I listened to this episode with Vitalik Buterin, in his first public update following a successful ‘Merge’ with Beacon chain to usher in the era of Proof of Stake for Ethereum.
I made some notes so if you don’t have 1hr 30 to spare this can serve as a kind of ‘TLDL;’
Questions/Topics from hosts Ryan Sean Adams and David Hoffman, responses from Vitalik (VB).
What will Trolls focus on post-merge?
(VB)
a ) Proof of Stake is Bad generally
b) Sharding will never happen e.g. data availability sampling is complex so not going to happen or Ethereums hits a scalability bottleneck
Betting against Ethereum Ecosystem’s ability to produce Tech does not have a good track record, so the best troll angle is to attack the ideological rather than the tech.
Merge went smoother than expected, testnets were not indicating quite such a smooth transition
Proof of Stake Energy Reduction
(VB) doesn’t believe climate is the no.1 existential threat we face, however it is predicted to have magnified effects on the worlds poorest countries which makes it a major concern.
Generally sees the argument that PoW actually incentivises green technologies such as solar and use of flared gas as being a convenient rationale to fit a narrative for PoW. A feeling of self-serving bias.
Likens it to “Phillip Morris claiming its an incredibly ethical company because it is creating incentives to cure lung cancer”.
Other arguments such that the nodes can be switched on/off to make use of troughs of energy use or peaks of solar etc. are not economically sound. Hardware is a large % of total costs for a profitable mining operations and its much more likely they would be left running 24/7 until Moores law renders the hardware economically unviable.
Thinks more corporates / govt bodies may come forward now PoS is in place, as often had promising discussions but too many of the incumbents had negative opinions of PoW (for right or wrong reasons) and this would block progress.
Sees the Ethereum community as ‘tilted towards the middle’ in the debate where one side is represented by ‘WEF bug eaters’ and the others ‘based cool people’ who think ‘PoW isn’t a problem, methane is good for the environment, it will all be solar in 5 years anyway’.
The values that Ethereum community holds dear are Freedom, Open Source, globally neutral and not blowing up the planet.
Believes the number from Danny Ryan of 0.2% world energy reduction from shift to PoS broadly correct. The argument that all this hash power would just go to Eth Classic doesn’t make sense as this is likely a very short term reallocation of resource as there has been a factor of 10 drop in economic benefit to GPU mining.
Why did PoS take so long ?
(VB) Basically the research and discovery phase was long and somewhat meandering. Mid 2018 Justin Drake’s proposal of BLS aggregation was a cultural tipping point and turned into a prescient observation. This cut off some paths that were being explored mainly the route to PoS via smart contract.
Had we known the outcome of the meanderings would not have spent such a lot of effort on State channels and plasma, like ‘10,000 ways not to make lightbulb’ . Does think that state channels make a lot of sense in some specific use cases.
Also there was no support for making rollups for transactions only, everyone wanted general purpose (EVM) rollups
Hopes that Dogecoin and ZCash can follow the merge process and move to PoS over next few years.
Where are we in Ethereums trajectory ?
(VB) Progress since last year looks good. Some tech stuff gets discussed whilst looking at details on the Ethereum roadmap doc, bit too much detail for this thread. Highlights only;
Merge – complete, things outstanding next big priority is post merge hardfork with withdrawals, should be straightforward, hopefully soon perhaps same time as EIP484
Also Distributed validators DVT and SSV, Long Term extras Single Slot Leadership Elections(SSLEs)
Single slot confirmations are being moved to earlier in the roadmap , there may be some compromises to the 32 ETH validator requirements or perhaps economic finality trade-offs
Surge – Basic Sharding blocks, this is moving along well
Verge – Progress is happening here, but the transaction represents a big engineering challenge. This has been slightly deprioritised as scalability is more important to the Ethereum community
Purge – EIP 4444 is making good progress, just need to get on with Ban self destruct
State expiry linked to PBS (Proposer Builder Separation), deprioritised. Need for another year of firefighting before we can move to a more proactive approach
Splurge – This is smaller but important extra components, some of these particularly ZKSNARKS are very valuable. Vitalik loves SNARKS!
“If I had to choose between giving up on the Verge versus giving up on ZK Snarks I would give up verge”.
ZK Snarks can offer a kind of ‘poor mans’ verge.
“(SNARKS are ) as important a technological breakthrough as blockchains themselves”
We will see more and more of them in the next decade
Economics of staking – what is changing?
(VB) Ways to make deposit / withdrawals faster – this will reduce incentives to use stake pools and further decentralise.
Changes to general MEV architecture.
MEV smoothing – proposal to redistribute MEV revenue to all validators
Vision here is that all a staker needs is to download and verify data snark and sign (!), this would make mobile phone mining viable, believes this is 5-10 years out.
Paths to single slot finality – Big discussions in the community required – this is a huge entire topic for another thread
Centralisation of stake worries
(VB) Addressing the concern that Coinbase / Kraken / Sake pools will own large % and this breaks some of the decentralised security guarantees of Ethereum, believes this is a somewhat overhyped risk.
e.g. LIDO as a single centralised actor is false, there is no individual SysAdmin who can be turned to support an attack, there are 19-21 sub validators and good internal decentralisation at LIDO
Also, there are good people at exchanges eg Brian at Coinbase has stated he would shut down Coinbase staking rather than fold to pressure from centralising power.
BTC has 3 pools controlling >50% amd 5 pools with >80% of hash. This is no different to PoS, certainly once withdrawals are enabled and people can freely reselect pools
Withdrawals themselves will likely mean there will be more single stakers.
PoS will keep improving iteratively. PoS is now more decentrliased than 2 weeks ago when PoW ran Eth
Censorship resistance problem
(VB) Transaction inclusion lists – outsource responsibility for creating a block, can also force acceptance of certain transactions
Ensures builder/relayer markets and MEV Boost
Validator choices
(VB) Can they choose to be OFAC compliant or to maximise profit ? if under pressure from regulator why would Coinbase not choose OFAC compliant validators.
Concept of relayers is going to disappear when in protocol PBS (!) implemented.
Relayers are inherently public and consciously chosen , centralised and trusted.
Builders will remain but some validators may refuse blocks from some block builders.
Have Layer 2s lived up to the hype ?
(VB) Mixed – the wins have been, thriving ecosystems working bridges and compression. ZK EVMs have amazed VB with way faster progress than expected.
Downsides – Fraud proofs have been going quite slowly, Arbitrum and optimism still have the training wheels on. This may mean the optimisitic route may never happen and ZK EVM will triumph.
2023/ 24 Era hopes
(VB) The priorities are :
– Get scaling sorted, rollups ready, apps on top, wallet infra in place
Move Eth development generally out of firefighting mode and into stability mode, leading to a careful, stale long term roadmap for sustainability
Roadmap protocol changes progress but balanced against..
..not putting so much pressure on core dev teams who may burnout.
END
Next episode will cover Ethereum as a platform for Network States, a look into AI and also DAOs.