Scalability and the Pathway to a Fairer World

Transcript

i think everyone sounds great vitalik can you speak for a second one two three four that's good i think we're block size war [Laughter] i declare the total supply of eth ah okay we're live so um i guess i'm doing the intro uh welcome to edcon uh i'm peter van volkenberg i'm going to moderate this panel with this incredible uh lineup of of folks in the crypto community who were really fortunate to have on today um i'm not even gonna ask them necessarily to give a big introduction about themselves i'm gonna ask them to go one by one because we're talking about four

very different projects here and you know introduce yourself extremely briefly most of you need no introduction and describe the project that you're working on in 40 words or less so as an example i'm peter i work at a nonprofit in washington dc it's a little different and here's my 40 words coin center is an independent nonprofit that's focused on the public policy issues facing cryptocurrencies and open blockchain networks we exist to defend the freedom to innovate using these privacy and freedom enhancing tools so just plain english what does your project seek to do in the world uh manip hey everyone munim here co-founder of blockstack so

blockstack is building a user-owned internet and we innovate in the broader bitcoin ecosystem so this tax blockchain registers assets and smart contracts that connect back to bitcoin's security uh and and that's our model of kind of like building a web 3. cool vitalik i'm vitalik founder of ethereum which is a general purpose blockchain project so ethereum basically tried is a blockchain um in the same way that there's a lot of other blockchains but with a particular focus on basically taking the functionality that

blockchains provide such as the permissionlessness and the decentralization and making it as kind of broad and general purpose as possible so people can apply it to any kind of application they want to build cool sergey hi everyone my name is sergey i am co-founder of chain link chainlink's a decentralized oracle network which means it validates events from the external world to the degree that they can become useful for blockchains and smart contracts to know what's going on so we we validate what's happening out in the real world and we we prove that to the degree that that proof is sufficient to trigger a smart contract uh move money affect uh affect various

important events in in in smart contract and blockchain platforms which is important for them to be able um to do all kinds of cool things related to d fine insurance global trade but we are really really a compliment so we seek to enable those uh various smart contract systems to to do a lot of cool things through the smart contracts they can build through external external data right and daniel hi um my name is danny wong from blueprint uh lupring is a zika roll-up implementation on ethereum basically it's a layer two scalability solution for transfers and decentralized exchanges basically we can reduce cost by a factor

of 1000 and improve the throughput by another thousand cool all right so these are obviously um pretty well-known projects if you've been in the crypto space for a little while especially ethereum and and block stack but also these newer apps that are gaining a lot of traction very quickly whether they're chain linked and they're focused on finding facts or whether they're loopering and focused on scalability and um and privacy uh and maybe decentralized exchange which is one of the things you'd do with that roll-up right daniel yes so i i'd propose that just to keep everyone on the same page in the audience um i hope we have a big

audience i have no idea if anyone's watching this right now it's kind of funny it's just like i get to have a fun conversation with some awesome people but to keep everyone's heads in the right place i i'd propose that what we've got here are you know vitalik and munib are building or they're you know they're they're central in communities that are building platforms for decentralized apps and those platforms themselves are decentralized and of course a big thing about building a decentralized app is where do you put the data how do people interact with the data and then what does the data do and so with ethereum the data is going in the ethereum blockchain with block stack the notion is that you could use the bitcoin blockchain or maybe any chain i know you guys are sort of chain agnostic to

anchor the data for decentralized apps but you guys are like the operating systems of the new decentralized world ideally you're like the microsoft windows or um mac os you think that's fair either vitalik or the new i think that's reasonable um i mean the the one thing that i would kind of add is that the emphasis is not just on data but also on the computation and kind of on the richness of the computation that the ethereum protocol makes possible but otherwise i think the end of emphasis on being like an operating system or base lawyer is very correct right kind of like verification of of computation and data rather than

scalability of computation right because as you've said before these things aren't massive parallel computing systems that could render all the frames in a big-budget marvel comics movie right and verification of computation is ultimately a kind of computation but that's definitely usually the best way to use it i think most people think of computation if they're new to the cryptocurrency world as like big data like how can we chug through the most frames of this video as possible to recognize every face and that's not really what these tools are good for right this is more like just processing transactions for things that we all need to trust right like money yeah yeah so i do agree that i think the we can apply the operating systems landsat as well

another way to look at would be to actually go a little bit deeper like to the microprocessors level like i think the analogy would be and i think this is this is interesting because it also highlights some of the differences and approaches that people take like for example back in the 80s uh when microprocessor designs were kind of like you know at more more early stages there was a reduced instruction set architecture and the idea was that you keep the microprocessor very very simple it would just do like basic unlike calculations and you try to build more complexity on top of that microphone layers yeah and i think on the on the other side there was another school of thought that was more about the complex instruction set and that is also perfectly valid

actually both survive even even till today uh both types of microprocessors and it seems like yeah one thing bitcoin exactly they're they're they're another extremely simple so sometimes i view i look at these things from that lens where we view bitcoin as a extremely simple uh kind of like a network mostly just does like one thing in a very simple scripting language right and then the stacks blockchain adds another layer on top of it connects to it but we are generally in that camp like we want to keep complexity as minimal as possible at the blockchain layer whereas ethereum is maybe not the extreme opposite of that but does seek to have more general purpose

computational power at its core right right okay i'll go ahead i'm just gonna say like it's definitely possible to go much more extreme on the ciscan than ethereum is like one example of this if you look at platforms like eo eos for example that we're like trying to do things like you know baking a decentralized court into the blockchain or making governance into the blockchain or these functionalities i'm like we're not going anywhere near that but yeah there is a spectrum and we're definitely kind of less on the um extreme minimum baseware minimization side than bitcoin is i do think because ethereum and bitcoin are some probably the most notable projects in the crypto space you guys get like painted as like extreme light and dark or extreme one or versus

the other but i think i think you're right there's projects that go much further in the general purpose realm so now to so so if these are our platforms and we've also got two amazing folks on this panel who are building apps on these platforms now both of you you're building tools that are primarily being used on ethereum is that right yes that's that's correct okay so um daniel and then sergey uh i guess you know so you've described your apps variously i would condense them to ones focused on um facts and the revelation of facts and the other one is at least right now with the zika roll-ups focused on creating liquidity right for uh decentralized exchanges and things like

that is that an accurate summarization of what your apps do um from my perspective no it's not about the liquidity it's still about scalability okay because liquid is more like a operational stuff right even if we have this technology ready it doesn't mean we have liquidity at all um so i think that's a another perspective so we are currently still focusing on technology to make sure that you know people can tweet without worrying about their asset being stolen right uh with a guarantee to be able to you know withdraw from the exchange but part of what you're doing with that

technology right now or what it's being used for is to allow people while still retaining control of their asset provide liquidity right well eventually yes because the core of our um you know value proposition is still a different decentralized exchange but it's not the time yet i think it's still too early to you know focus on operation right now still the time to improve the core technology so i think when we talk about the blueprint or zika roll up in general i think we're still talking about the throughput you know the cost per transaction stuff like that and those

metrics are still uh very technical so we are not really talking about how to create a program to incentivize market meters to bring liquidity from you know other venue to to looping exchange i i still don't think we are in the mode of operating exchange we are still researching something and fixing some bikes so maybe it's more fair to say that um you're just another layer in a sort of a platform stack rather than being any particular user-facing app right uh i've also not agreed to that okay because because eventually we want to provide the exchange functionality

and probably peer-to-peer payment on layer 2 to our end users okay but i think it's just a process we're still in the middle of the process i'm not ready to really promote any product yeah sure but but the nature of the zk roll up that you guys are working on is such that it could be used to perform some sort of decentralized app whether it's providing liquidity to a decentralized exchange where users don't have to say uh give up their control over their funds to some third party and doing it at scale rather than it just being a whole bunch of atomistic transactions on a decentralized exchange right is that fair yes i think that's mid statement is correct uh yes i got one on the long term for the long term

because right now if you look at ck rollups it's all centralized it's almost 100 centralized but it's just non-custodial to be secure right so going forward maybe we want to put more effort in making the relayer more decent decentralized not just controlled by like one party right now our exchange is controlled by us right although we don't have access to user's asset but we still you know um that the quality of service still depends on our own you know back-end availability okay so maybe going forward exactly what you said is correct and and daniel um my characterization of chain link is that you're trying to build a decentralized means of getting truths

about the world into blockchains specifically ethereum's blockchain through being this sort of distributed oracle is that is that about right did i say daniel i meant sergey sorry okay sure um yeah so i think on the first point when you mentioned earlier there's maybe a smaller discussion about what what is and isn't an app so i think we are are not an app because we don't actually have a user facing proposition we are more like a developer tool uh you can call it a blockchain middleware you can call it a blockchain abstraction layer it's something that provides a different form of decentralized computation for the validation of data so smart contracts are validated by multiple

independent node operators and their state is considered highly tamper proof and a kind of definitive truth about something that is housed in these systems what we do is we have a form of decentralized computation that seeks to uh we don't have a blockchain and we don't make apps so we don't have an app that we make i think that's there's also a category of folks that they both make a kind of um an additional layer or an additional uh cryptographic service of some kind or or decentralized computation that sits next to blockchains in that stack you mentioned and then they also make some of the first use cases using that so that's why it's sometimes difficult to unpack whether it's an app or whether

it's a developer tooling kind of addition in our case we're just a pure uh complement in that we we we don't make any d5 applications we don't have a chain we don't make we're not going to make a blockchain we're not going to make any example use cases but but you provide the tools that would allow someone to do a number of use cases could you give like one quick example of what like what your tools might allow a user to actually build sure so in a lot of cases in d5 people need prices they need price data but that price data needs to be validated to a sufficiently high degree of assurance because the automatic nature of contracts basically says we're eliminating people and we're going to suddenly put a

billion dollars in the hands of some automated system but if the automated system has been triggered by an external system you you now want assurances about that system so we try to extend the assurances that blockchains provide out into all these other systems so they can meet the high standards of a blockchain and therefore be used in the composition of smart contracts so let me let me put it this way and you can see if if i'm still on the money here or if i'm wrong because i've been wrong um it's sort of like in our weird crypto world where we want to do everything with as little uh trust in a central entity as possible we also don't want things like libor we don't want things like nasdaq's price feeds we would rather have 50 or 50 000 people contributing to a

price feed in a way that's hard for any of those individuals to game rather than trusting one trusted so is it and your tools provide that way of getting decentralized information about something like a price right in in an automated way not not in a way where people individually vote on things but in a way where automated systems come together to give you a picture of the world and then it becomes very composable so that you can say i want 20 data sources to tell me that the weather is a certain way and only then will i release the weather insurance payment to a farmer right i will not and and and that's when i can eliminate a person when i can know that something is a certain way and i can know it at the very high standards of decentralized computation and tamper-proof inputs um you know we

we work on a number of so i just wanted to clarify that right we we are we are not an app we we we work for all of these forms of smart contract computation and then even on this panel we're very lucky to work with daniel at loopering and we feed certain data into some of the apps that work on his system so we we can his stuff is not exclusively focused on decentralized exchange but there's there's a heavy component of doing non-custodial exchange and that is always going to need a price fee to you know people have committed maybe you know by signing or maybe through a zero knowledge proof that they want to sell at x but would not want to sell it why and so the smart contract needs to know whether the price is at x or y right is that

right in indeed in define land you need you need you know you have assurances at the smart contract layer which which people like vitalik and munibar are really doing amazing amazing work on and have brought our space forward from no features like no smart contract features to actual smart contracts and all those things and that's really really exciting but then you need um you need certain other other additional tooling which is really how i feel we're all building the stack together yeah and then the composition of all that tooling together into into more advanced use cases i think like some of the use cases on daniel's platform right already he's already because he has such an advanced platform he can build some of the advanced use cases

and then we can come along and very in a very focused way help build those use cases and you know he can use ethereum and he can have his platform do an amazing thing and and that's why he can have an advanced use case because he's composing specifically focused well-made pieces of the stack together right um to make a more advanced use case which is how it works in web development plan right in web development land everybody doesn't just build all their infrastructure and their app and their data sources and everything under the sun to make an application they compose it through very focused individual pieces of the stack and they compose it quickly and securely and and and iterate and make really cool use cases which is which is which is what's exciting

for the you know the next stage of how our at least i see our space becoming so uh accessible yeah so so i want to bring mounive and vitalik back in but this is going to be open for everyone i think a lot of people are looking at this space and saying i understand bitcoin i understand the idea of being able to send some provably scarce item from one person to another over the internet without trusting someone in between right because that allows me to do things like move wealth or protect wealth potentially from kleptocratic states or things like that without trusting somebody to be honest and to have my interests at heart but then we get into ethereum and block stack and these projects that want to go beyond just using

you know decentralized open blockchain networks to move wealth and do a lot of other things and i think to a lot of people um it starts to look like just craziness just this this mess of complexity i hope we've done a good job explaining why we need more elaborate toolings like chain link or loop ring in order to achieve more use cases but i think to a lot of people it just sounds like well wait a minute what are you even going to do with these toolings so are we building the right things are we actually moving towards a world where we're going to provide real functionality to to to people who want to use blockchains instead of centralized services um or are we just sort of creating a big

casino because sometimes it looks like that all this money moving around in weird places all these tokens moving around in weird places through weird mechanisms um i'd say um just looking at how things have evolved over time the casino enos is probably and i'd say yeah i mean definitely not more but very likely less than it wasn't in 2017 back when we were having the the icos and then the ieos and uh what we have much more of today i think actually yes substance right and like there's uh and there's a lot of different examples of this right like in terms of just like for example what

applications exist on ethereum you know in 2017 it was nothing and now or close to nothing now we got meeker down you know which is a it's a stable coin and that's something that a lot of people actually do use and benefit from we have a uniswapa which has just been seeing huge enemies an amazing amount of traction i'm with you with maker because the notion of having something that retains stable value as a as a just again to move value over open blockchain networks but without worrying about volatility makes sense and rather than trusting say coinbase or um the gemini in order to maintain the stable value like we do with usdc or gemini bucks it's nice to have the notion

that and i'm not saying it's a guarantee or possible i'm not vouching for this but it's nice to have the notion that we would be able to do that in a decentralized way but when you get to uniswap this is a tool for trading one token to another so i could see maybe people wanting to go from ethan to maker because they want to they have eth and they don't want the volatility and now they want maker but beyond that like what are all these other tokens yeah no unisop is definitely like another one of these metal layers right like it's base it's as good as the thing it's being used to trade between um there's there's definitely different tokens for different purposes like if there's one category of token aside from each that i think is like legitimately useful i definitely also say stable coins as well

um i'm also recently getting excited about these prediction markets so like we saw auger version 2 and omen get released recently and this is one example actually of uh i was like i was just randomly browsing a yeah so like non-ethereum community this was the sweet star codex subreddit and they just randomly linked to a uh an omen um prediction market about about some topic right so like it was wow this is something that people actually are kind of paying attention to outside of the ethereum community and so yeah that's a prediction right you know i'm i think i'm with you there too

because prediction markets could could potentially do a lot of good in the world just because it's a it's a market for better information about something that is contingent or in the future it's also a good use case for our tech because prediction markets are legal in a lot of places and maybe not for the right reasons like you just can't run a prediction market at all in the u.s even if the only thing people are betting on is something like who's going to win the election i mean you can you can run them but they have to be a very small amounts of money and they have to be sponsored by an academic institution here and that seems kind of silly because god knows our polling about presidential elections has been pretty bad lately and it'd be cool to have some alternative high volume you know information being traded about

them yeah like i think prediction markets are definitely something with a lot of positive potential like you know there's been a lot of these discussions happening around things so like for example just accountability of the media ecosystem just to give like one topic that people talk about and not controversial at all metallic yeah like the i mean you know the controversial things are the meaningful things right and like the kind of the promise that prediction markets bring is that you know instead of getting kind of pundits who can just you know make predictions and then six months later maybe they're true and maybe they're false and people actually don't remember what do they suffer yeah yeah yeah let's like actually have a market and you know if

you have an opinion then you declare your opinion on the market and if you're wrong you actually lose money for it um skin in the game right exactly i wanna i'm sorry i don't want me to cut you off but i want to give my knee i've been rambling too much no no this is great this is great um so what about block stack do you think that there's a similar sort of crop of use cases emerging on top of this platform versus ethereum or is it different what apps and use cases would you like to see on blockstack yeah uh i think blockstack uh just the last two years or just in the the way we kind of like evolved the core platform it's a little bit different because we did not introduce

a smart contract language initially so stacks 1.0 does not have a smart contract language stacks 2.0 that is launching in let's call it like a couple of months introduces a decidable uh smart contract language that's called clarity right so again it's it's a little bit uh restricted much more restrictive than solidity and it basically focuses more on kind of like security of the assets and so on but because of like that part of in the evolution the earlier apps were less around smart contracts or decentralized financial type products and more gender purpose uh web 3 applications right so

use cases would be there is a there are no taking apps like you know write node so it's like a call it like a secure private evernote right or there will be uh decentralized blogging platforms like sigil so call it a you know decentralized private version of a medium right and then developers built out like a variety of these use cases like around i think there are more than 400 of these applications and and over there it's basically uh in a way like there are there is an organic community that is like very die hard and wants to use these applications but if you compare them to the centralized versions it's a little bit like the ux is uh harder yeah right and uh

these apps are basically they they're going against the network effects of established players like medium or twitter or facebook so these are like pretty uh kind of like tough use cases but we're excited about the early attraction that we are we are seeing for them and i want to connect this back to your uh your earlier comment about kind of like is this all gambling or what's going on here and i think i've thought about this a lot like in the sense that if you look at traditional silicon valley type angel investments like even there is a element of somewhat gambling and you're taking risks over there but it's contained and it's kind of like restricted to accredited sophisticated investors who know kind of like what they're doing but if you look at the vc model of funding innovation

versus the ico model of funding innovation right and then you compare that to public markets and there's a big kind of like bar for you know you're doing a full ipo and you're going through a kind of like a qualification process with the sec and there's a quality bar before kind of like retail money gets involved so i think in crypto it's a weird mix where you're taking like early stage startup type gambling risk without having access to the kind of information that you would normally have in the public markets and i think the the closest thing that comes to mind is actually biotech ipos if you look at them the way biotech ipos sometimes work is that people are mostly just funding a team like it's a team of scientists or researchers who have a very ambitious

thing that we are going to you know invent like some particular medicine and here are the risks like we might fail but people still give them public money right like they do like you know relatively small scale ipos and then sometimes they're successful sometimes they're not and i feel like that layer has been really missing in the crypto space where people are taking risk without even really understanding um like like what what exactly are they taking a risk on well yeah and i think it was because it's this desire to get returns right um and and that brings me to the next framework that i want to introduce to sort of guide the discussion um to me you can think of bitcoin in a pretty simple way we want a decentralized group of people to do something to keep a blockchain of

transactions that aren't double spent as working because of two things the software that people run on their computers prevents people from doing some things um using cryptography so if you try and forge a digital signature or double spend an entry in the blockchain your digital signature will look wrong and the cryptography will actually make your wrongness evident to the rest of the community very quickly which stops you prevents you from doing something but these networks also work because they've been built to persuade us to do things that are good for the network in theory good for the network and so bitcoin is a simple example it prevents you from double spending but it persuades you to keep the blockchain updated as a minor and the way it persuades is by giving you

new bitcoins on a release schedule and fee revenue and so you've got this prevention and persuasion cryptography and incentives dichotomy and i think generally speaking like all of your projects embody some level of that that two-pronged feature set in order to get people to do something whether it's through the eth block reward or whether it's through um the you loop ring and chain link you both you guys both have um tokens that are native to your apps right and so there's some there's some assumption that the token value will go up or you'll earn the token when you provide the functionality that allows the decentralized network to work and manip you guys you guys have pioneered a sort of app mining model to get

more um applications out there you should be able to earn some sort of incentive so with that in mind i think this is where the casino issue becomes very real is because there's this great um there's this great notion called goodheart's law which says that once a metric becomes a target it stops being a useful metric and so what we're talking about with incentives is we'd really like to get this metric up whether it's the number of apps on block stack whether it's the number of people providing liquidity through loop rings zk roll-ups whether it's the number of people providing truth about the world on chain link or whether it's the number of people securing the ethereum blockchain or building on tops of ethereum but once everyone's actually just focused on that metric and earning the

thing that represents that metric the token sometimes we lose the functionality of the platform how do you prevent it against that how do you how do you protect against the community sort of going off the rails and just playing this shell game to impress with the metrics and actually get real use cases that improve the world um and i think like to some and to some extent it's um just a yeah a question of what kind of team it is like there's definitely teams that you know actually do wants to uh build great things and they are gonna build

great things and and often enough they see one of the money aspects as being even a necessary evil um and like i i do i kind of think it's important to kind of emphasize empathize with the necessariness of the evil like uh if you look at decentralization projects pretty much anywhere outside the crypto space right they're horribly underfunded you know diaspora's attempts to replace facebook if you look at just like all of the decentralized social things um messengers and all of this stuff like it's yeah it's hard to get money unless you um either have some centralized standard that you can exploit or you have a coin um and coins are kind of really nice in that they do uh

kind of increase the class of uh you know useful things that can be monetized though at the same time they do come with this price of uh kind of opening up a space of not very useful things that can be monetized um and in terms of uh kind of how that that challenge can be dealt with like i think some of it is uh uh something that the ecosystem is a kind of deal um improving on by itself um like there's definitely if you if you look at people's mindsets regarding and like things like tokens you know three or four years ago right they were

i think much more and of credulous and much more willing to think about like okay you know we know tokens go up it's a token therefore it'll go up whereas uh now people have had more experience of tokens being sometimes number goes down yeah they can go up but but but also go down and so you know if someone launches a token project with like the same pitch that they that they launched in a 2017 then the number of kind of willing participants is definitely kind of decreasing significantly and that's part of just kind of the ecosystem learning that's uh i mean i'm sure increased regulation is uh some components as well um also just um just uh just to some degree

um a kind of people's understandings of uh like what what these projects are and norms and all and uh all of these things are changing over time um there's also a kind of higher level and a higher level infrastructure as well like there's definitely things that have i have made it more difficult to start a yen uh to start a new project and that's definitely and of having both the the positive effects kind of reducing the the craziest of the crazy things though it's also in a lot of cases having negative effects like for example let's uh if when it becomes more difficult for a

legitimate project to just kind of get funding it becomes also like we see people kind of switching to things like um no liquidity mining kind of various more complicated ways of uh tr ways of trying to uh kind of distribute their tokens and sometimes they have advantages but sometimes they also they also have other disadvantages and they have their own kind of forms of unsustainability that i do sometimes worry the market i'll have to do an entire new cycle of learning around so we'll see you so uh i want to bring sergey and daniel in here um it is my summary of sort of the need to provide incentives

for for your decentralized middle layer to work um an accurate description of why you guys have tokens that are specific to your decentralized apps was that decision hard for you at all do you worry about sort of the markets for these tokens becoming sort of you know just a game about the token value and you lose sight of what the token is intended to actually incentivize people to do so do you want to go first i still got your music apologize um in our system i i think it's very clear you you need incentives for people to provide the correct data so i the

the way that i look at it is that at the core it's not a coincidence that bitcoin can function and have all this hash power and have all of these kind of computing systems working uh to to expend serious resources which then makes it difficult to to attack right so you have a you have a dynamic where people have a resource and that resource is attached to the proper operation of a certain protocol and if there's deviation from the protocol by the participants then the resource they have loses value right so i think at the end of the day uh the the way this you can look at it as bitcoin or you can look at it as somebody getting a miner and basically buying future bitcoin but you you you have a situation where you

want to incentivize people to properly operate the protocol and then in our case we tie them we tie that incentive to the delivery of data so in our system we have something called service agreements where you actually define the specific conditions under which the data is going to be delivered and then you can do things like state against or you will be able to stake against the actual um delivery of specific data so i i do i think what these incentives need to do is they need to be focused on the dynamics around the system that um that's being built right so i i i think some k in some cases i see people in in our space they take a blockchain they fork it and they call it an oracle

and they say i have a blockchain but it's an oracle and i'm generating blocks and and in generating blocks i'm creating an oracle when they don't really have a like they don't have a way to get even data into those blocks right and this this is this is this is a different dynamic right you're you're incentivizing people to generate blocks and and then there are other systems that say i want my system to perform a certain type of decentralized computation and i have a minor set and i have these kind of people that i want to incentivize to take specific actions and to to kind of guarantee that outcomes will be properly reached in the protocol so i think i think this is um a very powerful and useful pattern for getting people to coordinate in a decentralized way

for them to operate a protocol and an underlying infrastructure with itself though um you worry about it running you know people sometimes people just get into these markets because they draw some lines on a chart and they think you know oh and that's a good way to you know raise money for your project right or you know fund your project but it starts to become starts to become completely disentangled from maybe what the incentive was meant to promote which in your case would be collecting truth about the world i'm not saying that that's what's going on with chain link right now i'm just saying is this something that you worry about realistically i i think there's this kind of exogenous set of factors that we don't deal with

there's there's an architecture of a system and the system needs to operate in a specific manner and it's architected in that manner and it operates in that manner right there there's any number of other things that can happen out in out in the world that people can start doing this or start doing that or start hoarding this or start hoarding that and and and these are unpredictable and kind of unmanageable things the the thing that is manageable is the architecture of a system that is properly operating because people haven't as you put it incentives to properly operate a protocol against specific outcomes in our case it's the delivery of data and the validation of external events and the things about the world through for these independent node operators computing that from automated

sources in other platforms it's other things but but at the end of the day that's all you can really do is you can architect out a system that'll allow you to have the proper operation of a protocol at an architecture and and i think that's the important thing and well i think to bring it back to what money was saying earlier about sort of slightly different models i think the notion of using our existing regulatory frameworks like our securities laws to limit the class of people who can get involved in these markets is an interesting attempt to um you know the the project creator isn't necessarily trying to limit those exogenous factors um they're relying on the regulator to

do that by keeping markets from being overheated and keeping the participants in markets to so-called accredited investors now as a counter to that and i didn't say this earlier when maneuv was speaking but i probably should have i think you can very make you can make a very strong argument that those accredited investor rules are extremely anti-democratic uh they don't respect the individual they don't allow people to prove that they're sophisticated from their own bootstraps it says you're only sophisticated if you're over a million dollars wealthy and that's kind of a problem in and of itself especially if you want these things to uncover more truths about the world that are themselves decentralized that are more you know individuals out there not big hedge fund managers and vcs determining determining our fate right i would i

would i would agree with you over there i think that it it is it is strange that you know the securities laws would exclude like such a large population from uh basically investing in opportunities that that they want to invest in i think i think my my thinking over there usually boils down to what is good about the existing regulations is the focus on disclosures and basically forcing people to be more transparent and i think that is something that can be preserved that if if there is full visibility into a project and how it's being managed and where is the money flowing and what are the different incentives for all the key players

i think that's a good thing and if there's a lot of i'm not sure i agree i want to agree the optimist in me wants to agree that the best thing about our securities laws are disclosure and transparency but you know like all of these projects all of you guys have built incredible open source software that's more transparent than anything that's ever existed on the face of the earth as a business practice like the dutch east india company didn't open all of its you know like explain the engineering of its ships before people handed them money to go get spices and like so everything you guys have built is out there there's so much transparency in our space but there's also so much over and mal investment in our space that we see in the volatility it's i'm kind of worried that the only regulation that works is

really paternalistic it's like no only people who can afford to lose a lot are allowed to participate and it's deeply cynical and paternalistic way of trying to cool these markets down um but anyway i i shouldn't i shouldn't enjoy it i i think like it basically what happens is that the bad actors start taking advantage of the system that way that if someone is just in it purely from the gambling side and they're just just basically engaged in a sort of like malicious behavior there are no checks and balances there and for the lay person they cannot tell the difference between a real project and some sort of a vaporware

that's out there and i think i will connect that back to the metrics discussion that you're happening as well i do think that you need to be very very honest with your metrics uh like for example we started noticing uh interesting things happening with app mining app mining is a fairly small part of the incentive structures most of the incentives are for the actual miners and and holders who are participating in consensus right because you've got the stacks token so everyone here's got you know a token specific network so so for us the miners are processing on stacks 2.0 they're processing the clarity smart contracts and they're processing registrations of new digital assets and that's the incentive for the newly minted tokens for them and uh the current holders we have an interesting dynamic where if

they are participating in consensus they can earn bitcoin so that's our kind of like connection back back to bitcoin so we we uh as far as applying was concerned when we started noticing that actually developers could even game the the metrics and you know a developer could have like 10 different applications in the app mining program optimizing for the metrics and not really optimizing for building a really cool good hearts law again exactly right so we we ended up pausing the program and we're like we'll revamp it we will so you have to be really honest with your metrics otherwise you will uh basically uh you'll start heading in a very very weird direction that way i want to bring daniel in on the on the tokens and incentives conversation and

then we'll switch gears to uh cryptography sure sure so we also have a token and we have a staking design but to be honest we are not really satisfied satisfied uh satisfied with the current design maybe we'll do it again the issue is that you know when most people uh design their token um for for staking off or whatever they're trying to get rid of the compliance issue so you know now you'll see a lot of tokens marketed as a governance token right yeah don't get me wrong don't get me wrong the communist feature i think is is is nice it's nice to have but the notion is

you accumulate governance tokens and you can vote on the future of the protocol in some way or something like that right that's great that's that's something the the blockchain empower us to do but my point is the simplest value capture is an ownership token right you should allow people to to earn something passively not you know aggressively you know participated into the governance of a product but right now a lot of people a lot of teams are designing the token that way from my perspective my understanding is that they just want to get rid of the local regulation you know potential issues right so for us we also feel

the same pressure we need to do something like that um it's not just cool it's really for uh it's a sign not to get into any trouble right but um if we talk about like the ownership token people will ask what's your like roi right what if i put money to buy a token what's my annual return is it a share of a business uh is it a security it's not i would like to make it a share to be honest if there's no uh compliance issue at all but for from our perspective is too early to really make a sustainable you know revenues uh so it's not going to happen before the technology is really

ready for for production so right now internally i think we have this like a principle of like delayed satisfaction so we are not so eager to make money just fun now for next year we want to make sure we can going forward we can you know generate a steady revenue source you know uh for the long term we somehow successfully convinced our chinese community to believe in this delayed satisfaction it took some time really you know people give us a lot of savers right historically they're savers historically so yeah right yeah yeah yeah yeah so they're hard to have those supporters

but i mean it's it's tough i mean still a lot of people just got a new llc token they will come to us who say hey what's your plan to make it you know work more right they want to see a step-by-step like roadmap and we say we are still focusing on technology they say hey you suck you guys just you know you should pop that's that's the price we constantly get from not just the chinese community but a lot of other i think it's the heart of everything that's wrong with crypto unfortunately is that we focus on number and we focus on um it's money it's a root of evil even though we want to do we just want to use these to nudge people to do good things on the internet like provide decentralized storage or decentralized

compute but and we end up obsessing over the thing instead of the service i'm glad that's a global phenomenon because sometimes i look around and i'm like uh washington dc and it's like no it's everywhere it's everywhere um so let's quickly change gears we only have about 10 minutes left to the prevent side from persuade users to do good things on the internet to prevent them from doing bad things so with this new wave of decentralized apps define things like this we're seeing a lot we're seeing a lot of money going to this and we're seeing a lot of tools and these are all tools that presumably will be architected correctly so that people can't misuse them right you know like if you forge a digital signature the numbers won't add up i guess i'm going to open this to

everyone maybe start with vitalik though like the last time we had this sort of big enthusiasm was sort of triggered by the dow right that was the first big smart contract and it was it was like an ico type event and triggered a bunch of other icos that were very uh you know specious and of course the dow had this big bug uh have we gotten better with verifying that these smart contracts are going to do what they say they're going to do um should we worry um i think we have gotten better so i know that the amount of formal verification and auditing and all of these things that went into you know make her down like uniswap

auger all of these systems is definitely vastly higher than what went into the dow we learned a lot we learned about avoiding like specific issues we learned about of um avoiding reentrancy bugs um we learned about just the importance of simplicity in gen code in general uh so there's definitely a significantly higher bar that's gone into pretty much every project that i've launched after the dow though at the same time i do think that there is a yeah and of risk that at least some people are overestimating the safety of these systems so like i sometimes hear people saying things like you know oh if you have a dollar then you can get two percent interest if you

uh put it into a some time deposit in the fiat banking system but then you can get four percent if you put it into you know usdc and so clearly four percent then take the governance token and put it into this then put that into this right right and so like clearly the four plus four percent is better than two percent and so you should do the four percent thing but the reality is that four percent is only better than two percent if that four percent sense system has less than a two percent chance every year of breaking right like or at least it well i should uh clarify and say if the four percent system has at most a two percent greater chance of breaking compared to uh compared to the fiat thing right us and in practice you know as much as

people love to kind of rant about how the collapse of the dollar is impending and it has been impending ever since so what when did it start to impan the woods started hearing about an impeding in 2008 but maybe in the in the 70s or something um so um but at the same time you know most people's deposits and kind of financial uh products in fiat land have been honored and meanwhile i mean there's like it's hard for something like compounds to claim that it has a 98 chance of surviving a year when things been like running for a year right and so and that's not compounds fault it's just like limits of how much a new system using radical new technology

can promise and so i think over time there was risk so reduced but i definitely think that we should be acting today with the mindset that those risks still exist and we should be maximally kind of keeping things simple and maximally designing things with an eye to keeping that in mind got another question on the on the sort of crypto side of things so so bitcoin um you know in its original design somewhat naively attempts to um limit what kind of personal data ends up on the blockchain right you can transact using bitcoin but all that's going to end up on the blockchain is a pseudonym your bitcoin address and the amount sent and the person pseudonym that you sent it to the bitcoin address and of course what we've

learned is that a lot of that can be gamed by doing you know blockchain analysis and collecting information clustering analysis things like that we can basically find out all your transactions by looking at the blockchain if you're not doing mixing transactions or more novel things so i guess on this topic i want to open it up to manipu and daniel and sergey with your newer tools especially things like zero knowledge proofs um and other things what data really needs to be on the public consensus layer to achieve the functions that we want to achieve do how much how much information do we need there can we minimize that information in order to make these systems more private and more scalable because less information means you can

have more you know throughput and consensus right so for blueprint we put only two type of data on chain the first type of data is the we call it data availability which is basically the the site of data that anyone can use to reconstruct the layer two merkle tree so it's the minimum site uh we we reduce it to like like bait level right very minimum the other side of data is the zero knowledge proof which will be validated on chain to make sure all those often computation uh following the protocol exactly so we have those two two type of data unchained

uh if we turn this uh protocol into the valadium mode then we can remove the data availability from the layer one you know stories to maybe ipfs or other blockchains but the proof will be the type of data function looping doesn't really put privacy in his design so we don't really want to achieve privacy one of the reasons is that we want to be compliance friendly so going forward if some other decentralized exchange or even centralized exchange they want to adopt this technology you know uh compliance should not be that the thinking roll up you know it's

not uh that's that's interesting i want to push back on that just a little bit um i mean i feel like if a centralized entity is using these tools they can have a completely off-chain database of all their kyc information so why shouldn't the on-chain stuff still be entirely private why would you want that out on a public chain i i feel like like like the individual organization's compliance obligations can be met as a bank would meet them with just an excel spreadsheet that they keep secret uh we wouldn't want any of that information on a public chain right yes so actually we um if we talk about technology the zika roll-up really doesn't really

really doesn't require any personal data we what we need is just the um the ethereum address and maybe sometimes a signature from the user but that's everything so we don't collect any personal information we don't even have an email or a um like a password we don't save any personal data at all so all the data puts on chain uh no matter is ethereum or another blockchain is the transaction data it's all about the transaction to make sure you know the mercury can be restored you know in the worst scenario people can use their motor proof to claim their asset so that's it so but

but this technology doesn't really prevent people from using any centralized technology to you know you can use sticky road lab you can also use any other form of centralized technology to build a you know hybrid type of exchange it's not a it's centralized it's compliant it's called kyc they don't have they don't have custody though right right right um so block stack's a sort of a different model again because as you as you said you're anchoring a lot of the decentralized app data for things like a blog even in the bitcoin blockchain how does how does everyone's blogs fit in the bitcoin blockchain yeah uh i think i think it's a great question and i do think like thinking

about what data actually goes in a blockchain is a very fundamental question and uh there are different kind of like uh if you if you imagine like a design space like people are exploring different points on that design space right and where where we are or the school of thought that we are in is a little bit more like the question of like what data goes on the blockchain is actually a decentralization property because the more things you're pushing on on the blockchain layer itself like you're inherently reducing how many nodes or what type of participants can be in that network right so you will see so connecting this back to the earlier discussion around metrics like a metric

that gets thrown around a lot is like transactions per second for example like they're all these like new projects some of them are with highly capable people really trying to optimize for you know a ridiculous number of transactions per second whereas the question in my mind is actually like what type of things need to be at the base layer and what type of transaction processing do you even need there in our case those things are effectively your assets and we even scale that in a way that there could be thousands of assets registers on on the stacks chain and it has a one to one uh block ratio of a bitcoin so the bitcoin layer just sees a hash of a stack chain block right because the property on bitcoin is extremely expensive

and you want to use it as minimally as possible so mostly just using it for like time stamping right because we know blocks come after other blocks yes it's it's like a uh it plays a big role in our consensus right so to attack the stack change you actually have to go back and attack bitcoin and good good luck with that and and in in that sense like we do put like storage pointers so we think of storage as like a private data wall for a user and how do i discover you know peter's private storage drive that information is at the blockchain layer and in terms of smart contracts we we actually publish so clarity is a very different camp from solidity and some of the other approaches we actually don't have a

compiler we publish the source code of the smart contract itself and clarity is a more restrictive language right so you can actually do uh verification you can have mathematical proofs for what the contract is exactly going to do before you execute them right so that that information lives at the blockchain layer pointers to your storage live on the blockchain there and any assets you register right so if you're registering a username you're declaring a gaming asset those those things live addressability timestamping that kind of thing right okay i want to bring uh sergey in for a brief last point we've only got a minute left yes i i think i think it's it's really relevant the question you're asking

about what data has to exist on chain and all that stuff related to oracle's and i think the design pattern that that i've seen from from like the the top blockchain teams similar to what moniva's mentioned has been you want to focus for the base layer for it to successfully execute certain types of value deliver certain types of transactions do certain specific things right and and so what the the way that we see this is that other systems that sit in parallel and are complements to blockchains um you know like groupling like chain link that basically add an additional layer that can do other types of decentralized computation in in our case we have something called mixicles mixicles is something we

presented at stanford earlier this year where you can basically use oracle mechanisms to create dimensions of privacy so you can have a certain portions of the computation that you don't want to be public or need to be public you know in the base layer which saves the base layer on scalability allows you to to do things that you want to keep private and usually relates to external data so i i think what what you really see is you see the you see that focus once again so i think the thing to look for is that there's going to be focused pieces of the stack that serve very specific high quality purposes and then the composition of those pieces together is is how we're going to come to mimic

the web development advance more advanced infrastructure of how people compose well-made pieces together right and so the question you're asking is you know what kind of how do i build more advanced products that expose more data but how do i also maintain confidentiality and and privacy and all these dimensions so i want to expand the feature richness of my products but i want to maintain certain properties and and and i think that the way that looks is you have base layers that are very very good and absolutely critical to the proper operation of those contracts because you know that's where the contract state lives but then you have parallel systems that create that feature richness while maintaining these decentralized

computations security uh you know and all these other properties and and that's why these additional layers are so necessary and useful because they create the feature richness while maintaining those properties all right well we've got to wrap up i think i was a little ambitious in the amount of stuff i wanted to cover in this panel and i wish we had more time uh i i congratulate all of you on working on projects that will hopefully bring more decentralization more privacy and and and more uh more good transactions to the world and less bad transactions thanks everyone thank you all right thank you peter are we still on

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