David and Anthony unpack Modular Blockchains

Transcript

[Music] let's wait a second probably online but let's wait there we go we've been online for the last like 15 seconds what's up anthony hey man what's going on oh yeah you know just another good old friday friday night live stream with my my best bud anthony who lives in australia so it's saturday morning for him hey we're two in a row in last night i was gonna say that like we we typically do these kind of like randomly i guess but like two in a row i guess you're not traveling right now so it's just easier yeah yeah well we started these off i kind of think as a mistake mistakenly towards the end of covid

rather than at the start of kovid and so we had like a good like four or five that were all like every friday um but then at least in america like over co was like over um and then i started going doing real life things but i then i also moved down to san diego started traveling a bunch and so like now for for me personally it's just like i go out to like new york colorado all the crypto conferences get absolutely exhausted for like 10 days and then come home to san diego which is kind of like a party town but i'll just come home and he's like no quiet quiet peace peace and quiet please peace and quiet yeah yeah and i just sit here for mowing via twitter hey there the conference season is back

on so uh i heard you recently got back so congratulations about that uh and yeah fully vaxxed finally whenever australia lets you out like we're waiting with open arms brother yeah probably next year at this stage but it's okay i mean it's summer oh it's not summer yet but like it's getting warmer and i love that in in melbourne like when it's warm here i just like getting away when it's cold like during the winter months it's it's like it doesn't get that cold doesn't snow or anything but i'm just not a person who likes the cold funny enough though like when i was in denver it was during like winter uh in february like what was it 2019 2020 um and it was a different cold i didn't mind it but like the cold you get down here is like a [ __ ] cold i don't know if that's a

thing but like it just felt different denver is like it's the denver's really really cold and also really really dry and so like it makes the cold not so bad because it doesn't like wet cold is always worse wet cold or wet temperatures just transfer heat more like if it's colder it's worse if it's hotter it's worse um every time i go to denver's i just get immediately just like all the moisture just like sucked out of me like immediately chapped lips everything is so dry like i breathe out and i just feel just like the vapor just leaving my body i'm sure this is this is why people tune into these friday conversations to hear exactly this yeah yeah i mean it's not like we've haven't got things to talk about with

ethereum land i mean like how amazing has the last week been just watching the merge stuff going on i think that's been the most exciting thing right dude yeah there is like this um semi-regular ceremonious time on twitter where all the ethereum non-technical people watch all the technical people post screenshots of code in some compiler and the the people the the the client developers whether it's l1 or layer one ethereum or excuse me not layer one uh ethereum one versus ethereum two which i know we're not calling it that anymore but anyways um we all just view the code and pretend we know what we're seeing and but the all the people that are spitting out the the tweets and the pictures about like oh merge consensus

like our nodes are thinking they're like yay and all the other people around the non-technical technical people see these tweets and we're also like yay happy times don't know what it means but like the devs are happy so if the devs are happy we're happy yay uh that's exactly what it is and the funny thing is like a lot of these devs just don't really post to twitter very often or their tweets may not get much engagement um but like now they're posting yeah yeah exactly their heads down building um but yeah i mean this week we've seen like tons of those screenshots on on twitter and then today i mean i woke up to this we had ben edgington who who publishes the what's new in eth2 newsletter um which is an amazing newsletter by the way guys eth2.news it will keep you up to date

with everything happening with eth2 uh but like he posted a picture of all the i think it was like three or four of the clients on either side on the eighth one on these two sides being in sync with each other and then all the kind of like we're not all of them but like a lot of the core devs kind of just in another picture like celebrating and i looked at that and i'm just like this is so awesome like i commented i'm like this reminds me of like a space shuttle launch and all the kind of like you know uh scientists nasa scientists like in the kind of like little room and they're all like oh my god yes it didn't blow up right i didn't kill the astronauts it kind of it kind of feels like that with um with with that picture

but i mean we're so close man like seriously i don't know like i don't want to give any kind of dates or anything because i don't have any kind of like dates to give but it feels like the merge is a lot closer than people think it is and i've been you know beating the drama the emoji is coming i'm not going to give a date um but i don't know i feel like anthony says i'm not going to give a date as if he would be a person to give a date hey i can i can guess i can guess i can estimate right i see what you're saying i see what you're saying yeah yeah you're not saying like the date that you that you're just saying you're not gonna guess rather than like oh i'm not gonna be the official bestower of

the date yeah yeah yeah because people will quote me and be like uh you know thought leader anthony sosano said the merge is going live on january this date um but no no it's just been super exciting man like i think uh we're almost there like this is something that's been coming for a long time it's the biggest upgrade in ethereum's history and the fact that we're so close to it now is is incredible and i feel like everyone is just so energized like not just like us but like the core devs themselves and everyone in the community we're all like you know going towards this one goal like as fast as we can it's just it's so good yeah and it's a long time coming it's a and perhaps the original one promise that ethereum promised vitalik's vision right

it's the upmost like commitment that ethereum has committed to and a significant reason why ethereum gets a lot of flack for not upholding its commitments if you view a theorem from the outside if you view it from the inside you understand it a little bit more like there's so much just like um what denial that ethereum gets at this at this phase just because like everything is in the rear view mirror right and like where everything everybody in ethereum is like it's another one of these ceremonious times where we get to watch people like move the goal post keep on moving back keep on moving them back like we're now on proof of the stake like what you got next the goal posts always shift like there was a long for a long time the the

bitcoin maxis kept saying you know eth2 is never gonna launch eth2 is a pipe dream blah blah whatever then the beacon chain went live and they moved the goal post and kind of said well that's not really eth2 and i mean okay technically it's not like the full vision or whatever um but i think that you know the goal pros just keep moving and then once the merge happens like i'm sure they'll come up with something else and i think it's just kind of annoying having to deal with the gold price keep keep shifting and like the hilarious thing is is that like the market is kind of like rewarding eighth for its progress i think um especially not just against usd but against bitcoin like we we believe in the flipping and things like that and and it's going to take longer than we all would like it to take

but i feel like the market is definitely rewarding ethereum for that but also punishing it for its weaknesses like ethereum taking longer to scale than people would like it's punishing ethereum somewhat by you know some of the value flowing to other chains and that's fine i guess short-term stuff to me anyway i don't i don't consider it anything like a big deal there but uh it's funny how like you know the narratives can probably maybe you know work in the short term ish but like medium long term man like i don't know i i always believe that like the fundamental stuff wins out yeah i i do want to go down that path but there was a question in the youtube comments from reed uh when i said like oh we're not supposed to be calling it eat one eth2 anymore he goes what are we

um supposed to be calling it now i think that's something worthy to tap into uh and so uh i'll take my stab at answering this question and two devs two non-devs are gonna try and answer this uh okay so uh previously we had ethereum one and that was the proof-of-work ethereum chain where everything is on site inside one chain and then we have ethereum two which is the future proof-of-stake charted chain that is also a bunch of like roll-ups as it turns out this has rather than being like a binary like first we're here and then we're there it's turned into a uh phased rollout and we can as a result of that phase roll out there is no one like canonical line between

like ethereum one and ethereum two with proof of stake versus proof of work that is only talking about the consensus layer of ethereum and there's two layers there's the consensus layer and then the execution layer and the execution layer is where like you send your transactions some node some minor like processes them and then makes a block and they they execute the transaction and then they go from the execution of the transaction part to the consensus part by adding that block to the blockchain in the until you these are two separate things these two separate components the execution layer is the evm and then the consensus layer is proof of work so we're keeping the execution layer which

also includes all of the state of ethereum right all of the history we're keeping that and we're just replacing the consensus layer and going from proof of work to proof of stake so like it's not like there's a new chain there's no new ether there's no new anything there's this one canonical state and then we're just swapping out the consensus layer which is proof of work and so where the developers are trying to get away from this whole ethon east 2 thing because it puts bad images into people's minds we're just replacing one of the components about what makes a blockchain a blockchain with something else a new component that also makes it a blockchain but now instead of proof of work it's proof of stake so it's more of a seamless migration you want is there anything i miss or do you want anything

you want to add no that's that's kind of the gist of it um yeah i mean people will have seen execution layer and consensus layer be thrown around um i mean the simplest way to explain it i mean to your point as well is just like the uh kind of like execution layer is like you know eighth one that we know and love today proof of work everything consensus layer is the beacon chain where we're doing staking and once the merge goes through literally all that's happening with the merge is that we're replacing proof of work with proof of stake everything else stays the same like the the ethereum where no one loves to say the same you said at the states that stays the same there's no new eth or whatever nothing like that um we're just replacing proof of work with proof of stake so now the

stakers are the ones who process transactions you know compile blocks verify blocks all that sort of stuff and put them into the chain and it's it's kind of like the same job that the miners were doing it's it's pretty much the same thing like but we're just kind of swapping it out now i mean the reason why everyone's excited about this even though it may seem like uh i'm kind of like maybe downplaying it a little bit is obviously because we get rid of proof of work which we consider to be you know not not great uh we don't consider it to be an end yeah it was definitely graciously a means to an end yes yeah exactly and the ethereum community just generally doesn't like proof of work um at least for ethereum maybe they they're fine with it for bitcoin but for ethereum we

prefer proof-of-stake uh for a number of different reasons and i guess the other big reason people are excited about the merge is that the new issuance the new eighth issuance is going to drop by about 90 instantly like literally as soon as the merge happens we cut 90 of the new east being issued because we pay stakers um you know a lot less than what we pay miners because you're only paying the people that are staking uh so with proof of work the issuance takes uh uh uh sorry the the new eighth being issued is kind of like over all the eighth supply you're paying it to minors and then within uh kind of like proof of stake we're only paying each to what the seven million eight that he staked right now or probably a little bit more than that um so the issuance just drops like 90

and we get more security for that actually i won't go into all the technicals there but that's kind of like the reasons people are excited about it so you'll you'll see like execution and consensus layer b be kind of like uh uh used and that's the terminology that'll be used you know going forward i know it's confusing to follow along because these things can change very often for people um and then everything else just falls into that right like you mentioned the phase rollout the thing about the phase rollout is like even that changed where it's kind of like we don't have phases anymore it's like okay well we know that these major roadmap items that we want to deliver whenever one of them is ready we'll deliver it because originally if sharding was supposed to come before the merge we were going to do shouting on you remember on the

beacon chain and then the merge would come uh it was like phase one for shouting phase 1.5 for the merge and you know it just got it kind of got nowhere everywhere 1.5 it kind of got to the point where everyone's like okay let's just do the merge right like it makes more sense to do the merge first and then we'll do we'll do kind of like shouting uh after the merge or we'll do statelessness if that's ready before shouting but i think sharing will be ready first like a data sharing actually not not execution charting but um from that perspective yeah it's kind of like not really even really a phase rollout anymore and then you know people think okay where does rollups fit into this well roll ups kind of like a you know they still sit on the ethereum kind of like execution layer but then

when sharding comes into it they also kind of like post their their data and kind of like their proofs to uh to to kind of like uh the shards as well so it's it you know it may seem like a bit chaotic right now and maybe a lot of terms flying around um but like it once once it all kind of comes together it just simplifies things a lot we won't have to kind of like refer to either one of these two and all this sort of stuff it'll just be ethereum and you'll still see people talking about consensus layer versus execution layer but i mean you know the funny thing is is that unless you really kind of like want to get into the weeds of this stuff like everyday users don't need to understand this at all like i see some people complaining sometimes oh this is all too

complicated for end users and it's like well this is not something the end users should even be thinking about like if they're just casual users of ethereum they don't have to worry about this the whole point is that like the you know the um the core ethereum community does this stuff upgrades the chain comes together comes to consensus on things stewards the chain you know basically uh so that the end users can enjoy it and that's exactly why the merge is such a seamless process where it's not like oh the network's going to be offline for 24 hours while we do this change no it's going to be literally one one block to the other sort of thing so yeah exactly exactly and there's no there's kind of no kind of you know if it's if it's if it goes well there's no disruption at all there's nothing that

changes for the end user they're just processing their transactions as normal and we're now on proof of stake instead of proof of work so yeah i know i rambled a little bit about that but i think it's important to understand all the little differences there right and so there's a two like dynamics that you said that you said it's like important to understand and then you also said like regular users don't need to understand and i think what when people make the claims of like um this other l1 can scale well okay well then you just put yourself by saying that you just put yourself into the camp of somebody that needs to understand this uh and this is kind of what we wanted to talk about today when we talk about um this concept of like modular blockchains for any of the listeners that were listening to the

the weekly roll up today and and also anthony's content for like the past week or so um modular block change just means that there are a number of things that blockchains do and it's easier to and better to do those things if you can separate the division of labor out into different modules right one of these modules is the consensus layer one of these modules is the execution layer and another module is the data availability layer which is actually the same as the consensus layer um and and so like when you separate these through which these are the three things that blockchains do and it'll take a while to explain why it's just those three but if you take it on take it for granted that those are

the three things that happen uh it's like okay you make transactions and somebody does that computation to do that transaction the state of that transaction is stored in the data layer and then there's a consensus system of of what is true as in what is the data that is stored so these three things make up a blockchain and when you separate these things out into different components you can actually optimize each one so that each one is maximized and when you talk about like proof-of-stake reducing uh ether issuance like by 90 what you are saying is hey we've been able to like uh modularize proof of sake the consensus layer to ethereum

by pushing the the execution layer onto rollups like prioritizing rollups as the execution layer and then putting the consensus optimizing for the consensus layer and what this means is that you don't need big blocks which big blocks are an unoptimized consensus property small blocks are really really good at making consensus because the packets of information can move all around the internet really really freely and easily and that what makes a chain identify itself easily to all the nodes small blocks good for consensus the way that you have small blocks and scale is that you push the execution layer to the layer twos right you let people execute their transactions on the layer twos the

roll-ups compress a lot of the data and make all the data in the layer twos a very very small footprint so that when it actually does come time to deploy a transaction onto the ethereum l1 it's actually like 10 000 transactions at once and so you get to have small blocks because you've compressed 10 000 transactions into a small little bundle of information and then we are able to retain very very strong consensus by having small blocks and by having small blocks you actually also generate high fees we see this on ethereum i don't feel like i have to justify that we all know that the limited amount of block space creates high fees and when you create high fees

you also create ultrasound money because those high fees are collected and they burn the eath when ether is ultrasound money you actually have to issue less of it to incentivize security of ethereum so there's like this flywheel effect by modularizing all of the block the components that make up a blockchain and optimizing for each one individually and each one of those things benefits all the other things it's such like an elegant system and like the reason why like you've been hitting on this and we hit on this this week at bank list is because like i think the ethereum community has finally just learned the way to like illustrate this and like why the ethereum roadmap is the roadmap that it is yeah i mean if as you said like if

people have been watching kind of my content or reading my newsletter over the last couple weeks uh i've been talking a lot about this and it was actually pioneer i kind of like twitter user uh and also a reddit user they've got a different username there called librosis that pioneered this and really kind of i guess aligned my thinking on all of this and and and taught me a lot that i mean i i already had all the pieces in my head but they brought it together for me for kind of like a lack of a better term there but essentially i mean you're right like i think what people i kind of want to focus on what people kind of maybe get wrong and don't understand is that ethereum layer one being where most users sit is a temporary phenomenon it is not supposed

to be the end guy it was never meant to be the angle yeah exactly it's basically an accident of the layers who's not not not being ready yet or like i mean up until recently so the fact that we now have these layer twos and and you can use them and they're still rolling out it's the early days but you said it like the layer two basically compressed the transaction so they're they're happy to pay the high fees to secure those transactions on layer one because essentially what they're doing is they're just bringing lots of small kind of like transactions together and then adding them all up and it's kind of like in aggregate it pays the layer one fee but they only have to pay one fee to get to process of the chain it's not like they have to pay a massive fee uh

that that kind of like individual users do because they've done the heavy lifting off-chain it's kind of like the the analogy i like to use is like a zip file for example like when you zip something up into a zip file you have to do heavy computation on your pc to do that right so instead of doing that just one pc just one yeah exactly just your one pc like imagine doing that across you know the globe and having to stay in the consensus with every other node out there to do it all at once and you know it it's it's it's costly and it's hard and that's why the fees are high and all that sort of stuff there um so uh you know you zip it on your kind of like pc but then you would put that zip file on to kind of like the chain

for an example and that is like a compressed version of it now if you wanted to unzip that you can this is the beautiful thing about true rollups is that you can actually download it to locally if you want and you can run this code yourself to make sure that everything was fine that all the transactions processed as they should have and you can actually verify the information but because of the compression technique that is used by the cryptography that is used you don't need to you know you don't need to do that like you can if you want to but you don't need to do that you can actually have um the assurance that uh you know through zero knowledge cryptography that everything happened as it should have off chain which is the real breakthrough here the zero you know this is why people are so excited about ck roll ups

is the fact that the fact that you can have certainty that something happened without actually knowing it happened like it's it's actually it's like black magic zero knowledge stuff it really is because you can ass like the ethereum layer one chain can know and with kind of certainty that something happened off chain um that was correct and that was actually following the rules um which is you know this is really wild to think about but that is the key breakthrough here and that is why people are so excited about the fact that we can now have basically everything we want we can have the most decentralized and secure data availability layer that is ethereum layer 1 and we can have an execution layer which is the layer 2 system where users can have very very cheap fees and for their transactions and basically instant

transactions confirmation not finality that's a call that's a different thing your transaction isn't actually final until it's kind of like posted to the layer one but you get like um very very cheap fees and we can start experimenting with things as well because at layer two you're not limited to the evm you're not limited to solidity you can do anything like uh dy dx is built in cairo which is a language stacker came up with and he's running on this on um stuck x which is like their they're kind of like new virtual machine that they built uh as part of stock os so and it still verifies itself on ethereum it uses ethereum as its security and consensus layer uh so this is why people are getting so excited i think about the modular blockchain revolution because we're shifting from these kind of like

as pauline i like to call the monolithic layer ones that try to do everything like this is why i'm bearish on something like solana because i actually don't think you can scale to the world uh at least one and i don't think not not just for decentralization purposes because you know we can already see that that solano is definitely not decentralized because it's got a you know it runs in supernova super it runs in data centers like super nodes and everything like that regulators can't kind of like verify the chain and stuff like that or at least it's very very hard to um but like i'm not even talking about that i'm talking about actual scale because for them to scale up to millions of transactions per second they're not going to be able to do that all at least one they're going to have

to do um you know different kind of like techniques like load balancing they're going to have to do kind of kind of like um things like um quality of service or qos control which means actually filtering out transactions that are considered spam um and which is subjective by the way which is extremely subjective right like so you know when you kind of like take all this together you have this beautiful grand design that i like to call it which i actually wrote about this in the in the delegate newsletter a couple weeks ago and i called it the grand design because we've basically figured out how to invert the scalability trilemma or kind of like the uh the trilemma that says you can't have all three scalability security and decentralization and we basically said well no you can have all three and the more decentralization you

have the better your scale because in with proof-of-stake with uh with the consensus layer the more validators you have the more shards you can have which means the more data availability space you have for layer twos the more scale you have so we've basically you know we've solved blockchains essentially like i don't want to get too ahead of ourselves here but we've basically solved that kind of like scalability trilemma um in such a grand way that i can't help but be excited about it and that's why i've been talking about it so much lately is that it finally all clicked for me in my head where i'm like holy [ __ ] we are there like we can do this it's going to take you know a few years to fully roll out and things like that but we've got the design now and we

have the path forward and the you know everyone's kind of like in sync on that which i i'm you know super excited about obviously i i think the one thing that i uh really want to hammer home as much as possible is that like this whole like grand design that anthony is talking about this is a like a politically neutral construction this isn't tribalism this is technology and ethereum is working towards a specific like construction that is not just like oh it's this is the ethereum construction like no no no this is a construction that is inherently politically neutral it's an it's just a piece of technology and ethereum is working towards that and like one thing i'm fearful on is like this design

construction that ethereum is chasing is going to be branded as like the ethereum maxi like choice right like no no there are certain principles that guide us and then we go in that direction but it's not out of some it's not like whatever like roll-ups are inherently not an ethereum piece of technology and we know this is true because we're seeing tezos and nier go after the same basic construction right like different flavors of the same basic construction but it's a it's the construction that we are going for not that it's some sort of like eth maxi political movement like it's actually the technology that we're going for one thing i wanted to say is when you were talking about like the the zip files and i i cut in and said like it's

important that just one computer runs the compression like and when you're talking about monolithic block chains imagine this like it's actually if we can find a way this this is the simple way to illustrate the revolution of l2s instead of having every single note of the network all run the transactions we've are able to use the power of cryptography for one computer to run the transactions and then submit a proof which is a zip file to all the other computers that they did it correctly and so this is a the whole concept of p equals np which is that like sudoku puzzles for example hard to do but easy to verify and this is what is a zk uh zk proved is it's like it actually takes a decent amount of computation to

compute it but once it is computed it is extremely verifiable that it's actually the right thing right and so instead of having a monolithic blockchain like solana where all supernodes compute all of the transactions and they all check each other's work by doing all the raw computation instead we can compress labor we can compress computation by just having cryptography create this zero knowledge proof thing from one computer which we're not supposed to trust one computer that's that's sin you don't trust one computer but because cryptography enforces correctness one computer says hey i did the computation i did also by the way i did it by the rules that we all said that we were going to do it by which is zero knowledge proofs here's my proof and

then all the other computers were like oh yeah that is the proof look at that let's let's accept it and so we've actually reduced computation from all nodes to one or just a handful of nodes and this is again pairs very very nicely with the optimizations of proof-of-stake which is optimizations in a completely different direction for completely different reasons but these things pair so nicely with each other that is what anthony here is calling an elegant design or a grant grand grand design grand design yeah yeah um i call it the grand design because that's normally what people refer to as kind of like god's creation right like it's creating like the perfect that's what i'm saying like it's a logical conclusion it's not the ethereum vision it's a conclusion of

like crypto economics and cryptography exactly exactly and you know the funny thing is like people may be wondering well okay if um if only one computer does it can't that lead to censorship and it can this is the thing like the the trade-off with l2s is that if you only have one computer verifying uh all kind of like one node and one validator one sequence are processing the transactions and they of course can pick and choose which ones they want to process but the thing is is that once uh these l2's mature more they're gonna let anyone run a validator and anyone run a sequence site so anyone can collect the the kind of like transactions process them and then put them on layer one so essentially we we have uh we can have decentralization

at layer two as well or at least sorry censorship resistance at layer two as well because that's commonly something that people bring up as kind of a concern that is definitely a concern but i don't think it's a long-term concern either and on top of that like uh you think you were talking about i guess like um you know uh the compression and kind of like the zk technology the funny thing is we can bring that to layer one as well and there's actually a blockchain called mina protocol that does this right now where they basically compress everything using uh i think snarks maybe not not starks uh it's like zk snacks which is a bit different i'm not sure about the differences in the cryptography but i know that they're doing it right now i don't think you need a whole new blockchain to do this i

view them as kind of like you know admin is basically a research project into can this actually be done which it can be which means you can have an extremely small footprint at layer one um and then even with like statelessness as well where you don't have to keep the state for for forever and you kind of like recyc kind of like uh you know cycle out the state as time goes on and you have kind of like light and proper light clients and stuff like that like the next kind of like this is all going to be rolled out over the next five to ten years but essentially we're going to get to just such a great a great design where we keep the kind of like consensus layer the layer one the security layer decentralized and secure and we do we scale to the world uh via kind of like

layer two so i don't i mean i i and the thing is like you said you you kind of like said that people oh this is going to be like the 8th maxi design well i mean this has been the design that's been talked about for years like this is not anything new all that's new is that someone like paulina came along and gave it a name right and brought it all together elegantly and like illustrated how it actually works in ways that non-devs can comprehend and digest exactly he you know they just came along and said okay well this is what i'm calling modular blockchains and this is how it all works this is the separation of concerns and this is why it makes sense but like for years prior there have been disparate kind of like parties working on this sharing has been in the pipeline

since basically day one ethereum staking layer twos as well roll ups were just the kind of i guess like a natural extension of plasma which has been in the works for quite a while so it's not like any of this stuff is new and that ethereum has just pivoted to this to be like oh well you know we're better than these other chains because we can do it this way this is the culmination of years and years of research and development to get to this point and that's why a lot of us in the in kind of like the ethereum community get a little bit kind of like offended by these other chains who are like well we can do everything at least one and we can remain decentralized and whatever it's like no you can't like it that is not true at all like i would

actually wager if kind of like um nation states wanted to right now they could shut down most of these other chains especially the monolithic ones because all you need to do especially something like i mean i don't want to flood kind of like any one project too hard but like i i use solana as an example because it is on the extreme side of let's just like scale everything at layer one now for to shut down solana you just like all the validators that can halt the chain the 19 validators that can halt the chain they're all registered businesses they're all public right you just go to them and say hey you know you need to be shut down or you go to amazon and aws or like whatever data centers these are on and say you need to shut this down this is not uh

this is not legal i'm not saying that i want nation states to do this but i'm saying that we are building a system that is supposed to resist the final boss which is a nation state um and especially with something like the us and if you don't have a system like that where it's just you know where it becomes very easy to shut it down then everything else you build on top of it is pointless and it's not you know and that's just a decentralization aspect as i mentioned before there's also the fact that you hit the limits of scale if you're trying to do everything at layer one because you're doing everything um with hardware and hardware doesn't um uh doesn't improve like it like it has in the past like moore's law is pretty much dead um it is not going to improve

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

resistant but you only need one and they can do like all this you know processing and process like tons and tons of transactions per second as long as they can post it to layer one with sharding so i mean yeah i don't know like i just feel like it's not an 8th maxi thing it's the logical conclusion and you mentioned tazos and nia which are projects that are kind of pivoting to this design or have been you know kind of on the same roadmap like nia did sharding near to me is pretty much like h2's design they just did it earlier because they didn't have to kind of like inherit ethereum they did it earlier without and forgot about the community yeah yeah pretty much um and then tazo it seems to have like its own little community going there i haven't kept up with what they're doing they seem to get

some hype around nft stuff but they've pivoted to the roll-up centric road map as well uh which is like doing scaling via layer 2 um which is which is cool but you know i think some of these l ones will actually be just being l twos on ethereum as well which is a very controversial thing um the other day actually um justin brown on his youtube channel he asked dokkan the founder of uh of terror this question and it wasn't a question that came from me directly it's just something i spoke about on the refuel and then justin kind of like asked me hey can i ask dough this and i'm like okay that's fine so he asked him he's like would terra ever consider becoming like a layer 2 on ethereum and outline the reasons why that actually would be beneficial for terra as well and they

don't have to give up the lunar token or anything like that and dough didn't answer it he said i'd rather not answer that question he straight out didn't answer it so yeah so it's controversial to even talk about this because people just assume you're being an ethmaxy when in reality we're just kind of explaining how this technology is just better like it's got nothing to do with ethereum and being an eth max or whatever it's just better technology so i mean i was kind of shocked that he didn't even bother answering that and you know i know the reason he probably thought in his head oh anthony's asano this 8th maxi you know i'm not even going to bother applying to this but the thing is is that i think as the years go by it's just going to become undeniable that you're going to get a better kind of

like experience with on the technology side by just simply being a layer 2 and outsourcing your consensus and security concerns to ethereum layer 1 instead of doing it all yourself um i don't know i feel like you know the next five years we're going to see plenty of l2 spin up the l1s i think the l1s are done i don't think we're going to see any new l1 spot maybe one or two but like barely any i think uh that kind of chapter is closed now and the l2 is going to be the new thing 100 you know you know that uh the meme of the the man the guy feeling his face feels feels good meme that's going to be what happens when like all of this energy to spin up an ethereum killer or an alternative l1 when all of the monetary incentives to

do that which has been true since like 2013 even before the ethereum was around all that energy gets like redirected towards spinning up an ethereum l2 like an ethereum l2 generates as much economic incentives to spin up as the l1s of the last four or five years it feels so good it's going to feel so yeah yeah like finally finally some tailwinds behind ethereum the narrative is going to shift pretty pretty drastically i think uh there it it really doesn't make sense to bootstrap a new layer one anymore because uh as i said like you can still keep your token like you don't have to use um like kind of like eighth you can use eight for just gas space on your network whatever or kind of like the fees that will be on your network but you can use your token as the same that

a lot of these kind of like things use their token as a staking token right or kind of like their economic unit for their kind of like chain and there's going to be all the l2s are going to have tokens and everything like that like stock optimism arbitrarily you know uh zk sync i mean polygon already has a token medic but obviously their pos train is in l2 but that token is going to play a big role in their l2 rollout as well so yeah i don't know i think as you said the economic incentives are definitely going to be there on the l2 side once people figure out that hey okay you know launching l1 is actually redundant at this point it's more work than it's worth and we actually basically have to compete with all the other kind of l1s but why not just like build an l2 and

then all you have to compete with is is is kind of like the other the other kind of like ecosystems but you compete with them with ethereum at your side essentially totally and like i actually really really this is exactly where i wanted to go next before we go there however we are a little bit over halfway through this live stream through this friday semi-regular bankless daily great livestream so if you guys are enjoying this conversation you're watching it on the bankless youtube but go ahead and go and click that link that i just dropped in the comments to go to anthony's youtube where he talks like uh of stuff of this nature five days a week plus a few extra bits of content every now and then on the weekends and also writes about it every single day as well okay so you talked about how um

uh you get ethereum on your side if you if your token spins up an l2 right and there's a there's a very significant dynamic as well as why that would be good right what does it what does it even mean to have ethereum on your side and this goes back to the whole monolithic blockchain concept if you have a monolithic blockchain where the execution environment is also inside of the l1 rather than it being on a separate roll up on an l2 uh what that mean and you also want to scale what that means is you have to open up lock space really really far and wide you need a lot of supply of block space and the reason why consumers like this is because a large supply of block space comes along with cheap fees and and so

like solana or this is also true for polygon also it's actually like issuing an insane amount of inflation as a ratio of how much fees are being captured and the way that that is how solana and and these other like scaled chains are surviving is because there is um a large amount of issuance going on to the validators while there's only like you know there's like a half a million dollars of days collected in fees i think solana is even as low as like twenty thousand dollars of fees collected per day they're subsidizing the cost with issuance essentially exactly they're moving the cost from the users to the validators essentially right and we saw the same model with eos right eos like hey free transaction fees well you

actually just pay it in a much more insipidus way via inflation right and so uh so like there's three solana issued per block on the island chain and then there's point zero two solana collected in transaction fees if you have an economic monetary unit that issues like 96 issuance and four percent fee capture that is just inflation and the reason why it works in the short term is that there's an insane amount of speculative fervors like oh is solana the future is solana the future uh maybe it's the future i'll i'll buy the bags right but like if there's that ratio that insane amount of ratio of issuance versus fee capture it is literally the opposite of what is

ultrasound money it's money that just leaks itself in order to sustain the actual costs of validation and security and so this is why solana can't be have any sort of monetary premium is because it comes at a rate of insane amount of inflation uh and it's something like five to ten percent per year whereas ether under proof of stake after the optimizations of the modular blockchain revolution actually reduces by two percent right and so you lose all the monetary premium and the value of the native unit that's issued to secure the blockchain if that's higher you actually need to issue less which makes it even more ultrasound if the monetary premium is lower you

actually have to issue more which makes it even weaker so there's a negative feedback loop towards l1 issuance if you just expand the supply of your block space to really really large and so that's why ethereum with small blocks makes ether ultra sound money and going full circle to what you said you want to a lot a lie with a ally with ethereum as an l2 if you instead of solana being an l1 or avalanche being an l1 it can just be an l2 and not have to pay for security all of the security is paid by the decentralized l1 and so you actually don't have to issue so much because you have already outsourced security to ethereum uh and so like

i mean you technically you're paying but you're not paying through inflation you're paying uh the transaction fees to post to layer one right you're paying the minimum amount uh of the actual data that you actually create right rather than just having like 75 empty blocks just in case there's extra scale you just literally pay the bare minimum and that actually allows for better value capture because all of the economic activity that happens on solana which is a lot could actually be meaningfully captured in the soul token because they don't have to issue so much because they put on the l2 yeah and an analogy that i like to use you know with the subsidization thing in mind is uber remember when uber first

came out the rides were like really really cheap everyone's like oh my god it's so much cheaper than a taxi like taxi industry is a scam blah blah and do you know why those rides were cheap because vcs were subsidizing it they were throwing hundreds of millions and billions of dollars into this company because they knew it would be big right and they knew they could be able to be able to cash out eventually when it ipo'd and they were subsidizing these rights now you look at this this is a business term called penetra penetrate penetrate gosh penetrative pricing can you say that yeah yeah yeah yeah yeah um but uh yeah and now when you look at kind of like the uber prices for the rides they're basically the same if not more than a taxi because there's no more

subsidization going on right so when you kind of look at and i think what's what's most important for people to kind of look at is the use of the block space because right now not only is kind of like a solana paying uh you know an insane amount for kind of like to secure the network or to kind of like um pay the validators their blocks are empty mostly there's 50 000 transactions per second right in the blocks but right now they do 2000 transactions per second and that's most of those transactions are validator related they've got nothing to do with anything except the validator stuff and they're the only chain that does this by the way where they include validator kind of like voting and rounds and in the transactions that are happening on

the kind of like execution side so um their real tps is probably much lower than that i haven't looked lately but it's much much lower than that so they're basically paying all these kind of like uh issuance for these validators to run a network that is 99 empty right now and when it does if it does eventually fill up um you know the fees are going to go up right the fees are going to go up anyway but then what happens is that if they want to keep the fees low they have to increase the capacity they have to double it or triple it or whatever but what happens when you do that exactly by by making the hardware requirements even even more kind of like beefy so this is what this is what i mean like this is something that's really technical and a lot of people don't

understand they just see cheap fees but the thing is is that cheap fees come at you know the costs are just shifted there's no free lunch you guys aren't getting something for free you're paying for through it for it through other means and you as you said david you're paying through it through inflation of the native token to to secure and like really lots of inflation um for this sort of stuff so yeah i don't know i think people see cheap fees like in the short term they're like oh yeah this is so much better than ethereum blah blah and that's fine but like ethereum layer 2 is just going to take the the kind of market share back you can't compete with the layout ecosystem especially zk roll ups and stuff like that when they're fully rolled out because they're going to be near free transactions with with

sharding they're basically going to be sub cent transaction fees here which people are happy to pay i mean who's gonna complain about a one cent transaction fee no one right like um and also like it feels good to pay a fee even if it's even if it's minor even if it's trivial it feels good to pay a fee because that means no one owns you you paid for your freedom that way it's not facebook where the like sign up is free it's not it's not like the classic web tools even those like things are like you know facebook free reddit free twitter i mean it's ads right like and they're harvesting your data too you're just extracted from in a roundabout way exactly and maybe some people don't care about that but like i certainly do um you know and but the thing is like i

would love to see decentralized alternatives to those pop up but it's very hard like there's a lot of network effects around something like twitter so there's kind of trade-offs to be made here but you know in in saying that we shouldn't make those trade-offs for things like like blockchains i think and that's why you know you and i a lot of us in the hume community fight back against this sort of stuff is because this is not the design that we think should be the settlement layer for the world it should not be the backbone of a new financial system it should not be the thing that kind of wins it not saying that these other chains don't have their own kind of like use cases they don't appeal to their own users they do but the thing is is that what ethereum is building for is

very different to what these other chains are building for and i think that's fine but i wish these other changes would be more honest about this because a lot of them a lot of their communities say oh it's going to kill ethereum it's so stupid like it's literally the dumbest thing you can say it was going to kill ethereum it's not going to kill ethereum it's not even competing with ethereum like it's not competing with ethereum's layer 1 if anything is competing with the layer 2 ecosystem on the execution side so we uh just recorded a podcast with roon christensen after he wrote out that tweet thread about how like a multi-chain future is a multi-sig future multi-stakes like they're great for a lot of reasons but not for inter blockchain consensus that's not what they're supposed to be for multi-sigs is just basically like if you

put your assets on ethereum and then you send them over to solana via a multi-sig well congrats you've gone from like ethereum's ten thousand nodes to a five of seven multisig like that's your new security paradigm uh [ __ ] where's how to go with this uh it's like it's like giving up an army for a personal guard right right yeah like that's that's what you do right like oh no i don't need this army i'll just have my one personal guard and i'll be fine right and so like the the narrative that like minority blockchains blockchains with lesser adoption needs to tout is like they their game theory suggests that they start talking about how it's a multi-chain world like if you are a minority chain you want like oh there's going to be a lots of chains we're one of them there's going

to be economic activity everywhere and it's also going to be with us but then as soon as you become like the dominant activity chain the game theory flips he's like well once you're the dominant chain the game theory is like well no it's going to be a power a lot of distribution the dominant chain is going to like take the majority of everything like don't bother paying attention to the minority chains like we're just going to eat their lunch right and so like for all the the the and this is almost like explicitly a part of like the solana strategy is like oh the maximalism's broke maxlin's dead like they're gatekeepers like you you have to accept talana because we're going to be in a multi-chain world well as soon as solana in some hypothetical universe that we're never ever going to experience if solana actually does take

the lead you can bet your ass that all the like solana people are going to be like well salon is just going to eat everything right it's going to eat the whole world it's going to be one they're already maxis if you want to call it that right people who are just like on twitter basically you know um [ __ ] on every other chain saying solana's the one it's gonna win everything and this is just natural as communities get bigger and as people get more entrenched in their views you become i mean i think maximism is the wrong word but you become like you know a part of that thing and like that thing becomes your identity you you want it to win for various different reasons it means a lot to you so that's naturally gonna happen with anything that gets big enough like that's

unavoidable not everyone's gonna be like that but it's gonna happen for for the people that are closest to the medal and i don't think it's necessarily a bad thing i think it's actually needed i actually put out a tweet a few months ago i think where i said maximalism why it basically implied is maximalism actually needed for these kind of things to to survive long-term and i think there is i think there needs to be even just a small group of people that would like are basically the last line of defense against all this kind of stuff and can basically uh you know be i guess more maybe um forward about this sort of stuff than other people will to fight back against this because it's like my kind of like army analogy there the army that fights for a country right they're basically um you know they're called

nationalists in that kind of like perspective but like unless you're unless you defect unless you kind of i guess um you know betray your country you're fighting as a maximalist of that country technically right like if you're in the u.s army you are a us maximalist right you're like well my country is the best i'm going to protect my country and i'm going to go fight for it and obviously there are people that kind of like uh you know traders and whatever but like i'm talking about the majority here um and it's the same for for a crypto community if you're fighting for something you believe in and something you want to protect well i don't think that's a bad thing i think that's just the way it is and yes there's nuance and maybe okay the nation you're fighting against is actually um right in in the war and that

you're wrong but that doesn't change what you are you're fighting for for kind of like what you believe in wait you know where you were born from various different reasons as well so i think that analogy plays plays pretty well into this sort of stuff as well yeah that's also a component of a book that's like really really big in the crypto space which is the uh the sovereign individual there's a chapter in there that talked about like when two armies would go head to head um the bigger predictor of who which army was going to win versus like over over the size of the actual army was like which army has more to lose right and so like you would have like the invading army from some far-off distant land go against go up against like the natives the the uh indigenous the actual people

that had the land and had everything to lose they were fighting for their home they were fighting for what they believed in versus these foreign invaders right and the foreign invaders would be like better equipped better armed and the the indigenous native cultures would be like less equipped there would be fewer of them but they cared ten times more right and like the it's crazy the one of the i can't remember the stats but like the the in the book they talked about how like the people that fight for something that they care about will show up with way more energy and way more just commitment to fighting the fight more than the people that are like a bigger army that are better equipped right like if you believe in it you'll fight far more strategically with far more energy than in any other circumstance

exactly exactly sorry i think i was about to sneeze there it's spring here so hey fever um but no i i totally agree with you i think uh yeah the p you know it's different like when you have people just being like okay well you know to your analogy we're gonna go invade this this specific place and oh well okay just another place we're invading who cares right we can just be blase about it but the people that are being invaded are not going to be blase about it they're going to be like holy [ __ ] like i'm about to lose everything um you know we've got to fight um and you know people might may think to kind of like the movie 300 where like the 300 spartans were kind of like these persians have like a massive army if they come here they're going to

destroy our way of life we're going to be wiped out and they kind of like fought and they were better at fighting than the persians were because the persians were kind of like uh you know they didn't really believe in it um they were kind of like just like subsumed into this thing this thing that was kind of like um going and just killing everyone and everyone that didn't want to be killed kind of like became a slave um whereas like the you know the 300 were just kind of like fighting for what they believed in fighting like much much stronger to your analogy so you know i think people may sometimes be like oh that sounds silly like blockchains aren't like that like blockchains are like that guys blockchains are the modern nation states like they are the modern kind of like uh uh you know uh country the modern kind

of like land and if ethereum sees kind of like quote-unquote invaders like other chains being hostile and being like we're going to take over ethereum why would the ethereum community sit back and be and take it oh oh you are oh okay all right yeah i'll just lie down and take it with with every single l1 the way that it's constructed imparts some sort of values like you actually can't get away from that you can't code a value-less blockchain that is itself values and so when you align with a certain blockchain you are aligning with a certain set of values and if you do that like intentionally well then that means that you actually believe in those values so you're willing to fight for them uh and then if you start a media company you might find yourself on a

friday night weekly live stream with anthony and david yeah yeah and you know the funny thing is as well is like something else we haven't kind of like touched on we alluded to is the monetary aspects you know the fact that we have like bags of each right rather than bags of some other chain of course we're going to protect our investment just like anyone would uh and you know i think like that accumulates over time and you become more entrenched over time but in saying that like it's not just all ideology it's technology as well i believed ethereum's technology or it's kind of like path uh you know to to kind of like um improving over time was actually inferior then i would for sure kind of like you know pivot from the ethereum ecosystem to something else um based on the technology but i actually don't i

just don't see that i don't think that at all i don't think that the other kind of like trains are solving anything that ethereum is not kind of like working to solve just in a different way it's just different design philosophies different architectures and ones that i don't personally agree with or align with for me it's got nothing to do with i mean okay maybe subconsciously it has some stuff to do with bags but really at the end of the day like i am a tech maximus i want to see like the best tech win and the best tech when it comes to blockchains is the ethereum roadmap right now it is not doing everything at least one right no and then that goes back to what i was trying to trying to say earlier is that like this whole technology like roll ups not actually in

ethereum technology like modular blockchains not actually in ethereum technology ethereum is choosing that path but when it's to go down that path as well 100 and and when i come into the crypto space and i come in with my certain set of values i'm looking for a a certain expression of those values and i will find a blockchain that expresses those values i think ethereum expresses those values as soon as it doesn't i'm out i'm elsewhere right like i'm i'm aligned with the values not with ethereum the only thing that i'm really kind of aligned with ethereum on is that it tends to express those values better than any other blockchain and committed to the same values that i have yeah by far nothing even comes close like i have studied all the other chains

i have looked at all of them i looked at their communities nothing even comes close like i i don't think there's any other community that i actually kind of like vibe with that like i do with ethereum um for various different reasons like for for polka dot for example um they have on-chain governance and they're very governance heavy uh whereas i'm governance minimalized i want the layer one to be governance minimalized uh i don't want it to be have like token token um voting or whatever and polkadot's kind of architecture as well i don't think is ideal um solana i mean i just don't vibe with that community it's very very different to the ethereum community um you know bsc i mean do they even really have a community it's more like a kind of like a degen town and again i don't align with that community

either and you go down the list and you know you know the funny thing is i actually felt like i aligned a little bit with the terror community out of all of them and then i saw dough not add some you know anything and like basically just say that i was like uh okay this is this is really shitty um because that was just one that i i kind of like really like aligned with but yeah it just all comes down to that at the end of the day and i've looked at other things and i just i don't you know i really don't ethereum is it for me at this point in time maybe there's something else in the future but i don't know the longer the ethereum survives the more lindy it gets the more entrenched people become the more people building it the more network effects it

kind of like uh uh kind of um gets and yeah i don't know maybe in 10 years something else is is is it overtakes ethereum but at this point in time i just don't see it happening i think like the last thing i want to leave the listeners with is like we when you come into this space and you see crypto you see all these like merits that crypto is going to bring for this world it's like self-sovereign money peer-to-peer transfers all these great technologies and like you hear me and anthony talking about like values and like alignment and like tribes with this specific blockchain well if you don't think in those terms you're a ignoring a very significant part of crypto which is which is the way that the code impacts the society that comes around it if you don't think in

these terms you're going to you're going to um allow perhaps at worst case allow other people to think in those terms for you but you're also just going to accidentally align yourself with values that you forgot to consider right and so like this is not something that you can actually opt out of like you actually have to consider the ways that these systems impact society by their very design in nature uh and that's what i'll leave with yeah no i i totally and i think people who say oh you know crypto's too tribal or like tribalism is going to lead to crypto losing i really need to go and study human history and how humans came to where we are today and how nation states performed and how

humans actually were able to kind of advance as societies it's all tribalism guys it is in our dna we're never getting away from that there is toxic tribalism then there is healthy tribalism um there is definitely distinctions to be made but uh you're fooling yourself if you think that tribalism is going away ever like unless humans kind of like remove it from our dna and remove kind of like the things that make us tribal it's never going away so you need to kind of like deal with it and operate within that reality you can't just like simply ignore it because eventually as you said david you're going to be kind of like it's going to be forced upon you anyway by by people if you don't embrace it yourself as kevin owaki says it's all coordination and it always has been and

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

we're in the first one and the first one is like hey guys can we all get on the same page and then the second one is like all right guys now that we're on the same page what do we do next right now that we're all here where should we go but like humanity's still in the first phase like hey guys like we're all trying to get cohered can we all can we all make one tribe rather than have all the other tribes and like religion turned into nation states now turned into blockchain protocols we're getting closer and closer to everyone being on the same rules which is really really bullish once we get everyone on the same rules on the same protocol we can now answer the question like alright guys now now that we've all got i've gathered you all here today what should we do

next like that's what's happening yes yes exactly exactly i agree with that but i think you know we've come up on time here so we'll leave it at that for now all right guys uh thank you for tuning in to this friday send me a regular bank list at daily guay weekly live stream i just put anthony's daily great youtube channel in the chat once again so you can go ahead and subscribe to his youtube if you want to hear more ramps and ramblings about this uh anthony i will see you perhaps next friday maybe three in a row uh not committing to that one though we'll see we'll see but yeah we'll uh we'll see if we if we do one next week all right cheers everyone thanks for tuning in cool thanks everyone hey we hope you enjoyed the video if you did head over to bankless hq right now

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