculator.io and get a 30% discount with code BANK30. Click the link in the show notes for more information. Alright guys, the end is on the horizon. We got The Verge coming up next. Dom, you're taking this one. The Verge, spirit of The Verge: make block verification super easy. Can you talk about just like what that means and what that means for the goals of Ethereum?

• 1:32:53David Hoffman?

  Why is block verification being easy important? And what like solutions does it bring to the table?

• 1:33:00Speaker 03

  So verifying blocks as a node, that's one of the settlement guarantees of Ethereum, that anyone can just run a node and verify the blockchain for themselves. So you know you're not getting lied to. And it kind of ties in with the surge where we had like these nodes verifying data availability very quickly, like just download a few bytes for a few samples and then you're sure that the data is there. And the verge is basically that, but for execution where all you need to do is download a few bytes, verify a proof, and then you're good, the block is valid, you verified it. The main way to do that is through vertical trees first. And then eventually we use, we use ZK, ZK magic again for starting the whole layer one.

• 1:33:42Speaker 03

  So that you can verify the whole chain on your smartwatch, like Justin said, as his end goal.

• 1:33:48David Hoffman?

  Dom, you said, so that we want to make block verification super easy so that we can assure that we're not being lied to. I think you're alluding to an attack vector. Can you just illustrate that to make that super clear? Like, what is that attack vector and why, why might it happen?

• 1:34:04Speaker 03

  The goal of having a decentralized validator set and also like very easy to run a node, even if you're not a validator, it should be easy to run a node on your average computer, because if you have super high cost for running a node, then fewer people are going to do it and then it becomes possible to collude and do something invalid, like, like say I print myself a thousand ETH. And if you don't run a node, you kind of have to take my word for it. But if you do run a node, I can't lie to you because that's the cryptography, like the ETH has to come from somewhere, there has to be a valid block, a valid signature, valid transaction. So it's super important that anyone can just run a node to verify these transactions and all these blocks.

• 1:34:46Speaker 03

  And the goal of the verge is to make that the cost of verifying super cheap. So we can both scale layer one and keep the low cost of verification so you can't be lied to.

• 1:34:58Ryan Sean Adams?

  Guys, let me just say here, I want to underline this, like, running a node is the entire freaking point.

• 1:35:06Ryan Sean Adams?

  Like, that's the point. That's why we do blockchains, right? It's a hyperslow, silly computer, aside from the fact that anybody in the world with an internet connection and some modest hardware, you know, profile can verify what's gone on. Like, that is the entire point. That is why there were the big block versus small block debates in Bitcoin. That is why Ethereum has optimized within the constraint of trying to make it possible for solo stakers to verify and validate blocks. Like, that is the thing that keeps the whole thing decentralized and preserves what Mike was talking about earlier, which is censorship

• 1:35:50Ryan Sean Adams?

  resistance. That is a thing that we should not trade off ever and should never trade off lightly. I think that's the spirit of Ethereum, is it not? That's exactly correct.

• 1:36:00David Hoffman?

  Can we just, I want to stay on this point, actually, a little bit. I think I am now a system that doesn't necessarily agree with that that's the appropriate trade-off. If we want to get more people on-chain, it's actually better if we kind of just delegate node validation and maintenance of a blockchain to experts who have a lot of hardware and are sophisticated and can run a system on behalf of the rest of the world because they are experts. And that way, we can distribute more block space. We can get more people on-chain. This is an alternative perspective. What do we lose? What might we lose? What's the argument against this from like the Ethereum philosophy? Dom, you want to take this one?

• 1:36:45Speaker 03

  You still want to verify that they're not lying to you, even if they're super centralized. And BFU wants some guarantees that the whole system remains credibly neutral and permissionless.

• 1:36:55Ryan Sean Adams?

  I mean, to me, it's kind of like what you just said, David. It's sort of, you said the experts, right? Another word for experts, I think, in this model is elites, right? It's like, do you want the elites, small cabals, kind of like to verify what has happened? I mean, at some level, I think the Bitcoiners are very much right about this. Like, that is what we have in our existing system. You look at kind of like central banks. That is a few elites running the verifier nodes of what the bank balances say.

• 1:37:23Ryan Sean Adams?

  And so that is kind of the difference here. One question I have for you, though, Dom, is sometimes I get tripped up, and I think a lot of people get tripped up around the difference between verification, which is the term that you've been using, make block verification super easy, and validation. Are we talking about the same things? Like, what's the difference between a block verifier and a piece of software that verifies a block and a validator? So like, actually like validating the block production? Because, yeah, just could you get into that? Because I think people get confused by these two different terms.

• 1:38:02Speaker 03

  The term validator on the beacon chain has always been a bit of a misnomer because technically, anyone running a node is validating the chain as in like checking that it's valid. But the role of a validator is that they actually have some money on the line, like stake, and their job is to attest to blocks. So basically say, this block looks good to me. And they put their vote there, and that's what defines the canonical chain. So that's what makes it super expensive to reorg the chain because then you have to double vote, which is like a cryptography thing that's very easy to verify and then slash what money you have at stake.

• 1:38:39Ryan Sean Adams?

  So you have to have 32 ETH to be a validator, but you don't have to have any ETH to verify, right?

• 1:38:45Speaker 03

  Exactly.

• 1:38:46Ryan Sean Adams?

  Okay, so anybody can kind of run an ETH verification node? And then why would they want to do that, Dom? If it's just like, like, give us kind of like the summary. Why would they want to do that if they're not also validating the block and receiving some reward? Is anyone realistically going to run verification software?

• 1:39:08Speaker 03

  Most users today aren't really doing that. They're delegating to like RPC endpoints from other people running full nodes, like in Fura and stuff like that. But one reason why you might want to do that is to not have to rely on that trust in the first place, because that's what blockchains offer is trustless verification. So if it's not important to you, then you can delegate. But if you're doing high value stuff, then you want to verify that you're not being lied to, which is one of the main things that Ethereum offers as settlement assurance.

• 1:39:39Speaker 00

  Yeah, and just to jump in here, like you could imagine a future world where, let's say you want to go settle a high-value transaction. And you know, you send the transaction and you're trying to, let's say, buy a car. And the guy who's selling you the car, he says, oh, like, I can just pull out my phone. I'm verifying the blockchain on my phone, so I know that transaction is in there and I know it's valid. Right? Alternatively, he would have to go to like EtherScan or go to some trusted entity. And that entity could totally lie to him, right? Like, I could have hacked EtherScan and inserted an arbitrary transaction in there that said, I paid you $20,000 for this, for this brand-new car. But that never happened. And like, he wouldn't have any way of verifying beyond just like EtherScan's trust assumption

• 1:40:24Speaker 00

  that the transaction's actually in the chain.

• 1:40:26Ryan Sean Adams?

  Okay, and so current state is I can run an Ethereum verification software on, what, a consumer-grade laptop? Can I still run this on a Raspberry Pi? Is that possible right now?

• 1:40:39Speaker 03

  There is some project called Ethereum on R M. For, you can see on Twitter where they, they do run it on Raspberry Pis, but you still need like SSD for fast read-write on the disk, because there's a lot of terabytes of information on the chain. Part of the verge is to get rid of this requirement to hold the state with vertical trees, which will introduce stateless clients, which we can introduce in a second. But that's going to reduce this reliance on storage space. And then you can run it on a Raspberry Pi easily, because that's the one main bottleneck today is holding the state and state growth just keeps, keeps growing. The state keeps getting bigger and bigger, which we don't really like. So that's what we're addressing with vertical trees.

• 1:41:25Speaker 03

  And eventually, even the execution is just going to be super fast. You just verify a ZK, ZK proof, and that's it. You know that the block is valid. That's kind of what

• 1:41:34Ryan Sean Adams?

  That's what we're getting to. It's not just a Raspberry Pi. It could be your phone, or it could be a watch, or I don't know, your new Apple VR set. It's just like, it requires very little storage and compute in order to verify.

• 1:41:49Speaker 03

  Exactly.

• 1:41:50David Hoffman?

  I want to actually take a moment to define a Verkle tree. I think most people, most listeners will be familiar with a Merkle tree, even though that is also a pretty dense subject. Gosh, a Merkle tree is like a tree of contingencies based off of hashes, and you can kind of like route your way through a tree based off of a hash. That probably wasn't helpful. If you don't know what a Merkle tree is, you might need to pause this episode and go learn what a Merkle tree is. Dom, can you explain what a Verkle tree is and what its superpowers are above and beyond, just like what we have now, which is a Merkle tree?

• 1:42:24Speaker 03

  Yeah, so right now, the reason why we have trees together, it's for the state. So if you only have the header of the previous block, then there's going to be what's called a state root inside that block header. So even if you don't know the transactions or what balances of accounts are, someone can use that state root and craft a proof to you, and then you know for sure that this proof is valid against the state root that you know is part of the canonical chain. That's what we have today with Merkle trees. But the problem is that these proofs are very, very heavy. So it's not realistic to have light clients on your phone checking these proofs, because there are going to be too many of them, and they're too big.

• 1:43:05Speaker 03

  So the point of Verkle tree is to replace that structure of Merkle trees using more advanced polynomial math, so that the proofs are much, much shorter, and they can get aggregated into a single block witness. So you receive the block. There's a witness, which is just a proof of everything that's happening inside that block. And then you can check that quickly and be sure that the block is valid, even if you're You didn't, you didn't know the block that went previously. So that's kind of the magic of Verkle trees. It's just very shorter proof.

• 1:43:39David Hoffman?

  Is it just like better? It's just like a better compression technology. It's a better proof technology. It's like Merkel trees 2.0.

• 1:43:46Speaker 03

  Yeah, basically.

• 1:43:46David Hoffman?

  And if we can get more compression, and we're talking about the layer one, if we can get it more better compression technology inside of our layer one blocks, what does that do for like layer one throughput? Is this, are we talking about just the capacity of the layer one?

• 1:44:00Speaker 03

  Uh, yeah, Verkle trees can come with like easily a 3X of the gas limit, which means much more layer one scalability and cheaper gas prices on layer one, which is cool. Like, one of the biggest problem of running a node, like I alluded to earlier, is holding the entire state, because you have to know, like, what balances are, what's the state of every smart contract, before you start verifying the current block. Because like, if I send you 100 ETH, you have to know that I did have 100 ETH previously. So you have to go somewhere in the history that you're storing on your hard drive, see that at some point I received 100 ETH, and then you know, I do have the ETH that I claimed to have, and then you can accept that this transaction in the latest block is valid.

• 1:44:44Speaker 03

  And part of the magic of Verkle trees is that your node can just come online, receive just the latest block. It doesn't have to know the history or the state of the blockchain. All it receives is that transaction that I send you at 100 ETH, which comes with a short proof that guarantees to you that I do have that money. So, running a node becomes much cheaper in terms of storage and verification, because you can just jump in at any point, get the latest block, and validate transactions from that point forward, because you have state proofs of everything that's being accessed on Ethereum is valid, and you're not being lied to, which is like the main theme of verification.

• 1:45:23Ryan Sean Adams?

  So if the verifiers aren't holding that, all of that state that is currently in, like, solid state drives, SSDs, who is taking that function over? And why is that okay to like have another? Non verifying, non validating entity take over the storage of that.

• 1:45:41Speaker 03

  So, once again, it gets delegated to the builders because they're centralized, they're beefy, and they can afford to buy like 256 gigs of RAM and hold the entire state in RAM so they don't have to bother with like slow reads and it's super fast for them. And they're in charge of crafting these proofs. So, once again, they can't lie to you with a fake proof because that's cryptographically unfeasible. And that's where the state is going to go, is basically to builders. But you as a user, you can, with Virko trees, you can afford to just forget about all the state you don't care about, except your own balance, which is something that's pretty cool. It's going to come with Virko trees.

• 1:46:24Ryan Sean Adams?

  And that doesn't matter. That's not a centralization vector because so long as we have at least one entity, a builder, some other entity that has that state, we're fine.

• 1:46:34Speaker 03

  Yes. And also, state can also be reconstructed from history. If you're a user, you don't transact often. And like in the last 1,000 blocks, you made like three transactions and you want to have your own state and you only have to execute these, the three transactions in those three blocks. Versus today where to do that, you would have to compute the entire 1,000 blocks to get your own personal balance and make your own proofs to send to like a live client or things like that.

• 1:47:02Speaker 00

  Just to add one little thing, I kind of see this as extending the theme of pushing all the expensive and complicated stuff onto the builders because they're being well compensated for doing so. And like their incentives are to be very sophisticated. So MEV, we're outsourcing the block production to them. For Virko, we're outsourcing the state access to them. And they can't lie to us. We know, like, we have cryptography to kind of constrain their action space. But to kind of firewall off those things allows the validators to, the validators and the verifiers to stay super lightweight, super decentralized. And then we kind of like formalize this class of sophistication that handles the rest of the aspects of the chain.

• 1:47:45David Hoffman?

  So we're really using builders as this reservoir to push a lot of services that we need for Ethereum onto these very sophisticated actors. And then we are checking them with the powers of cryptography. But we're just creating like, oh, we need this thing. It is valuable and sophisticated. Let's give it to this thing that we've classed builders. And these builders are just these checked service providers for the Ethereum system.

• 1:48:12Speaker 00

  Right. And the important thing here is that in the case that the builders go offline, everything can still keep on working. Right? So there's no dependency on the builders. It's just the builders are incentivized to specialize in this role and they're compensated well for doing so. But there's no strict dependency on them. And we preserve the censorship resistance of having a distributed validator set in the first place.

• 1:48:37David Hoffman?

  I think I remember doing this when we did this episode with Vitalik like two years ago. I think this is when this snake metaphor came in, the game of snake, right? And the blockchain, it propagates one block at a time. We add a block on to the snake and the snake grows a little bit longer. And then the snake becomes a little bit larger of a liability for the long tail of node operators who are just the solo stakers because then the snake is getting beefier. It's harder to maintain. What the Verge does is actually thins out the tail of the snake and makes the snake a little bit lightweight, a little bit more manageable, a little bit, well, maybe a lot, actually, a lot more can fit for smartwatches,

• 1:49:20David Hoffman?

  phones, computers, home validators, just because this snake using cryptography, using vertical trees, has been made more easily can fit into your watch. One thing I want to really tap into here is as we do the compression, the compression of the snake, the verticalization of the blockchain, we are, as a network, the Ethereum network, can have a higher fidelity relationship with the hardware that it runs on. Right now, we are constraining the Ethereum protocol in order to preserve decentralization so that there, as Moore's law increases, we get To increase the gas limit a little bit. I think we're actually a little bit lagging behind on increasing the gas limit. I saw a Vitalik tweet about this.

• 1:50:01David Hoffman?

  But with Moore's law, we actually are able to lag Moore's law less. And this is my understanding. Can you guys, can you guys just extrapolate on that? Like, what is, how does The Verge change the relationship between the growth of consumer hardware capabilities and the capabilities of the Ethereum Layer One? Dom, you want to take this one?

• 1:50:23Speaker 03

  Easily. Viral trees can add a lot to the gas limit, like you said, because we remove a lot of the storage space requirement and the bandwidth of like everyone sharing all the data to each other. Instead, you have these short proofs. So that allows to, that allows the increase of a gas limit because now we don't really mind that the state is going to be growing faster because that doesn't incur a cost on nodes verifying the state and verifying the blockchain syncing because you don't want it to be too long to synchronize and have a node come online and you don't want nodes to fall out of sync if they can't process transactions fast enough. And this is a good thing for Viral trees because they remove that a lot of the syncing speed.

• 1:51:08Speaker 03

  Going forward in the future, you just snarkify everything, including vocal proofs, including L1 EVM, which makes it even better for nodes to verify things because it's just one proof and you have the, you have like a cryptography guarantee that the block is valid, even if you didn't actually compute it yourself. So that's means even more Layer One scalability with gas limit increases.

• 1:51:31David Hoffman?

  Snarkify everything. That sounds intense. What does that mean?

• 1:51:36Speaker 03

  Well, a snark is just a zero knowledge proof where there's a big asymmetry between proving and verifying where a prover can be like a very beefy builder and then the verification is super quick and cheap. So you know that the builder didn't lie to you in when he executed the transaction.

• 1:51:56Ryan Sean Adams?

  Does snarkify everything? Maybe this is where we resume a conversation. We put a pin in earlier when we were talking about the ZK EVM, sort of some zero knowledge execution environment actually being available at the layer one level. I mean, that to me, sounds a little sci fi, but we have ZK rollups right now as layer twos. So when you were talking, Dom, about snarkifying everything, what's the relationship between that and having a, some sort of execution environment that is snarkified on Ethereum's layer one? Is that, is that part of the Verge too?

• 1:52:36Speaker 03

  Yeah, basically, the rollups, ZK rollups are going to do a lot of innovation and they're working on doing ZK EVMs. And that's like, it's basically a freebie for Ethereum layer one because we don't have to develop that. We can just leverage what they built and then enshrine a ZK EVM directly at layer one, which is basically what I mean by snarkifying everything. You have a snark for execution, for state access, for verifying signatures on the beacon chain. Everything comes together into a snarkified L1, which I think is, like you said, is very futuristic. We're not quite there yet. Like, we, we let ZK EVMs battle it out and then we're going to see which one is the best designed,

• 1:53:19Speaker 03

  safest and everything, and then we can progressively enshrine that. Vitalik has a pretty cool post on that.

• 1:53:24Ryan Sean Adams?

  Okay, just talking about when that's enshrined, what will that mean? So let's say we had an enshrined ZK EVM. We also still, like, this is years in the future. So I imagine we'll have a very sophisticated layer two world as well. Yeah, are there, like, what would that even look like? I mean, I'm trying to imagine. Do we even need layer twos anymore? Or do we now have everything we need on the layer one? Or does this kind of like amplify the scalability that we get? What, what does that world look like? I'm having a hard time imagining it.

• 1:53:58Speaker 03

  The first point, I would say it's, uh, layer twos will still exist on top of layer one. It just means that you scale layer one and then that compounds exponentially for scaling layer two. So if by the time we were ready to enshrine a ZK EVM, most, if not all, like mainstream users are going to be on layer two. And what's that gonna do is just passively increase them and mean even more scalability for them on layer two. Like they don't really have to care what happens at layer one. Another point is we were gonna have this EVM verification precompile, which is a very, very cool thing. Where you can have an upcode that just verify a proof for a ZK EVM.

• 1:54:37Speaker 03

  So inside layer one, you can make it very trivial to have a ZK rollup and like verify EVM inside the EVM. So you can have like infinite recursions of EVM verifying this precompile. And that's gonna make rollups even less trusted. Like they don't, they won't have to keep upgrading to catch up with layer one EVM modifications if they want to stay fully compatible. So that's a very sci-fi thing.

• 1:55:04David Hoffman?

  All right. I think that wraps up the Verge. This brings us to the Purge. Okay, so just as a reminder, the first four, which we have gotten through, are about adding features and capability and capacity to Ethereum. The Purge is now about some removing some stuff, simplifying the protocol, eliminating tech debt. Dom, what is the thing or the things that we are purging from Ethereum? What is all this tech debt that we've accrued?

• 1:55:28Speaker 03

  The big thing of the Purge is history expiry. So as we saw in the Verge, vertical trees solve the problem of having to hold the entire state. And the Purge is removes the problem of holding the entire history. Now you can just like sync even faster by getting the latest finalized block and then saying, hey, give me like the state today or vertical proofs and everything. So you don't really need to hold the entire history either. So that's the big point of the Purge is it simplifies the codebase for a lot of these clients. Cause right now, if you're syncing from Genesis, you have to. Keep up with all the rules that change over all the hard force in the past. And that's a lot of complexity in the code that we don't really need.

• 1:56:11Speaker 03

  Because we now that we have like finalization, you can just say, okay, that's the latest finalized block. I can just start following from there, from the P two P layer. And not have to bother computing history because you just start there at the finalized point. And there's like all the guarantees are there that it's the canonical chain.

• 1:56:30David Hoffman?

  Okay, so new people, new chips, hardware, computers can come on to the network and start participating because they don't have to go all the way back to Genesis. Say, however, I'm I'm an Ethereum ICO participant and I haven't actually moved my Ether from my wallet since Genesis. So I have this property that I own is called Ether. It's been in my wallet from Genesis. Will I still be able to have my the assurances of my property rights all the way back to the very tail end of history? Or is that now compromised?

• 1:57:01Speaker 03

  It wouldn't be guaranteed by Ethereum Layer One, but it's still it would you would still be able to move those funds. If you have like the the vertical proof, which you can either compute yourself if you get the history from somewhere else, like a like a BitTorrent or something called the Portal Network. Or the or if you don't care really, you can go to centralized participants like Block Explorers and Infura and tell them, hey, give me the vertical proof for the ETH I had all these years ago. But the the point to really drive home is that history of a blockchain is one of N trust assumptions. So you can't be lied to and it only takes one honest participant to give you the honest history. So you're not going to accept the wrong history of the blockchain.

• 1:57:46Speaker 03

  So that's kind of why it's not a big deal to purge history.

• 1:57:50Speaker 00

  And also, it's worth mentioning that you're not obliged to purge, right? Like you can choose to run your node in this fully historical mode where you download everything. You verify everything from Genesis. It's just saying. That that option is going to be kind of default off when when you start validating a new, like you spin up a new client, like the software will be slightly different because you don't have to keep all the transition points. Like right now, in the code, if you're syncing from Genesis, every hard fork, like the merge, like, you know, Den Kun, all of these hard forks, you have to keep the logic and that branch for like, is it before or after this hard fork? If so, like, change the rules in this slight way. So that's like

• 1:58:34Speaker 00

  a huge source of of tech debt and pain. It's like as if as if the Google website you rendered had like all the versions of Google that ever ran since 1998, right? Like, that's just like so inefficient, whereas Google can just update their thing and have a fresh version. That's that's the thing that gets sent to you. It's like way easier, kind of in terms of not having to do this whole history thing.

• 1:58:57David Hoffman?

  And so if I'm running the the node and everything with history, I'm not going to be able to do that from a smartwatch, I imagine.

• 1:59:03Speaker 00

  No, definitely not. And that will always be like, that's going to have a lot of memory requirement, like storage requirements, disk requirements. Yeah.

• 1:59:11David Hoffman?

  Okay, so this is something that is not guaranteed, no longer guaranteed by the Ethereum Layer One protocol. The N of one trust assumption is pretty strong, but it's still an assumption. So if I have like assets very far back in Ethereum's history, there's that N of one trust assumption that I is now the condition for my property rights.

• 1:59:30Speaker 00

  One event.

• 1:59:30David Hoffman?

  One event, excuse me. When Bitcoiners hear this, they like the the strong property rights violation will they the unacceptable. Why? Why are we accepting it in Ethereum? What are we getting with this trade off? Why? Why is this an acceptable trade off? What do we get from this?

• 1:59:46Speaker 03

  Well, the obvious answer is lightweight verification. So that's the like following the chain is much easier. But to come back to your kind of like property rights thing, I would say right now, we're already pretty familiar with the idea of like something like a seed phrase that holds all your keys. So you put money on the blockchain, you have your C your 12 or 24 words, and then you go in a K for 100 years, you come back and you expect that to be available. But one thing, it's like a small trade-off where you can do the same thing with Verkle trees to prove that that your money is there in the state. So you just, on top of your seed phrase, before you go in the cave for 100 years, you have to remember the short proof

• 2:00:27Speaker 03

  that says, yeah, I have these assets from 100 years ago. It's your own data that you can be in charge of if you really insist on keeping everything trustless and not having to rely on other providers for history.

• 2:00:39Ryan Sean Adams?

  Okay, so I want to understand that, Dom. So if I have that Ethereum ICO from like Genesis block, I have that and I've got the seed phrase to that wallet, then I just need that plus some other bit of Verkle identification. Like, what is that data profile? That's not a seed phrase, right? Is that some sort of, like, what does that look like? I'm just, I'm just getting ready to go in a cave. So I just really want to, I really want to figure this out.

• 2:01:07Speaker 03

  It's just a small amount of bytes that just proves that inside your account, you have this balance. So that 100 years later, even if somehow all the state data is just disappeared, all you have is the state root and you can keep proving that you had this before transacting with those assets.

• 2:01:25Ryan Sean Adams?

  Okay, so I have to have my seed phrase and then I have to have a USB drive, just a tiny one with some bytes of data, and then I can go, go in my cave for 400 years, yes?

• 2:01:34Speaker 00

  It's important to say that you don't have to use this, right? Like, you can still run the historical node that still, you know, will generate that proof for you 400 years later when you're ready to come out of your cave. Like, you don't necessarily need to foregone conclusion this. You can still do it. It's just, we're taking away the default of everyone having to do it for, for all the nodes that they're running.

• 2:01:59Ryan Sean Adams?

  Right. Because my other thing is, if I don't want to run that node, I just want to go in with my Verkle bits of data and then my seed phrase, then like the other thing that will probably, like, certainly almost happen 40 years in the, in the future is, somebody will be running this. EtherScan, Coinbase. Somebody will have that, that data. Anthony Sizano.

• 2:02:19Ryan Sean Adams?

  You know, Vitalik, once he's uploaded himself into kind of like the the computer consciousness. Yeah, so I'm sure I'm sure there'll be some resources there and that that's, I guess, what the you know, the one of uncertainty is.

• 2:02:32Speaker 03

  Yeah, so it's like the crypto economics of builders is to hold the entire state. Because you can imagine if I try to transact with all the assets and then one builder just decided that I'm not worth it and they just prune my my account from the data that they have about the state, then they can't come up with that proof to make the next block. So the builder that did hold the entire state, including my account, gets to to collect the fee that I was willing to pay for like my transactions using those old assets. But there's a lot of incentives to just keep the state alive.

• 2:03:05Ryan Sean Adams?

  Last one. Here we are at the end. The splurge. Okay, that that sounds like the most fun because we get stuff, we get to splurge. What tell us about the goodies. What is the splurge, Mike?

• 2:03:17Speaker 00

  Yeah, I I'll pass it off to Dom pretty quick here, but one thing that I I think is really exciting is this multidimensional 1559, right? So currently, one thing that that we do is is we have this transaction fee mechanism that says this is how much I'm willing to pay to get my transaction included on the chain. And all of the resources that are consumed by a transaction, such as compute, storage, data access, all of these are priced under a single unit, which is this gas thing, right? Like, you pay for everything. Each each resource has a different number that it's charged, but the unit of all of them is the same.

• 2:03:58Speaker 00

  And importantly, like that unit is priced kind of statically among all of them, right? So if gas goes up because of a huge demand for minting an NFT, then that also means that like blob or call data cost is going like way up for the rollups because they're paying for that with the same unit of account, which is that gas metric.

• 2:04:20Speaker 00

  Multidimensional 1559 says. Hey, we're gonna split this up and say, okay, compute costs something, storage costs something. And in the case of this NFT mint, if the compute costs are way higher than what they normally are due to like a high inflow of new NFT mint demand, then the call data cost could still remain the same because you've decoupled the two fee mechanisms between the two. So that's like a very more accurate way of actually pricing what it costs to put a transaction on the chain.

• 2:04:55Ryan Sean Adams?

  Yeah, so what's happening is like, like, uh, like, right now, if you're in your home, so it's my house, I get electricity is one of kind of the commodities I use. Propane for like, I have a fireplace and then also water, right? And so like, right now, what's happening, uh, let's say, let's imagine is these are all kind of bundled together in the same price. And the problem is I've got a neighbor and his propane usage is absolutely off the charts, right? And like propane is spiking in terms of demand. It's very expensive and that goes into my bill because it's all being bundled together right now. So it's very inefficient. What you're saying is basically this gets unbundled. So I am paying now my propane like and my water

• 2:05:39Ryan Sean Adams?

  and my electricity as kind of separate usage line items based on my own individual usage. And I don't have to worry about my, my neighbor jacking up propane prices for on my bill.

• 2:05:51Speaker 03

  So to add on to what Mike said about multidimensional EIP 1559 is that today, since everything is inside the same unit of account called gas, whenever we want to raise the gas limit, we have to do a bunch of analysis and prepare for the worst case. Whereas with multidimensional EIP 1559, we can have individual targets. So you can imagine like state growth versus like history bloat, let's say. If you raise their gas limit, then you, it also makes it cheaper to build bigger blocks, which like has a big history. But then another worst case is that you can have small blocks that do a lot of compute and a lot of state read and writes. And then even though the blocks are Small, the state growth from those block is super high and out of control.

• 2:06:37Speaker 03

  So that's why there's like a bottleneck everywhere when we increase the gas limit. But with multi-dimensional EIP 1559, you have individual targets. So we say, okay, the blocks are going to be on average this big. And then the state growth resulting from executing a block is going to be this much gigabyte per year. And then that allows for a much smoother pricing, much more accurate in terms of what the demand for each resource is.

• 2:07:02Ryan Sean Adams?

  Okay, so we talked about multi-dimensional gas and the theme of this urge, the splurge is like it's a grab bag of everything else, right? And so tell us what else is kind of included in the splurge?

• 2:07:14Speaker 03

  Well, still in the EIP 1559 theme, we can change the pricing curve so that it increases the cost of censor censoring a transaction, which is a cool topic because right now we have 12.5% up or down, but most of it gets burned. So instead, if we change the pricing curve, we can have it such that like block builders are kind of buying block space from the blockchain itself, like the same way like you have Uniswap pricing curves. But when you do that, you can have it such that a transaction that's willing to pay a lot of money. All that money goes to the block producer. But then by by the fact that they're paying for more blocks, block space for that specific block,

• 2:07:59Speaker 03

  there's they're basically burning the same amount, but foregoing the transaction is going to cost them a lot in opportunity cost. So you can imagine that if a block burns one ETH and point one goes to the builder, then the cost of censoring that block is point one ETH, which is kind of the the one downside of 1559 is the cost of censoring is cheaper. But if you do it with a different pricing curve, then the cost of censoring that block is the entire 1.1 ETH, like the burn plus the tip.

• 2:08:29Ryan Sean Adams?

  Okay, what else we got? What else is in the bag?

• 2:08:32Speaker 03

  For this splurge, basically, we have like all the goodies like improving the EVM, which I'm not quite familiar with, like stuff like EOF and other like big modular arithmetic for like smart contract development at the execution layer, just like some EVM goodies. Otherwise, the whole topic of account abstraction goes into this splurge as well. So Vitalik has this whole roadmap idea of enshrining ERC 4337 inside EOAs. Once we have like a mature protocol for that ERC.

• 2:09:06Ryan Sean Adams?

  So account abstraction right now is in ERC form, but this would be making it more native? Is that the end game?

• 2:09:15David Hoffman?

  Turning it into an EIP and then eventually merging it in, correct?

• 2:09:19Speaker 03

  Yeah.

• 2:09:19Ryan Sean Adams?

  Okay, and then like, what would that would, what would that mean? Is all of our EOAs right now, so all of our Ethereum addresses basically become account abstraction enabled, so they could be be fully AA, is that right?

• 2:09:33Speaker 03

  Yeah, basically, there would be like a multi-step process as usual, like between adding code to EOAs and then convert an EOA into a 4337 wallet. And then you can have in-protocol enshrining. But it's another end game of account abstraction as well. There's, there are other EIPs for delegating EOAs to smart contract and other pieces of code.

• 2:09:58Ryan Sean Adams?

  Guys, I think we did it. The merge, the surge, the scourge, the verge, the purge, the splurge. We got all six. And I think the question right now is, where do we start? What is coming on the near-term horizon? David made the excellent point earlier in the episode that all of these different urges are being worked on in parallel. But what can we expect in not the hard fork in March, but maybe the one after that? And in more the, the, the middle time period here?

• 2:10:28David Hoffman?

  2024, 2025, what are, what are we trying to get done here?

• 2:10:32Speaker 00

  Yeah, for sure. I think it's useful to kind of take all of this information and distill it into a few like key themes, right? Like, what is Ethereum trying to do in the medium term? Because I think you're going to have Tim on to talk about what comes in the in the next hard fork. That'll be like super useful. Beyond like Deneb and and kind of the current version that we're forking in March, I think of there being like three important directions that we need to to make sure Ethereum is still marching in. The first is preserving the decentralization and censorship resistance, right? Like, in my mind, this is kind of the core value prop. It has to be the the thing that all other decisions are downstream of, because without it, it just like, I don't think that the

• 2:11:17Speaker 00

  blockchain makes that much sense. So, starting there. And then also, I think the second theme that I feel is very important is kind of circling back to this Manhattan underconstruction analogy I was using before. Like, we do want Ethereum DA to be extremely valuable. We want it to have very high security properties, but we need to scale it in order to make sure that people don't move off Manhattan and like the construction is is basically enough that, like, keeping keeping the the pedal to the metal in terms of keeping the the rollups using Ethereum DA for their for the rollup. And then the third thing I think of is more of kind of almost a research direction, like those first two feel like

• 2:11:59Speaker 00

  very concrete. The the third one is like, okay, we have these various centralization pressures that are pushing on the protocol in different ways, right? We have MEV, we have liquid staking and restaking, and, you know, there's all of this kind of the these various pressure points, I would say, that need to be relieved, and figuring out the endgame for each of those is like critical to moving forward. So I think I think starting with censorship resistance, still keeping the focus on DA as the rollup-centric roadmap continues to to mature, and then focusing on MEV, restaking, staking, and the kind of core endgame proof of stake is is the right way to to think about the next couple of years.

• 2:12:44David Hoffman?

  To summarize kind of the pattern that I see, it's a lot of emphasis on settlement and specifically censorship-resistant settlement. We get into the world of improving Ethereum's execution with the Verge, but like in the medium term is really we're focusing on the censorship-resistant settlement of the Ethereum Layer 1 and the scalability of execution on the Ethereum Layer 2 as it relates to settlement back onto the Layer 1. I'm really seeing just settlement as a big theme in Ethereum. Would you agree with that assertion, Mike?

• 2:13:18Speaker 00

  Yeah, I like to kind of take a step back and think, okay, what is Ethereum good at, right? Like, what makes Ethereum's beer taste better? This is kind of like an agent saying that I think Jeff Bezos was talking about. And in my mind, it's like Ethereum is great at being incredibly neutral, decentralized censorship-resistant block space. I don't think Ethereum should try and kind of scale execution to the moon because that's like kind of directly in contrast to the core value proposition of keeping solo stakers around. In the exact same vein, I don't think Ethereum should try and compete byte for byte and get like 1 gigabyte blocks, 2 gigabyte blocks in the next year. Because again, you make concessions in terms of the decentralization

• 2:14:02Speaker 00

  and who can actually access this network. So yeah, I think both the settlement layer of like the global internet of value is like a great vision for almost like a settlement layer-centric roadmap. I think that's like, it makes a ton of sense while still making DA good enough for that blue chip for the super valuable L2 blob space. I think that's kind of the right framing. And also, I think Ethereum as a community is like the huge thing that is super valuable, right? Like Ethereum historically has been a group of people that all care about this thing. And you know, we were talking about decentralized governance. We're talking about different teams contributing in different ways.

• 2:14:44Speaker 00

  Like this whole grassroots movement of building out the roadmap and contributing in your different ways. I think making sure that like the vision is firmly on maintaining And and building that community to be sure that the next wave, the next million, next hundred million, next billion users like choose Ethereum and choose to to make it their their crypto home. I think that's very important, too.

• 2:15:07Ryan Sean Adams?

  So if we were to zoom out all the way, we've we've zoomed out at each individual six urge. So like we've kind of explained the spirit of each individual one, and I want to look at all of them as one system, one system that we call Ethereum, post urges, once all of the urges are now what we just call Ethereum. What is Ethereum? What is the end game? What does Ethereum look like when all of these things are complete? How do we think of this system?

• 2:15:35Speaker 00

  Sure. Yeah, I'll just call back to Vitalik's original end game post, which he wrote in December of 2021. So I think it was right before he he came on Bankless the first time. He summarized it with a very simple diagram that said, you're going to have centralized block block production, decentralized block validation and strong censorship resistance. Like, if that's the the thing that we're building towards, I think we're going in the right direction.

• 2:15:59Ryan Sean Adams?

  So I have the the diagram that Mike just mentioned up from Vitalik's original post, and we'll include a link to that post. It was called Endgame, actually. So same title as this this episode and the episode that that preceded it in 2022. So this diagram itself is pretty significant because I think what it's pointing to, Dom, is we all of the different approaches to scaling a blockchain are all converging into this single box, which is centralized production, decentralized validation, strong anti censorship protection. There's some sort of notion of convergence, I think, in the end game here. What like so what what do you think this is?

• 2:16:44Ryan Sean Adams?

  Why is this significant for for Ethereum and kind of the roadmap that we just went through?

• 2:16:50Speaker 03

  I think it just means that no matter what we do, we end up at this end game. So the approach that Ethereum takes with rollups is it's very pragmatic. As in, it's much easier to introduce blob space and scale it and then let rollups innovate on top of it. Rather than trying to scale layer one all by ourselves, which was like the roadmap before rollups came about. And it's all these urges just tie together beautifully. Like you have blob space, innovation on rollups, and then ZK EVMs on the rollups. And then you enshrine that onto layer one. And it all comes together for very, very easy validation of the chain.

• 2:17:29Speaker 03

  Even though there is a centralized block building, but they are constrained so that we keep this censorship resistance.

• 2:17:36Ryan Sean Adams?

  And that's true for Ethereum, even if like there becomes one super rollup that scales and dominates everything. Or if we are more like the world that we're in right now, where there's many different rollups that are flourishing. And there's kind of like this fragmentation, but we've got some cross-chain kind of like bridging. If either of those paths come true, then we sort of end up at this end game. And Ethereum is just accelerating towards that. Is that right?

• 2:18:00Speaker 03

  Yes, it's exactly right. So of course, if we mean one rollup, it sounds scary if you think of rollups today with multi-sigs and bridges and upgradeability. But like in the end game, you have, even if you have one rollup and that rollup is like fueling mature and no training wheels. That rollup itself has like censorship resistance guarantees from layer one. Then if we end up at a world with a single rollup, then that's basically that rollup is effectively Ethereum's execution layer. Like somewhat indirectly, but also it has the same trust assumptions and everything. So we end up at this, this end game anyway. But with many rollups, you can see that they compete with each other in order to squeeze the most value out of Ethereum blob space.

• 2:18:44Speaker 03

  So if the one rollup starts slacking and charging too much compared to what blob space actually costs. And you can have like competition, another rollup takes the market chair. And we still end up at that end game, which is a vital point.

• 2:18:57Ryan Sean Adams?

  Because the thing that Ethereum is really prioritizing is censorship resistance, right? That censorship resistance.

• 2:19:05Ryan Sean Adams?

  Decentralization, that armor at kind of the base level. And I guess if you're approaching it from another vantage point, which I think it is diagram, he talks about the traditional big blockchains. So these are chains that have not prioritized their roadmap for censorship resistance. In order to get to that end game, that end state that Ethereum is marching towards, they will have to go back and add that, won't they? They'll have to go back and add all of the anti-fraud types of mechanisms. They'll have to go figure out how to slay the MEV monster, or at least tame it, as we said through this episode. They'll have to figure out how to do the inclusion lists and encrypted mempools and add all of that censorship resistance armor.

• 2:19:50Ryan Sean Adams?

  And there's still a path for them to do it. It's just like, wow, that's hard. You have to effectively do all of the stuff that Ethereum is kind of doing in its roadmap today. Is that the point?

• 2:20:00Speaker 00

  Yeah, I think that's exactly right. And, you know, obviously super biased, but I feel like we're almost taking the easier path, right? Because it seems very like the fact that Ethereum already has this credible neutrality, this great base layer community that's running solo staking. We have client diversity. Like, starting from there and kind of scaling the technology kind of horizontally first and then vertically feels much easier than scaling it vertically and then trying to go horizontal, right? Because now to go horizontal, you have to convince solo stakers to run nodes in many jurisdictions. You have to introduce latency into this block production pipeline to allow people to communicate across the globe.

• 2:20:43Speaker 00

  Like, the path of least resistance feels like the one that we're taking.

• 2:20:48Ryan Sean Adams?

  It's easy. And I guess in another way, the approach is either to start decentralized, right? Than to start centralized and become more decentralized. It's just like a little bit of a hard mode here.

• 2:20:58Speaker 00

  Yeah, you're kind of fighting Moloch, right?

• 2:21:00Ryan Sean Adams?

  Yeah, right. I want to ask you guys the question. As you zoom out, you look at this roadmap, like, just maybe a general question. What can go wrong here? Right, like, as you think about actually implementing the full vision here, I'm sure there's some dragons hidden in that diagram on the wallpaper of your phone screen, Mike. Where are they? Like, if something goes wrong, where?

• 2:21:24David Hoffman?

  Three years ago, we didn't know that the scourge was in the roadmap, but the scourge was in the roadmap whether we knew it or not.

• 2:21:30Ryan Sean Adams?

  Is there maybe an unknown unknowns category, of course, but like, yeah, what about the things that you know that you think could be thorny?

• 2:21:37Speaker 00

  Yeah, I think not addressing, kind of, when I mentioned earlier, these kind of key centralization choke points of MEV restaking, liquid staking. I think that could get into a situation that's very hard to get out of, right? Like, for example, that whole 100% ETH staked, all of it through a single governance token, that governance token being controlled by a small minority of people would be like a very difficult place to get out of. I think there's also just this kind of continual push and pull in terms of ossification versus like trying to ship all this cool, exciting new tech, right? And there's almost some natural amount of ossification happening

• 2:22:19Speaker 00

  just because coordination gets really hard as you scale out, right? Like, the ecosystem is growing, like, I just mentioned Wolok, but there's all of these like human coordination problems that seem to arise. And especially as everyone has kind of their own vested interest, the financial side starts to like creep in. So you have this almost weird thing where, you know, how in US Congress, like, nothing gets done because everyone has essentially like solidified in their views and no one can come to consensus on what the right path forward is. I don't think we're gonna ossify through lack of execution. That seems like a really bad outcome. But if we get to a point where the important themes of the roadmap

• 2:23:02Speaker 00

  aren't prioritized and aren't shipped within like the right timeframe, it could almost become like the process, the governance process is just stagnant and no longer able to like deliver what Ethereum consumers need, which is like L2 scaling roadmap, cheap transaction fees on the L2 and great censorship resistance on the L1.

• 2:23:22Ryan Sean Adams?

  What about you, Dom? If something goes wrong, what do you think it's going to be?

• 2:23:27Speaker 03

  I think the key theme of something going wrong in any of these pieces is that we always have fallbacks. Like, a good example is finality. If for some reason too many validators are offline, then we have the inactivity leak. We're still producing blocks for people to use a blockchain. It's still live, just not finalized just yet. That's one fallback. And if we have EPBS, and then for some reason, all the builders just go out of business and they don't they no longer proposing blocks, then we fall back to what we have today with locally built blocks. And things like that, there's fallbacks everywhere. So sure, there are some unknown unknowns, but I think overall, everyone's like super aligned to have a strong Ethereum,

• 2:24:11Speaker 03

  including the social layer, which is the ultimate fallback if something goes catastrophic. Things like client diversity is super important to address at the social layer, because that's another fallback. If one client has a bug, then other clients can just pick up the slack. So you can see that the resilience of Ethereum is just in all these fallbacks and the modular version of doing all these modular parts and coming together. It's like I said earlier, it's beautiful and there's fallbacks everywhere.

• 2:24:40Speaker 00

  Defense in depth, yeah.

• 2:24:42Ryan Sean Adams?

  Yeah, it's so interesting because as we've, like, one of the early blacklist principles is there's a difference between the network and the asset when you're looking at a blockchain system. So there's Ethereum, the network, and there's Ether, the asset. A lot of people confuse those things. And because Bitcoin, you know, the asset and the network are both called Bitcoin. I like to say Ether whenever possible, although a lot of people use Ethereum pretty synonymously, and I've capitulated on some of that. But I think in this entire conversation, we've been talking mostly about Ethereum, the network. That's very interesting, because when you bring on strong Bitcoiners. There's very little talk about the network.

• 2:25:25Ryan Sean Adams?

  Maybe now more increasingly with ordinals and things like that, but it's mostly about Bitcoin, the asset itself. And I want to ask you guys this because the focus has been on Ethereum, the network, this entire episode. And we've talked about this computer that we're all building out in the open collectively. And there's all these groups like coming together to pitch in. And it's some of the smartest minds on the internet in the world at this time. And this exciting project, and we're all doing it together, right? It's very collaborative and we're building this censorship resistance blockchain network, computer. And at the end of that, I'm wondering what that means for Ether, the asset. And I've kind of, I kind of want your, your personal takes here, right?

• 2:26:08Ryan Sean Adams?

  So like, Mike, do you think that this is what we're building here is kind of like a monetary unit? I mean, David and I, our take here is like, what we're actually building is a censorship resistant form of money. That's kind of the byproduct of the network that we're building. It's kind of like, you know, a part of the same thing. If we build the network, then we get the asset. And if the asset's strong, then we get like stronger properties in the network. It's like this flywheel. What's your take on that? At the end of this, when the Ethereum roadmap is complete, when we've reached the end game, what about Ether, the asset? What does that look like?

• 2:26:45Speaker 00

  I really like the analogy of thinking of Ether as the digital oil, right? It's kind of this important commodity on, in the future of the internet. It's useful for paying gas. People use it to buy things. They price, you know, NFTs in it. It also is kind of this, this decentralized store of value, right? It does have that moneyness property where, you know, across border payments are just like seamless. All you have to do is, is know someone's address. Like, I do think a lot of the moneyness properties of, of Ether, the asset are just fully solidified by, by having that kind of foundational network security, network censorship resistance.

• 2:27:28Speaker 00

  And yeah, kind of just like drawing back to, to the kind of Canadian strike that I mentioned earlier. I think, yeah, like it all comes back to property rights. And if there's no one that can exert any control over the network, then the property rights are maximally strong and maximally permissionless. And I think the the value of of the Ether token is just downstream of of that, honestly.

• 2:27:55Ryan Sean Adams?

  What's your take on the same question, Don?

• 2:27:57Speaker 03

  I think the flywheel effect you mentioned is another beautiful aspect of Ethereum, where Ethereum, the network, helps Ether the asset and Ether the asset helps Ethereum the network, because there's like this feedback loop between all the different cryptoeconomic elements, like having to pay ETH for gas, which gives some demand for ETH, but also using ETH as the only trustless money across the the whole ecosystem with rollups and everything. Like, that's the one permissionless asset that has no off-chain dependencies. And all these equilibriums just come together where it stays secure by having ETH, the asset, used as collateral for staking in pretty secure Ethereum the blockchain.

• 2:28:42Speaker 03

  And then there's the equilibrium of staking yield that goes down if too many validators exit. So more validators come in to replace them. So it's all these flywheel effects are super cool to see in Ethereum as an asset and as a network.

• 2:28:57Ryan Sean Adams?

  So this high-level roadmap, this is not months, this is definitely a years-type thing. Want to ask you to get to the end of everything we've talked about today. Are we talking about a longer time period? Are we talking about decades? Are we still in years? I mean, do you think we can get this whole thing wrapped up in like five years? Or will this take longer?

• 2:29:18Speaker 00

  I think there's a very long tail. Like, all of this kind of super futuristic cryptography especially feels extremely unknown unknowns in terms of of time horizons. But I do I do genuinely think, especially when I was talking about like kind of ossification through coordination, in the next like five to seven years, I do feel like a majority of the big questions about Ethereum should have been answered and should have been enshrined into the protocol. Because these these things are very slow to evolve, right? Like, the Internet Protocol has barely evolved since it was, you know, enshrined. In the in the early days, I think USB is another really good example of something that was like

• 2:30:03Speaker 00

  super sticky like this protocol, which is like the protocol is defined by the hardware spec. Right. And that's also extremely sticky because by the time that something gains like real value and real product market fit, real adoption, it can't afford to change very much. So I I hope that like we get to the point where where Dom and I don't even have to be employed by the EF anymore. You know, we're doing our thing somewhere else. The network is is boring, the all core devs, nothing happens because there's no, there's no change. You know, I I think that getting to that state quickly is is pretty important, too.

• 2:30:36David Hoffman?

  I think maybe another question to ask of the similar vibe of a of a timeline is how much of this is research and how much of this is engineering? Like to I'm getting the guess that like most of the research phase has come to a close. But how much of that, how much of research around this roadmap still needs to be done in order for us to actually engineer this roadmap? Dom, do you have a perspective here?

• 2:30:58Speaker 03

  A lot of it is implementation details. So like the research, we know where we're going. And now we need to figure out how we're doing for most things. Like vertical trees are mostly implemented. There is a question of how we do the transition from Merkle to Verkle. But the actual end goal itself is like, we know what it's going to look like. And we just need to do it safely, upgrade the same way we upgraded to proof of stake. But a lot of the the deep crypto for futuristic stuff is still in in the research phase. But most of the big ticket items like are gonna come into a matter of implementation.

• 2:31:38David Hoffman?

  You guys have done a phenomenal job taking us through the Ethereum roadmap and the end game. And one of my big outstanding questions that we can't answer on in this episode, but will answer over the years to come is whether this is really the end?

• 2:31:50Ryan Sean Adams?

  Are we gonna add some more on top of this? I know Drake, when we have Monty, talks about things like single shot finality. Single shot signatures. Yeah, signal shot, I can't even say it. One shot signatures. Thank you, gentlemen. And that's a whole nother rabbit hole. So like when we talk about the end game, part of me is like, are we sure? There might be an end game after this end game.

• 2:32:13Speaker 00

  But talking to Justin is unique because he's always so far in the future, you know? He's great at like, yeah, creating new research directions.

• 2:32:23Ryan Sean Adams?

  I'll note, we have some new urges if we want. We've got the converge that hasn't been used, or the submerge, or the diverge. So we've got some more urges we can add to the roadmap. I don't know. Maybe we do, David. We don't know.

• 2:32:35Speaker 00

  That sounds dissonant.

• 2:32:36Ryan Sean Adams?

  That sounds like a fork. Let's, uh, let's end with this then, because, uh, once again, you guys have done a phenomenal job. And the last person to take us through the roadmap with this level of thoroughness was Vitalik, of course, like two years ago. I think this one was more thorough. I don't say that, David, but it's big shoes to fill and you guys did a fantastic job. I want to ask you this, because we've gotten to know Vitalik very much over the years. And I feel like now Bankless listeners have a sense of why he's doing what he does. Why are you guys doing this? Like, why are you working on this weird internet world computer project? Like, personal reasons? Don't you know you can be paid a million dollars working on an alt layer one? Yeah, meme coins, meme coins pay pretty, pretty well right now. With your skill sets, you guys could be doing a lot of other things.

• 2:33:20Ryan Sean Adams?

  Mike, why, why are you doing this?

• 2:33:22Speaker 00

  Yeah, I like to say that I came for the tech and stayed for the vibes. Yeah, I've just been totally pilled by the community. And that's why I wanted to really hammer home that I think that's one of the really unique aspects of Ethereum. It's like just how welcoming and how, how stoked everyone is to, to be working on this together. Yeah, I think beyond that, I just couldn't imagine wanting to do anything more than just like hack on the core protocol itself. And, and this feels like the, the right way to do it right now.

• 2:33:52Ryan Sean Adams?

  Dom, why are you spending your life here and, and almost three hours on a Bankless podcast?

• 2:33:58Speaker 03

  For me, it's the infinite nerd snipe of every little item that's like you see the big roadmap and each one of those is like its own little rabbit hole that you can just spend hours and hours and weeks into just figuring out every aspect of it. And the way it all comes together is just very cool to see. And I there's nowhere else I'd rather be.

• 2:34:18Ryan Sean Adams?

  Well, thank you for everything you guys are doing. And thank you for this episode. It's been phenomenal. Some action items for you, Bankless Nation. The Ethereum end game episode, the original, will be a link in the show notes. Also, Dom's Blob Space episode that we did, that'll prepare you for the next Ethereum hard fork, which is coming in just, you know, in a matter of weeks here. And also Dom's MEV burn episode. I'm talking about two, two episodes that we've gone down a rabbit hole with Dom. Just listen, if this wasn't enough, just listen to those two back to back right after this episode. Guys, got to let you know, of course, crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. And we just saw the frontier of Ethereum in today's episode. It's not for everyone, but we're glad you're with us on

• 2:35:03Ryan Sean Adams?

  the Bankless journey. Thanks a lot.

• 2:35:26Ryan Sean Adams?

  Bingo.

• 2:35:26David Hoffman?

  Woo!

• 2:35:27Ryan Sean Adams?

  Wow.

• 2:35:28David Hoffman?

  Nailed it.

• 2:35:28Ryan Sean Adams?

  Oh, my God.

• 2:35:29David Hoffman?

  That was crazy.

• 2:35:29Ryan Sean Adams?

  Holy crap.