Ethereum Merge Updates! | Tim Beiko

Tim Beiko of the Ethereum Foundation is here to update us on the merge. What steps are left? What obstacles do we need to overcome? Are we merging in August like Justin Drake said? Or later? Also, there are a lot of misconceptions about the merge! We’re gonna clear them up. ------ 📣 METAMASK | The Easiest Buy in Crypto https://bankless.cc/buy ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🏦 ROCKET POOL | DECENTRALIZED ETH STAKING https://bankless.cc/RocketPool 👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave ⚡️ MAKER DAO | THE DAI STABLECOIN https://bankless.cc/MakerDAO 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave ------ Topics Covered: 0:00 Intro 7:00 The State of the Merge 12:15 Testnets 15:30 Ropsten Merge 21:13 Client Diversity 24:45 Dress Rehearsals 29:45 Knowing When to Ship 34:00 The Timeline 39:30 Approaching the Merge 47:58 Wen Merge? How Merge? 53:12 Top 5 Misconceptions 1:01:22 Closing Remarks ------ Resources: Tim Beiko on Twitter: https://twitter.com/TimBeiko?s=20&t=CI2Ox4OKbi1sqcRH98qVtg ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:12Ryan Sean Adams?

  Hey guys, Bankless Nation, welcome to another episode of State of the Nation. David, this episode, we're going to be asking Tim Beiko all about the merge. Are we there yet, Tim? Are we there yet?

• 0:23David Hoffman?

  I think we're only going to be asking Tim when merge. That's a whole show.

• 0:28Ryan Sean Adams?

  Well, definitely, we need an update on the merge because I feel like some things have happened recently that may... Look, there were never dates for the merge, of course, but we want to get an assessment of actually when. But also, more importantly, what needs to happen between now and the merge? And Tim Beiko is the person to ask about all of these things. He is a master coordinator on everything Ethereum. So, David, what else are we going to discuss with Tim today?

• 0:51David Hoffman?

  Yeah, there are just a number of testnets that we have to get through. And so, we're going to talk about each step of the testnets, what needs to happen with each of those. There's also, like most hard forks in Ethereum, happen at that block height, but not the merge. The merge happens with a different pre-weapon visit, I guess, for when actually the merge happens. So, there's a bunch of information to parse apart there. And also, overall, there's just a bunch of misconceptions we want to clear up. No, the Ethereum merge will not reduce gas fees. We're going to talk about why people think that and why it's wrong. And also, just talk about what does happen at the merge. Like, does Ether issuance go down? Yes, it does, but why? Will users or apps have to do anything?

• 1:36David Hoffman?

  Can you run a node without staking? What other popular misconceptions there are? And then, of course, what happens after the merge? So, after we ask Tim Beiko when merge, we will be asking all about the misconceptions and the things on the horizon beyond the merge as well. But first, we're going to talk about the road to the merge. So, that's what comes up next.

• 1:54Ryan Sean Adams?

  Awesome. All right. And also, our friends over at MetaMask have wanted us to tell you about the Buy button inside of the MetaMask wallet. I'm a super user of MetaMask. It's fantastic. Use the extension. Use MetaMask in mobile. But David, I haven't noticed until recently that there's actually a Buy button inside of both the browser extension and inside of the mobile wallet. What does that Buy wallet unlock for people?

• 2:20David Hoffman?

  Yeah, for me, I use it when I need to top up a wallet for gas payments, for example. It's nice because you can use the Buy button in MetaMask with your credit card or debit card, or it can hook also straight into your bank account. But if you just need to quickly get some ETH into your wallet, the MetaMask Buy button is super convenient. It has a bunch of just integrations with your bank accounts via different providers. And so I believe there's Wire, there's Transact, there's Moonpay. And so it's probably the fastest way to go from a credit card or a bank account into ETH or into your wallet. For whatever reason, maybe you need to buy a quick NFT on OpenSea, maybe you need some gas in a brand-new wallet, and you don't want to dox yourself. It's on both the desktop version. So listeners who are watching this on YouTube right now, you can open up MetaMask and see

• 3:04David Hoffman?

  that little Buy button. You probably didn't really think about that too often, but it's also on MetaMask mobile as well, being probably the fastest way to get from fiat into crypto. Buy buttons. We like Buy buttons more than we like Sell buttons, don't we, Ryan?

• 3:16Ryan Sean Adams?

  Yeah, you know what? It always makes me sad whenever I pay for gas fees in ETH, because I'm like, "Oh, I spent ETH. I don't want to spend ETH." And so it's nice to have a way to automatically buy that back right inside of the wallet extension. If there was like an auto-buy-back option, I'd probably just click that and have MetaMask replace all of the gas fees I spent on ETH.

• 3:38David Hoffman?

  It's the closest thing possible to paying for gas with your credit card.

• 3:42Ryan Sean Adams?

  There you go. There you go. David, before we get into the episode with Tim, I want to ask you the question I always ask, which is, what is the state of the nation today?

• 3:50David Hoffman?

  I'm going to go ahead and guess the state of the nation is annoying, Ryan. My answer was previously, we are verging, as in we are on the verge of the merge. But since everyone is asking Tim, "When merge? When merge?", I'm going to go ahead and say, Ryan, that the state of the nation is really annoying for people like Tim Beiko, who's always bombarded with the question, "When merge?", we're about to ask him the same question. So we're the annoying ones this week, Ryan. So yeah, state of the nation, Ryan, is annoying.

• 4:15Ryan Sean Adams?

  Yeah, well, you know, it's kind of like the kids in the backseat of the car, right? Always asking dad and, you know, Tim's in that place. But maybe we'll save that question a little bit towards the end. I think it is getting close, though, David. I think we are on the verge of the merge of regardless. It's just like, when exactly will that happen? And I think that's not even the most important question, right? Important question, of course, is how do we make sure we get this thing right? Because it would be very bad if, you know, we did this a little bit too early before all of the boxes were checked and before we felt secure as a community. So we'll talk about all of those things with Tim Baker. You want to say something and then we'll get to sponsors, David?

• 4:53David Hoffman?

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• 5:38David Hoffman?

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• 6:21David Hoffman?

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• 6:36David Hoffman?

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• 7:18David Hoffman?

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• 7:29Ryan Sean Adams?

  Hey, guys. We are back here with Tim Baker, talking all about the merge today. It's a merge check-in. I think we're probably going to have a few of these episodes on Bankless. But of course, you guys know Tim. He's been on the Bankless Podcast a number of times. He runs the Core Protocol Meetings, called the All Core Devs Call, that essential ACD call that you may have heard about for Ethereum. This is where all the devs come together. They discuss what to do next with Ethereum. They get input from all corners of the ecosystem, protocol researchers, and client teams, and everyone else. And Tim, of course, coordinates and is a liaison for a lot of that activity. And Tim also spends a lot of time talking to the outside world about the Ethereum roadmap. So he's the guy we can ask about the merge. Tim, how are you doing, man? It's good to have you back.

• 8:15Ryan Sean Adams?

  Thanks. Yeah, glad to be back. So aside from yourself, I'm curious, Tim, who else can we ask the question of when merge? It's like, you know, because we would be doing this weekly if we could.

• 8:26Speaker 02

  Yeah, yeah. So the reason I'm happy to come on here is that this way researchers and devs are not spending their times answering these questions and they can actually work on the merge. So yeah, they can obviously give you an answer, but hopefully they can spend their time working on it instead. I mean, Trent from the EF is another really good person for this. Like, he just likes me, like, follows all of this and has a bit more like a community role. Danny can also give you some really good answers, but he's like head down writing all these specs. So again, you don't want him to spend too much of his time doing this stuff.

• 9:05Ryan Sean Adams?

  We've got another name. That's good. So Tim and Trent. And then this is a message to the community. Every time you ask a dev or researcher when merge, it delays the merge by another 10 minutes. Okay? So we need to stop doing that. We need to, you know,

• 9:21Ryan Sean Adams?

  we can only do it of Tim and Trent now. But like, so if the imagery here is like, we are kind of the annoying kids in the back of the car, asking the drivers, the developers, you know, when merge, when's this all going to happen? I guess the next follow-up question is maybe more broadly is what mile marker are we on? Okay? So if the road to the merge is 100 miles long, what mile marker are we on at this point in time? Are we, you know, 70? Are we 80? Are we like, you know, 90, 95, something like this?

• 9:55Speaker 02

  Right.

• 9:57Speaker 02

  It's weird because it's not like a straight road, right? Like it's a winding road and and there's some turns that get added as we

• 10:04Ryan Sean Adams?

  Just like your answer, huh, Tim?

• 10:06Speaker 02

  Yeah, yeah. So I don't have a great like answer. I mean, like at a high level, like, you know, we, test nets are the last thing we do before going to main map and tomorrow we're forking the first of the three test nets we planned to fork. We did. So and that's Robston, just to be clear. And we are forking Robston a bit earlier than we otherwise would. Because basically we're asking a bit more of node operators and stakeholders in this upgrade than we are in previous ones. So in previous upgrades on say the execution layer or even on the beacon chain,

• 10:46Speaker 02

  the only thing people usually have to do is download a new version of the client that they're running and that's it. They're good to go. It takes like five minutes and that's it. This one's a bit more complicated. So if you're running on the beacon chain or on the kind of execution chain or proof of work chain today, you now need to download this other client, which you may not have had before. You need to configure it to work with your current client. And there's a couple of extra parameters you need to set. And so because this is like a bit more complicated than than previous upgrades, we figured it would be good to run Robson first as a way for people to kind of test drive this process. And we do plan to deprecate the Robson testnet kind of shortly after the merge. So even if, you know, it doesn't go exactly as smoothly

• 11:30Speaker 02

  as as we'd want, we're we're fine with that. Because this way, you know, like home stakeholders, for example, or infrastructure providers can run through the merge on Robson, figure out if anything went wrong, we can fix all of that. And then we'll hopefully have like a much smoother deployment on like Gorley, which would be like our next step. But but at a high level, you know, it's we want to run through Robson, then there's two more testnets, Gordy and Sepolia. And once those are done, we'd move to mainnet. The big caveat is obviously if we found a big issue at any point during that, then we'll want to pause and fix that. Yeah. So in terms of steps, there's not that many steps, but it's very hard to tell you how long each of those steps can take. Yeah.

• 12:14David Hoffman?

  And each testnet is actually a proof of work testnet. And so every testnet is going to transition into proof of stake. And so is that correct?

• 12:24Speaker 02

  Kind of. So two of the three are proof of work. So Robson is and Sepolia is. The Gordy testnet actually runs under what's called proof of authority. And that's basically, we whitelist a bunch of nodes and we tell them you can produce a block at this at this time and we just rotate through them. So they'll all move to proof of stake. There's only two of the three that are moving that are moving from proof of work and Robson is one of them. Yeah.

• 12:49David Hoffman?

  Okay. And so what are we testing with every single testnet, right? Each testnet has various like variables and of course, the merge has a bunch of variables with it has the consensus layer clients, it has the execution layer clients. As we let's start with Gorley, the one that's coming up here in a couple of days. What are we actually testing when we when we merge a testnet?

• 13:11Speaker 02

  Right, that's a good question. So Robson is the one that's tomorrow to be here. So yeah, yeah. So what we're testing is basically whether, you know, the code in client works as expected. But for the, and that's usually what we test on test, like, you know, does this thing work as we'd expect in conditions that are more or less similar to maintenance? But for the merge, we've actually done this quite a lot of times before with these shadow forks that we've run. So the shadow forks were kind of forks that would happen on test nets or main nets, but there would only have a small number of nodes that's controlled by testing and client teams that would fork. So we've done those, I think, about 10 times so far. And so we have high confidence that, like, you know, things work.

• 13:56Speaker 02

  And we wanted to have that extra level of confidence because the merge is such a like complex change. So I think the thing that we're looking at for test nets even more today than just like the code working is whether the community like manages to like smoothly upgrade. And, and basically it's like, you know, once it's happened, you know, are the validators able to run through the commands, is it clear? What type of tutorials and documentation do we need to write for them? So I think that's like the additional parts that like we're really paying a lot of attention to here. And we know that this first one probably won't be perfect just because of how kind of new and different it is. But then hopefully for the next one, which which will probably be Gordy, we can fix a bunch of those issues, have better documentation.

• 14:41Speaker 02

  So that goes smoother and people kind of have many runs to try things on before it actually happens on main net. And when it does happen on main net, then they have really high confidence that their setup is is is correct.

• 14:52David Hoffman?

  So this is not only a test net on of the software of the protocol of the code, it's also a test net for humans, right? This is also social coordination in addition to actual code coordination.

• 15:04Speaker 02

  Yes, and I feel it's like it's more than 50% the social part in this case because we've gotten quite good at doing just the technical part, you know, kind of in a more closed fashion. So we've really improved that over the past year. But yeah, obviously, we still want to make sure that everyone in the community is able to run a node and they, they, yeah, they're comfortable when the merge happens on that.

• 15:29David Hoffman?

  Okay, so we've got three test nets that we are going to run a mock merge on. It'll be a real merge for the actual test nets.

• 15:36Speaker 02

  Yeah.

• 15:36David Hoffman?

  And then after we merge Robson, which is the one that's actually coming up in a couple of days, like, do we just need to, like, sit and wait and watch Robson in his post-merge state for a while? What happens after the Robson merge for the Robson network?

• 15:49Speaker 02

  Right. Yeah, that's a good question. So on Robson, we will definitely sit and wait and watch it. I do suspect that'll be pretty uneventful because we've done all these shadow forks. I think the thing that we need to then wait for a bit more is

• 16:07Speaker 02

  the code that clients have today works, but it's still not quite as polished as we'd like it to be on mainnet. And that's really the thing where I think we'll probably move to the next test nets once we just have like a bit more of a polished product from client teams. And this is stuff like, you know, fixing some edge case issues, having some better documentation, having some better APIs to interact with the network. So things like that. So that when we do run the Gordy and Sepolia, it might not be 100% where it will be on mainnet in terms of code, but it'll be, you know, 90% plus percent, if not like 95 or 99. So you want it to be quite close. And again, you know, it might happen that Robson has an

• 16:49Speaker 02

  issue on the network and we'll obviously watch that and monitor it and fix it if it comes up. But because we had all these shadow forks, I think we're, we have higher confidence that like the transition should should actually go quite well. The other thing that we'll also see on Robson is Robson has like way more integrations with products, you know, like EtherScan supports it, MetaMask supports it, a bunch of applications have their like core test deployment on it. And even though we've, we've done this, also with another test set that we launched called Kiln, it'll just be useful to see like. This is like a, I don't know, kind of top tier test net in a way that's really broadly supported. Are there any weird tooling or integration issues that aren't directly caused by the code of the merge?

• 17:34Speaker 02

  But just like because things are changing and this tool did not plan for it. And that's definitely something we want to, um, that's definitely something we want to be aware of. Yeah.

• 17:44David Hoffman?

  So say it's Ropsten merge, merge day, which is again, coming in in a couple of days. What, what are you going to be looking at? Like what data are you trying to collect? Or is it more of like a, you kind of know it when you see it kind of a moment?

• 17:57Speaker 02

  Yeah. Uh, so a, a, a couple of things. So one is just like, does the network finalize? Is it generally stable? We have kind of a list of a bunch of, uh, of metrics that we look at. So like, you know, that's like the baseline, you know, that it works. Um, two, the thing that I will look at is just like, are there some big services that have issues? You know, say either scans stopped working, uh, that would be, that would be bad and we want to figure out why. Um, so, so that's the other big thing. And then three is, it's a bit more qualitative, but it's just like, do, do people, did people manage to upgrade, you know, like for example, you're going to eat steak or discord. Is it like, is it like chaos or are people generally like, okay with, with what happened?

• 18:40Speaker 02

  Um, and I think, um, again, like assuming the technical stuff is, is, is correct and there's no issues there. Then I suspect most of the work is about, um, how do you, um, yeah. How do you just make it easy for people to, to, to use the software? Yeah.

• 18:55David Hoffman?

  So is the merge ready? Isn't really like a binary yes or no. It's more of just like a vibe of like, how much chaos is there post test net merge? And like, do we feel good about that?

• 19:08Speaker 02

  Right. And, and one thing that's sort of highlighted is the, the reason for that is, The Ethereum network is pretty resilient to things being imperfect, right? Like, it's designed to assume that things are not going well. Um, so this is why, like, we can have these shadow forks and they can go well. And even imagine a world where, like, proof of work is banned tomorrow, or like, all the miners disappear to attack the chain. We could probably merge with the software that exists today and the network would be, would be fine. Um, but the question is, like, then we, we need to spend all this time fixing all these edge cases, issues on a network that's live in production with, like, hundreds of billions at stake. Uh, and we'd rather avoid that, right?

• 19:50Speaker 02

  It's like, if we can find an issue before having it on main net rather than after, it's, it's much better to fix it before. Um, even though the network could probably sustain, like, a lot of different types of these issues. Um, and, and I guess the reason for that is just like, if you, if you take a bit of a, like, bigger view of, like, the entire Ethereum roadmap, you know, if we don't just want to ship the merge, you know, we have a ton of things we want to ship after. Um, and say we ship the merge, like, in two weeks, but then spent the next six months fixing a bunch of bugs that are, like, trickier to fix because they're already on main net and stuff like that. It would just slow down everything else we have to ship after. Um, and so it's, yeah, this is why, even though it can, like, appear, like, it's ready and it's like, we're not looking for, like,

• 20:34Speaker 02

  much, or like, things don't necessarily break super loudly. Um, we do want to, like, zoom in and find those small issues where things break or are not perfect. Um, so that, yeah, when the transition happens on main net, hopefully, there's, you know, there's kind of nothing to do after and we just, we just move on to the next thing.

• 20:51David Hoffman?

  Yeah, the rule of thumb, measure twice, cut once, comes to mind. The idea is that, like, we could merge right now if we wanted to, but we would perhaps have a lot of collateral, uh, collateral damage as a result of that. And so what we are doing now is we are preemptively fixing that collateral damage before we move, merge, so that the whole entire thing is smooth rather than, than rough. Um, Tim, what is, like, a catastrophic thing that you, that you are worried about? Like, what keeps you up at night with, like, the Robson merges, uh, and/or Testnet merges that you definitely do not want to see in the actual live merge?

• 21:29Speaker 02

  So luckily, like, we've hit a lot of them. I think so. One thing that's it's a bit broader than the merge, but it is this idea of client diversity. So I think we've done, we've done really good work on the consensus layer side with regards to client diversity. Prism is now well under two thirds, and that's really healthy. On the execution layer side, we still have like a super strong dominance by Geth.

• 21:53Speaker 02

  And one thing that does keep me up at night is if we go to the merge and that stays correct.

• 21:59Speaker 02

  If there are cases where like, the majority of the network is using Geth and there's a bug in Geth, that would be really bad. And you can imagine something like, you know, imagine that Geth has a bug which prints even just one ether, or deletes one ether that it shouldn't, right? It really affects kind of the, the, the, the whole purpose of this chain, which is, you know, to have like an immutable ledger that people agree on based on, on a specific set of rules. So Geth had an issue that like, broke some of those rules, and it was run by a majority of nodes. But just like on a, on a CL side, that would be really bad for the stakers running those clients. And it would lead, it would put the Ethereum community in like a very awkward spot of having to choose between like,

• 22:42Speaker 02

  do we bail out, you know, potentially the majority of the chain? Because, uh, you know, most people are using that, or do we actually enforce the correct protocol rules? Even though it might harm the majority of the stake on the network. So that's, that's one thing that keeps me up at night. Like, I definitely want people to try and like, use other clients. And, and this is literally the best opportunity we'll have in Ethereum's history to reset the balance of this. And this is maybe something people don't know, but it's almost not as much a problem right now on, on the proof of work Ethereum, because all the mining is done with Geth. So that means that if there was a bug in Geth, very weirdly, like, all the miners would agree on it,

• 23:25Speaker 02

  because they all run Geth because of Flashbots. Whereas after the merge, Flashbots has updated their infrastructure to be client agnostic. So you don't, you know, it doesn't have to be Geth. You can, you can run any execution layer client. But that's the big thing. It's like, if, if people keep using Geth as a majority client on the network, and there is an issue with it, regardless of when, after the merge, it doesn't have to be right after the merge. That could put us in a really bad position. So, but that's keeping me up at night.

• 23:55Ryan Sean Adams?

  So I'm kind of getting this imagery of like, you know, a school play, right? Where everyone's rehearsing for this school play, right? And people have memorized their lines and there's all sorts of these other parties. You know, there's kind of the stage crew, you know, there's the scenery, there's the spotlight. All of these pieces need to come together. And what you're doing now with these test nets, Tim, is you guys are doing dress rehearsals, essentially. And so, you know, there's going to be, shouldn't just be one dress rehearsal. There should be multiple dress rehearsals. And each of these test nets provides another opportunity for a run through of the play, where everyone's lines are rehearsed and everyone knows, you know, what spot to be and that sort of thing. And so the first dress rehearsal is happening within the next 48 hours or so.

• 24:40Ryan Sean Adams?

  The Robson test net, as you mentioned. And so I'm kind of curious, as we think about these dress rehearsals too. David asked you the question of, you know, what keeps you up at night? But what sorts of things do you anticipate could go wrong in one of these dress rehearsals? Like, what's the analogy of like, you know, the lead actor forgets his lines? Or, you know, this actress is not in the right spot or forgets to come out for backstage? What sorts of things might happen? Or is it completely unpredictable?

• 25:11Speaker 02

  So I think, yeah, if you look at the dress rehearsals, it's like the people don't show up. This is like the back. And, you know, I'll take an example, like with EtherScan, for example. Actually, EtherScan's a bit different because by default they'll be included because they follow the chain. But let's take someone like Lido, right? Like, Lido today is a pool that's just live on mainnet in the beacon chain. And I'll pick on them because they actually have showed up since like the first test net. And I know, I know they're actually on top of this. But imagine a world where Lido doesn't show up. You know, they don't, they don't get any of the blog posts or they see them and they don't care. And then we have the merge happen on test nets and, you know, it looks like everything's all right.

• 25:52Speaker 02

  And then it comes on mainnet and for some reason, Lido operators like mess up their upgrades. And either that means that they're like going offline or like at the worst, they're signing the wrong thing. So they get either like a penalty because they're offline or they get slashed, which is really bad. If, even in the case of Lido, because it's like a big part of the network, if all of their operators were offline, then it might actually affect like the finalization of the chain, which would also be really bad. So I think this is like, you know, one example, just like... If large projects like don't pay attention and don't do anything, it can affect obviously like their end users, but also like

• 26:32Speaker 02

  if they are stakers or or like infrastructure providers that stakers use, it might affect like a large part of the chain and and and lead to like disruptions there. And and this is kind of like on proof of work, right? Like when we have these upgrades on proof of work, you want all the miners to upgrade and you want like the software that miners use that also works and and not have bugs. Um, so I think that's like the thing. It's like if people just like ignore completely these these these uh blog posts and announcements that we make and they just, you know, get to mainnet and then do it wrong because they haven't practiced. Um, that could be bad. Um, and like, I'll give you another example is like, for example, uh, at the merge, transaction fees become available to validators, right?

• 27:14Speaker 02

  Um, so if you're if you're a validator, you can put in an ETH address and and when you create a block, that's where the transaction fees go. Uh, but imagine something like Coinbase or Kraken, which has a staking pool. It might not be as simple for them, right? Because they have, it's not actually their ETH that they're staking, they're staking all their users ETH. So I suspect for them, it's a bit more involved than just for like a solo validator who will just lug in their ledger address, right? Like they'll just say, okay, send the funds there. If you're Coinbase or Kraken, you might want to think about like, okay, what are we actually doing with these funds? Are we compounding them? You know, like, if we get all these transaction fees, should we just give them to users now? Should we just compound them? Um, and so that's the type of stuff where like you want them to have thought about these problems and have a solution for them

• 27:57Speaker 02

  weeks or months in advance. You don't want them to read the blog post from mainnet and be like, oh, oh, man, we're gonna get these transaction fees now. What do we do with them? Um, so it's, yeah, I think it's really just about like paying attention and like,

• 28:10Speaker 02

  and and similarly, you know, one last one is like, if none of the solo stakers see it, like, you know, if one solo staker misses the memo, their will be fine. But it's like, as a community, it's super important that we reach that part of the community and that they're aware and that, you know, it's not just big projects and infrastructure providers updating, but like if solo seekers can't upgrade and none of them have upgraded, that's also, you know, super, super bad for Ethereum. So yeah, that's, that's what

• 28:33Ryan Sean Adams?

  So it is, it's, it's just like a dress rehearsal, right? There, there are lots of different kind of actors and, you know, participators and, you know, there's kind of a choir, maybe there's a band and, you know, if you get one or two instruments that are off or a minor character doesn't show up in costume, like who cares? But if you have someone like, like Lido and they're scheduled to, uh, to sing their solo at, you know, midway through the show, you know, and that doesn't go well, they don't come out on stage, then you got a real problem. So the, uh, the dress rehearsal, the objective of that is to kind of just run through it all. And like, it's funny because like, how do you know that you are ready for showtime? It's like, well, when you have a few successful dress rehearsals under your belt and everyone knows where to be and then, then you're kind

• 29:18Ryan Sean Adams?

  of ready to go to the show. So it is, as David said earlier, it seems to be more like a vibe, right? Like, oh, we've done this a few times. We're feeling good about it. Everyone's now confident and we have this rough consensus that we are ready to go. But also at some point you do need to be like, we need to ship guys and we are ready to go because you could spend time in just dress rehearsal over and over and over again. And then the audience is never going to actually be able to see the show and you could get stuck in that too. So I guess this is just a judgment call. Is this rough consensus as far as where it went to ship? And maybe that explains why it's so difficult to nail down a date.

• 29:53Speaker 02

  Yeah, I think so. And I think the thing, the thing that like at least client teams look at is like, are they comfortable in the software that they're shipping? Um, and there, you know, we get feedback from users and, and, you know, both large and small on that. I think, you know, the thing that we definitely Like if if like a large or even like there's something that breaks for a bunch of small users comes up, then like, yeah, we might choose to delay things there to make sure it happens smoothly. But that's different than, you know, say, Inferno was not ready for the merge because they don't pay attention. Then that's kind of on them at some point. It's like, you know, if they run a business,

• 30:32Speaker 02

  it's it's on them to monitor this stuff. And again, I'll pick on Inferno because I know they actually follow this stuff super closely and and are quite involved. But like, you know, if if they kind of tuned out for six months and then they're like, oh, wow, the merge is happening. And I we would not block it on them. Like, I mean, you know, we

• 30:49Speaker 02

  and and hopefully they they're aware and and they can prepare. And and at the end of the day, you know, if Inferno is not ready for the merge, it is it is like a bad user experience for a lot of people using Ethereum, but it's not a threat to the protocol. You know, and that means that, say, again, imagine, you know, Inferno is not not ready for the merge and like, I don't know, say, open season Inferno user. Well, they may like not like Inferno as much anymore as like a, you know, a service provider and they might change something else and like, that's that's all right. It becomes more of like a, you know, quality of product concern there.

• 31:24Speaker 02

  And again, I I I'm not saying this because I don't think Inferno is ready. Like, I think, you know, they're very active and and on top of this. So just an easy, easy example to pick on.

• 31:33David Hoffman?

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• 33:22David Hoffman?

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• 34:06David Hoffman?

  and connect to other wallets and DeFi apps, all from the security of the best privacy browser on the market. Whether you're new to crypto or a seasoned pro, it's time to switch to the Brave Wallet. Download Brave at brave.com/banklist and click the Wallet icon to get started. All right, Bankless Nation, we are back. And we've got this handy little graphic. Shout out to Trent Van Eppes for putting this graphic together. And this really shows the timeline of the dependencies between now, where we are on the very far left, with that "we are here" indication to where we're going on the very far right. Podcast listeners, it might be useful to open up the YouTube if you want to look at the graphic here. So just to navigate this thing, on the blue line, the blue line up top of the three lines is off-chain. These are social layer consensus choices that are

• 34:49David Hoffman?

  being made, and also some testnet merges as well, which we've talked about. And then below, we have the green consensus layer, and then the red execution layer. And at the end of this graphic is when these things merge, hence the merge. And so, Tim, I'm wondering if you can walk us through this graphic. We've already talked about the testnet client releases, Robson, Sepolia, and Gorley. That's what is in the very near term. Robson goes live literally in the next 48 hours. But then we have some remaining steps. Can you walk us through the remaining steps between now and the merge?

• 35:20Speaker 02

  Right, yeah. So this assumes all the testnets go live. We just talked about that. So it's worth hitting on like, when we get to this next step, you know, terminal total difficulty, like what that is and why it matters, and how the merge is maybe a bit different from other Ethereum upgrades. So generally, when we have an upgrade on the Ethereum proof of work chain, we use a block number. So we say, as of this number, you know, the new rules apply to the chain. And this is kind of easy for clients to handle generally, because even though there's forks on the network, what happens is like, you know, even across multiple forks, well, if you're the block before the upgrade happens,

• 36:03Speaker 02

  you don't have the new rules. And if you're the block after, then you do have the new rules. And it's easy to triage between that. So even if you had, imagine like, three different proof of work forks kind of competing for which one is the valid one, well, you just activate the fork on all three up to when the certain height is hit. And then eventually, you know, those forks resolve, there's a single canonical chain. But it doesn't really matter that like, on the two kind of sidechains, you've like, activated the hard fork as well. It just means that like, the transactions in those block were either valid or invalid.

• 36:37Speaker 02

  The thing with the merge is that we want to make sure that like the merge is only triggered on like one major chain, right? Like, we want it to be pretty clear that like this is where the merge is happening. So instead of using a block number, we're using the total difficulty of the chain. So for those who aren't familiar with proof of work, every block on a proof of work chain has a specific difficulty value, like how hard is it to mine it? And if you sum all those values together, you get the total difficulty of a chain. So it's like, how hard was it to mine block one plus block two plus block three all the way to the head?

• 37:16Speaker 02

  And this is like a really costly measure to fake, because you know, if you want to increase the difficulty of the chain, you actually have to mine it. And whereas if you wanted to increase the block number of the chain, what you could do is you could start a fork where you like really slowly drive the difficulty down to zero and then mine a bunch of blocks when the difficulty is zero. And you'd have like a really high block number on a chain that doesn't have a lot of proof of work difficulty.

• 37:45Speaker 02

  So by using this terminal total difficulty, what we're saying is that when we hit a specific amount of proof of work on the chain is when we would trigger the merge. And that means that if you want to create like an alternate chain there, you would have to spend a ton of money to do so, and there's not really an incentive to do that.

• 38:06Speaker 02

  And so we choose a specific total difficulty value, which we call the terminal total difficulty value. And once we've exceeded that on proof of work, that's when the actual transition from proof of work to proof of state gets triggered. And if your listeners are like super familiar with proof of work, they'll realize that this also doesn't fully guarantee you don't get reorgs, because you could get like short-term reorgs like we have on mainnet basically with uncle blocks. But those are fine, because basically what would happen is if you hit the TTD and there's like three blocks which satisfy kind of the condition. And the condition is like that block's total difficulty is bigger than the TTD, but its parents isn't.

• 38:50Speaker 02

  So it's like literally the only block that's like exceeded that threshold. So if you have a couple of different blocks, like competing uncle blocks, you would simply have the validator pick one of those and they'd all be valid blocks. So, you know, they have kind of a choice over it. But they don't, there's not the risk that like, somebody then reveals an other completely different chain, you know, that was built months ahead, months in the past and has a higher difficulty. Like, basically, if that were to happen, it's kind of the same threat model, let's say a 51% attack on Ethereum. And if we assume that proof of work is secure, you know, that's not something we should, we should head with. Um, so, yeah, I'll, I'll pause here. I see you have a question, David.

• 39:30David Hoffman?

  Uh, I, I think just the summary, I, I think that's correct, is that this TTD mechanism makes the actual event of the merge unpredictable, which makes it impossible to coordinate an attack around. Is that a good summary?

• 39:45Speaker 02

  Uh, it's not that it's unpredictable, it's that it's very costly to fake.

• 39:50David Hoffman?

  Right.

• 39:50Speaker 02

  So basically, if you wanted to hit the TTD on an alternative fork, you need to spend as much hash rate as you would do to mine the Ethereum mainnet.

• 39:59David Hoffman?

  Right.

• 39:59Speaker 02

  And so that's, and, and while you're doing that, you're basically foregoing, uh,

• 40:06David Hoffman?

  Yeah.

• 40:07Speaker 02

  Yeah, that you could get on mainnet. And so that's, that's kind of the thing. It's just like, it's really costly to fake and you don't really get anything from that attack, except like messing with the merge. So, um, and similarly, that cost today is, is on the order of like doing your 51% back on Ethereum, which like you could actually get more out of, you know, if you're thinking about like ROI on your, on your attack. So yeah, it's just, it's just like a, a, a higher security threshold, uh, and, and harder for people to tamper with.

• 40:41Ryan Sean Adams?

  So this is the reason, Tim, you, you guys are using a, a TTD rather than a block number here, right?

• 40:46Speaker 02

  That's correct.

• 40:47Ryan Sean Adams?

  I guess just to zoom out on this, on this graphic for people on YouTube or the podcast, uh, we had talked about the dress rehearsals, the test, testnet client releases, Robston and, and the others that is happening now. The TTD date will be chosen, or the TT. D, the total difficulty number will be actually chosen on all core dev call after the successful dress rehearsals happen.

• 41:13David Hoffman?

  And that's like committing to a live performance, basically. It's like the dress rehearsals are done. We are going to make a live performance happen. We're going to have our first big show, our only big show.

• 41:23Ryan Sean Adams?

  And we get to put up the posters. We get to say at TTD X. What, what will that be? Is that sort of a hash rate? I'm not used to thinking in dates as hash rate.

• 41:34Speaker 02

  So, so, yeah, yeah. So at TTD X, basically, and you can map that back to time as precisely as a block number. So like, you know, with block numbers, we, we usually have like a range of days. Like we can't predict it on the day.

• 41:47Ryan Sean Adams?

  Exactly.

• 41:47Speaker 02

  But like, we, we can do the same with, with.

• 41:49Ryan Sean Adams?

  Okay, so we'll, we'll have a range, a range time. And then we have two client releases. One, of course, is the consensus layer, which is the beacon chain. That's the proof of stake chain that's happening right now. And the other, of course, is the execution layer, which is the existing kind of geth and existing Ethereum mainnet. That's all proof of work. And then it sounds like there is this period that we see on the bottom of this graphic called pre-activation for both of those client releases, both Bellatrix, which is the consensus, the beacon chain, and Paris, which is the existing Ethereum proof of work mainnet. That gets pre-activated and then there's some time period between the pre-activation and the actual time when the, the TTD number hits.

• 42:34Ryan Sean Adams?

  Any idea on like what that, that time range will be between pre-activation and the, you know, TTD? Are we talking like hours? Are we talking days?

• 42:43Speaker 02

  We're talking probably like small number of weeks.

• 42:45Ryan Sean Adams?

  And, okay.

• 42:46Speaker 02

  Yeah. And, and maybe just to take a step back and explain like why you need to run through this whole process. So like you mentioned, like Bellatrix is the name of the changes that happened on the beacon chain. Which kind of allow it to speak to the current proof of work chain. And Paris is kind of the mirror image of that. It's the change we need to do on execution clients, which allow them to use the beacon chain rather than proof of work to come to consensus. And so we need those releases to be out and like those changes to be active on the network before the transition happens. And what that means in practice is like when those changes go live, there'll be like a hard fork on the beacon chain like there was for Altair.

• 43:29Speaker 02

  And what happens after that hard fork is the beacon chain is just pinging the proof of work chain and saying like, have you hit TTD yet? Have you hit TTD yet? Have you hit TTD yet? And so it kind of knows to wait and it obviously knows what to do once, once the TTD is hit. And so basically, because we, we want to give people time to like upgrade their nodes and whatnot. Before the TTD is actually hit. That's why we want to have, choose a TTD value, have like this hard fork. So give people a couple of weeks for, to upgrade their nodes for the hard fork. Even though the hard fork doesn't really change the functionality of either until the TTD is hit.

• 44:12Speaker 02

  And then give a couple more weeks for the TTD to actually be hit. And the reason there is that you don't want the TTD to be hit before the hard fork happens. Because that would mean that like the beacon chain and the execution chain aren't even aware that they should be listening for a TTD. So like, nothing is going to happen on the TTD. And the worst case scenario is if the hard fork, if the TTD was hit. Kind of when only some of the nodes, but not all have upgraded, then you'd have this weird case where like, you know, some nodes are following the hard fork, other nodes have no idea it's happening. And this is why having like some buffers there just give people, gives people plenty of time to know what's happening and to run the upgrades.

• 44:57Speaker 02

  But at the same time also it's worth noting, because TTD is a function of difficulty on proof of work. We don't want to predict it too far out because if the hash rate changes a ton, which we could expect to happen because the merge is happening and people might sell their GPUs. It might take us a longer time to hit it. So this is why like a small number of weeks is probably the sweet spot where like. It lets people enough of a, it gives people enough of a heads up to upgrade. But also, you know, imagine that like the hash rate starts dropping. Well, maybe instead of hitting it in two weeks, we hit it in three weeks. But we don't want to go from like hitting it in eight weeks to 16 weeks. Like that would be really bad.

• 45:37Ryan Sean Adams?

  So, but, but that, that, that, once we have the pre-activation of Paris and Bellatrix, both those clients, then it's just basically a countdown. It's, it's a shot clock to TTD actually hitting. And I'm sure it's a drum. I'm sure we'll have charts. I'm sure we'll have websites. I'm sure we'll have you on like three or four times. I'm sure Tim, during the course of that, we're like just watching the clock. But, but when it actually cuts over, is that all like automatic? Does anything need to happen?

• 46:08Speaker 02

  No, it's all automatic. And this is like, why this is so hard. Like it would be 10 times easier to shut Ethereum down for a day and restart it on proof of stake. Like, and seriously, like, you know, like, I don't want to put a percentage on it, but like at least 50. Yeah, at least half of the work is caused by like, this has to happen like instantaneously. Like, there's no doubt. It, it, yeah, it would be much, much easier to just shut it there and done for a day. And then restart it under proof of state.

• 46:38Ryan Sean Adams?

  So we really are swapping the engine out mid-flight. That's really what's happening.

• 46:41Speaker 02

  Yeah, yeah. And this is why there's so much work. Because if you, from the view of a smart contract, imagine you're like a smart contract. You're on the last proof of work block. The next proof, the next block comes 12 seconds after and is proof of stake. But nothing has like changed from you. Like a small things have around like the difficulty opcodes and whatnot. But it's like, there is no downtime. There's no, for end users sending a transaction, you know, imagine you've sent the transaction five minutes before the merge and it's pending. Like, it might get included in the last proof of work block, the first proof of stake block. And there's really no difference. Like the, the network doesn't. Doesn't know and and and this is why it's so important because you know so much of this stuff is interconnected. If we if we went down for even like 10 minutes, you know, imagine

• 47:26Speaker 02

  like how would wreck like D5, for example. And and yeah, that's where the difficulty is. It's just like having this happen without any downtime for applications.

• 47:36David Hoffman?

  Right. It's like it's the Indiana Jones swap where you swap on the the sandbag to take off the the treasure, right? It has to be instantaneous or else bad things happen.

• 47:46Speaker 02

  Exactly.

• 47:46David Hoffman?

  It is nice to see a a core community of developers prioritize uptime to such a large degree. So I definitely do appreciate that in the D5 financial system that I envision for us in the future. So Tim, how long would this all take after all the test nets and the Belltricks hard work and deciding the TTD like, well, when I talked to Justin Drake at Permissionless and Preston Van Loon, they were like, well, the the Ice Age is coming in August and they said that they're pretty bullish on this being able to get done in August. Do you share that August conviction or what is your perceived timeline on this whole thing?

• 48:25Speaker 02

  Yeah, the the hard thing with timelines is like unknown unknowns, right? It's like, sure, there's a world where like everything goes right and like we merge in August and and but at the same time, if you set that expectation and say we find a weird sync bug on one of these test nets and it takes us two weeks to ship to to ship it fixed, then it's like, well, maybe it's not August and it's September. And if you find two of those, then like, oh, maybe it's not early September is like mid-September. If you find like three or four, then it's like, oh, maybe it's like October. And so I think I I struggle to put like a really precise month just because of that. The thing I am like really confident about is like for it to not happen in 2022, there would have to be like a really terrible thing that happens. Or like

• 49:08Speaker 02

  An incredibly unlikely sequence of like medium bad bad things. It's like if you told me, you know, will we find a bug for the merge? I'd say like, sure, there's probably a good chance. Will we find like two bad ones like, oh, maybe three? That seems unlikely, but it's like the odds of like finding seven or 10 to me are they're tiny. But like it's it's not impossible, right? It could happen, but it's just very small. Or the odds of something like, I don't know. There was like a massive attack on Ethereum, right? Then we have to literally drop everything for three months and like fix that. Or there's like, I don't know, something like the real world, like when COVID hit in 2020, right? Like, and and like, things just like go crazy for like three months. So I think like for it to not happen in 2022, something of that scale would have to happen.

• 49:50Speaker 02

  Either like a huge unlikely string of like medium bad events or like something catastrophic that like hinders our ability to make progress for months. Um, and I think then like, yeah, if you're thinking about like, you know, when can it happen? Otherwise, it's like, how many hiccups do we hit? And if we hit like none at all, then sure, August probably makes sense. But like I I've disappointed myself with optimistic timelines many times before. So I, you know, I don't want to set the expectation that it happens in August and like we find a sync bug like in July and client teams feel like they can't properly fix that because they need to ship the merge a month later. Um, and so that's that's really the main thing. Why it's hard to make a prediction.

• 50:35Speaker 02

  But I do think it's like, it's definitely on the order of like a couple of months from now. And whether it's, you know, two or four or like, I don't know. I guess the worst case would be like five now or something for for the end of the year. Like, that's really a function of like, how many issues do we hit? Um, but more than that, there would have to be something really bad that happens. And, um, and this late in the process, I think it's very unlikely that it would be something that has to do with the merge itself. It's almost like a like, yeah, event. Yeah, external event or or again, like a really unlikely sequence of internal things, but it's, yeah.

• 51:12David Hoffman?

  Well, like I said at the beginning, everyone asks the question, when merge? But, uh, no one really asked the question, how's the merge doing? And so kind of going back to the whole like, it's not really a date. It's more of a vibe. Tim, overall, like, how just, how do you feel? You feel good?

• 51:26Speaker 02

  I feel good. Yeah, I'm really happy about client teams work. Like, I think, uh, like, yeah, it's going well. There's still some like issues we're ironing out here and there, but like, it definitely feels like, you know, we're not only going downhill from here, but like we're quite far down the hill and that's really good. Um, I think I'm also pretty optimistic by the fact that like, I've spent the past couple of months reaching out a bunch of random projects and asking them to test stuff ad hoc and, and, and like, making sure that we don't have any blind spots and stuff and, and so far, so good there. Um, I think the last bit of information

• 52:07Speaker 02

  is kind of what we talked about first on this call is like, how will home stickers like, you know, run through this upgrade? Like, are they gonna have a bunch of issues or not? And, and I hope that not. And I've been spending the past couple of weeks trying to write these blog posts and like, and getting client teams to write explainers about how to upgrade this. And, and that's something we're gonna keep doing. Um, so like, that's the, the thing I'm probably most focused on right now. But overall, yeah, I think, I think it's, it's been really good. Um, I'm, I'm quite happy.

• 52:37Ryan Sean Adams?

  All right. So maybe, maybe two to five months is kind of the, the, the time range here. It sounds like unless something catastrophic or, you know, a number of small things go wrong.

• 52:47Speaker 02

  Yeah, she was probably pretty optimistic. So two, we're early June. It's like, I think if it was in August, it wouldn't be early August. I think like the quickest is, you know, but I think, yeah, August to December, you can probably quote me on that.

• 52:59Ryan Sean Adams?

  There you go. August to December. We, we intend to quote you on that, Tim.

• 53:02Speaker 02

  And then I'll also say like, you know, we won't ship the merge like past like December. It's like, yeah.

• 53:10Ryan Sean Adams?

  Yeah. So we got the window there. So let's do this, Tim, because, um, you know, to kind of wrap things up, we, we want to create, there's a lot of misconceptions going into the merge. We want to lightning round these misconceptions and like turn this into a YouTube video. So, so people can clarify all of the misconceptions. And I'm gonna go through five of the top misconceptions I hear about the merge, and then maybe you can add. But let's just reflect on each of these and, and give us the reason that these things are misconceptions and not true. So I'll go through all five. The first one is this, there is a misconception that you can withdraw your staked ETH after the merge. Is that correct or incorrect? And why?

• 53:50Speaker 02

  It's incorrect. So the merge is basically only to transition to proof of state. You're going to need another upgrade to have withdrawals. And the reason there is just the merge is already the most complicated change we've ever done to Ethereum. And we wanted to limit it as much as possible to make sure that it goes well. So the upgrade after the merge will have withdrawals and there's already specs being worked on for it.

• 54:12Ryan Sean Adams?

  So if you have staked ETH, guys, what this means is post-merge, it'll still be locked in place. You will not be able to withdraw it, but there will be another upgrade coming down the pipeline. In the order of, I don't know, months are we talking about or years? And that will be another upgrade post-merge. Maybe six months time range, six months to a year, something like that. Is that what you expect, Tim?

• 54:35Speaker 02

  Yeah, basically, that's usually what we do.

• 54:38Ryan Sean Adams?

  Okay, there we go. The second misconception that we hear so often is that the merge will lower transaction fees. There's a little bit of truth here, but it's just a tiny bit of truth.

• 54:48David Hoffman?

  An ignorable amount of truth.

• 54:50Ryan Sean Adams?

  Yeah, basically, can you tell us about this misconception?

• 54:54Speaker 02

  So in short, it won't basically like proof of work versus proof of stake doesn't change the throughput of the chain. Ethereum strategy to lower transaction fees is rollups and making it as cheap as possible to use them. And so that'll be a whole other series of upgrades, which is also starting to be worked on.

• 55:13Ryan Sean Adams?

  Okay, so the merge will not lower transaction fees, folks. Number three misconception, the merge will lower ETH issuance. Actually, that one's not a misconception. That's true.

• 55:24Speaker 02

  Yeah, that's actually true. So proof of work issuance, I don't have the numbers in front of me, but it's like

• 55:32David Hoffman?

  4.7% down to 4.6%, 0.46%.

• 55:36Speaker 02

  Yeah, so in the way I, the way I look at it is if you go on EtherScan, they have like an issuance chart for mainnet. And it was like four lines in it. There's like proof of work issuance, proof of work uncle issuance,

• 55:51Speaker 02

  uncle rewards issuance, and then the E2 issuance that you can chain. And so if you look at that, like you can literally remove the three first lines and you just have the the proof of stake issuance left. And it's about a 90%, like the proof of stake issuance is about 10% of the total. So it's about a 90% reduction. It varies like on a daily basis, you know. There's some error bars on these numbers, but like, yeah, there is a massive issuance reduction.

• 56:16Ryan Sean Adams?

  So putting that in misconception format, some people think that the merge will increase ETH issuance, and it won't. It will decrease ETH issuance. Total ETH supply, at least issuance over time, will be decreased over time. Number four, there's a misconception that users, applications, will have to do some work to upgrade, maybe click a button and download something. What is that misconception? What will users and applications need to actually do post-merge?

• 56:46Speaker 02

  So assuming, so again, if you run a node, or you're a staker, or you're an infrastructure provider, like, you definitely need to do stuff. Blog.ethereum.org has the whole list. If you're just using Ethereum, like sending transactions or deploying smart contracts, basically, you need to do nothing. Like, everything will keep working as is. The one small thing I'll say for smart contracts is if you use the block time, or if you use the block numbers, like proxy for time, that changes a bit. So like, today, blocks are about 13 seconds with a lot of variance. After the merge, they're always like a multiple of 12 seconds. So like, for some yield farms and like APY products, like, that matters,

• 57:29Speaker 02

  because if you calculate like a certain APY over a certain number of blocks, after the merge, you're gonna be issuing yet slightly quicker. But it's not like, you don't have to do anything. That will just happen. You should be aware of that, and if you want to upgrade your contracts, you should. But that's really like the only, the only thing that can affect how applications work.

• 57:50Ryan Sean Adams?

  So if you are a regular, everyday, normal user, not running a ETH node, there's nothing you will have to do. If you're just using MetaMask, continue just using MetaMask. You don't have to click any buttons. There's no upgrade. It will roll over automatically. The fifth misconception is you can't run a node, an Ethereum node, without staking. So without 32 ETH, for example. Can you tell us about, why is that a misconception, Tim?

• 58:16Speaker 02

  Yes. So there's two types of nodes, right, on the network. There's validators, which are nodes that produce blocks, which are like miners today. To run one of those, you do need to run, you do need... To put thirty two ETH, and every thirty two ETH gets you like an extra validator slot. And you can think of it as a lottery, like every block, there's a lottery. And your thirty two ETH is like your tickets to like potentially produce the next block. So if you want to do that and be a validator on the network, you you need that capital. If you want to run a node on the network, that's different from being a validator. And what running a node means is you actually verify that the blocks and transactions that these validators create are valid. So validator is like a really bad term because the validator doesn't just verify.

• 59:00Speaker 02

  What they do, all the nodes verify on the network. What the validator does in addition to that is they produce the block. And this is why like in MEV, they call them block producers, not validators. But if you're just a normal user and you want to make sure that the blocks that are being propagated on the network and produced by validators are actually correct. And that, for example, you know, a staking pool doesn't collude to print itself a bunch of ETH. It is free to do that. So like you can just download, you know, your consensus layer client, your execution layer client and run that. It will sync to the chain. It will verify that the history of that chain, you know, the rules were followed. Or at least that there was like strong agreement amongst everybody that the rules were followed.

• 59:44Speaker 02

  And then today, you know, like once you are synced, every new block, it will run it and make sure that like every transaction in that block meets the rules of the protocol. And that's like really important because the only the kind of biggest blocker that we have to validate there's colluding and changing the rules of the protocols is having a large number of nodes that are run by non-validators who just like act as a check and make sure that they're not changing the rules of the protocol behind closed doors. So if you run a node, you do contribute to the security of the network. You don't have to put up capital to do it.

• 1:00:20Ryan Sean Adams?

  It's a public good then to run a node, a non-validating node. It's kind of like, you know, voting in your local elections is sort of a, you know, a public good and a check on power.

• 1:00:29Speaker 02

  Yeah, that's correct.

• 1:00:31David Hoffman?

  Tim, I know you already have a call that started 2 minutes ago. Thank you so much for coming in between a very busy schedule of your day. The last misconception, you can drop off whenever if you do need to run. The last misconception I'll bring up is that in the post-merge world, the ETH stake rate is going to be something like 15%. That number has now, well, no one really knows that number, but like new consensus on very, very informed individuals like Polinaia have converged around 7%. And so the current ETH stake rate is like something around 4 point something percent. It's going to go up to 7-ish percent, give or take, post-merge, not in the teens at all. Tim, thank you so much for coming on Bankless and giving us all of this clarifying information and allowing us to ask when merge in 50 different ways.

• 1:01:16David Hoffman?

  Of course. Thank you so much for having me. Yeah, have a good one, guys. Bye, Tim.

• 1:01:22Ryan Sean Adams?

  There you go, guys. Some of the misconceptions, just to clear up. So you can't withdraw your staked ETH after the merge, number one. The merge will not lower transaction fees. If you've been told that, that's incorrect. The merge actually will decrease ETH issuance. So if you've heard it's increasing ETH issuance, that is incorrect. Users and apps will not have to do anything when they upgrade. You still can, as you can with Ethereum right now, run a node without staking. In fact, it is a public good to run a node because it is a check on power. That is essentially how we're voting in these blockchain systems. And the last one, David, what's that about the ETH stake rate?

• 1:02:03Ryan Sean Adams?

  It's actually more like 7%-ish rather than 13% or so? Does that count? Does, is MEV included in that figure, David?

• 1:02:11David Hoffman?

  MEV is included in that figure. The 13% to 17% ETH stake rate came on the assumption of a 70-30 block fee to tip ratio. And at post-EIP 1559, your transaction fee is split into two halves. One half is the base fee, which people thought was going to be about 70% of the total transaction fee, and 30% would be the remainder tip. Now that EIP 1559 has been live for a while, we have much more data. We've noticed that these numbers have converged on 90%. 10. So 90% of your transaction fee gets burnt, only 10% goes to the validators. So that brought the ETH stake rate down a little bit. And then the other half of the story is that, well, when we first started talking about ultrasound money and the ETH stake rate,

• 1:02:55David Hoffman?

  it was in the middle of DeFi summer when like gas fees were like 200 to 400 Gue consistently. And now instead they're like 20 to 40 Gue. So that also brought the ETH stake rate down. And so that went from like these very, very high, high number estimates of something like 13 to 17% down to a much more, much more like kind of logical and reasonable number of 7%. However, that does not mean to say that if the gas fees go back up, the ETH stake rate would also go back up.

• 1:03:22Ryan Sean Adams?

  I don't even, it's very hard. It's like, I guess what we're doing is we're just picking another point in time and crafting a prediction based on the market conditions right now and saying it's lower than 13% because it's a different, you know, market conditions. But obviously so many supply, demand dynamics go into that rate, including how many validators are, are, you know, part of the network, right? And so this will all fluctuate, but it's likely over the long run that we'll see, you know, between 4% and then at times into the double digits percent for the ETH stake rate. And that will fluctuate over time as well. The other point is really interesting is so EIP is actually burning more than we thought it is. That's still very good for all Ethereum holders, of course. So that, that value just accrues to anyone who holds ETH rather than just the, just the validators.

• 1:04:07Ryan Sean Adams?

  So, you know, 90% is burnt is actually a pretty surprising number to me, but that has certainly been the case with EIP 1559.

• 1:04:14David Hoffman?

  That is before Layer 2s start sucking up all the block space. They're only like at 3% now. One day they'll be at 30%. One day, Ryan, they'll be at 90% and gas fees will be extremely high.

• 1:04:25Ryan Sean Adams?

  True, true, true. All right, man. So if we, we got our answer, I think, when merge. We're doing dress rehearsals right now. Merge in, you know, two to five months or so before the end of the year. It's gotta happen. So we are close and David and I will be continuing to sit in the backseat with the Bankless Nation, asking everybody involved when merge as the weeks go by and the months progress, but we are getting very close, folks. Anything else you want to end on, David?

• 1:04:53David Hoffman?

  The thing I want to end on is if you like this video, the merge will come faster. It's a verifiable fact. So if you're watching on YouTube, go ahead and click that like button. I see 420 people watching it and I only see 141 likes. So y'all got some work to do. And while you're at it, you might as well hit that subscribe button as well because if you subscribe to Bankless, you subscribe to when merge updates. And so every time we ask when merge, you will hear the answer as we get closer and closer and closer to that. Thank you everyone for tuning into Bankless. And I guess if you're listening on the podcast, go ahead and give us a five star review as well because again, the more that Bankless here gets to more ears, the more the bull market gets returned to our hands.

• 1:05:32Ryan Sean Adams?

  I like when you say things like this, David. Yeah, I'm incented. I'm going to go review this podcast. It sounds great. It'll save us from the bear market. Risks and disclaimers, of course. As always, guys, none of this has been financial advice. It's not ETH merge advice. We don't honestly know a date yet, but hopefully we will soon. ETH is risky, of course.

• 1:05:51David Hoffman?

  A TTD. We want a TTD.

• 1:05:52Ryan Sean Adams?

  A TTD. As is all of crypto. You could definitely lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.