Fragmentation, Privacy, and Adoption: Unlocking the Next Era of Ethereum L2s

Transcript

Hi guys, uh thanks for coming here. And yeah, we have uh know amazing panelists today uh to talk talk about uh layer 2 uh what we call LDOS right and it's been a while uh L2 space uh you know growing um since the beginning uh emergence of the L2 it was like 2020 and yeah we have a great achievement uh from L2 space and at the same time we have a problems in L2 space and we want to talk about that So beta lake is no it's uh not need to explain uh he's a uh co-founder of ethereum and the glahham uh he's from uh meload research tech lead and the

basically he's a no ethereum researcher and the suji uh he's a uh founder of uh mask network so today uh we need talk about the no yeah let's start from the quite big on the abstract uh problem uh which is happening in L2. Uh basically some people are optimizing uh calculation uh or speeding up of uh L2 and the other people are minimizing their data size of L2. So there's a may maybe uh many many bottlenecks or the problems to solve a technical problem to solve uh in this

space but yeah maybe people have different opinion about what is the the biggest bottleneck. So let's start from what do you think is the biggest bottleneck to to solve? Yeah, I think uh for me the most important short-term priority right now is uh decreasing the withdrawal time, right? Because right now most L2s are uh optimistic rollups, which means you have to wait one week to withdraw from them. And uh like nobody wants to wait a week and but even if you pay a liquidity provider to weigh one week for you, like that's still very expensive. And so this is a big part of why we see a lot of assets like doing their own bridging that has like a lot

of multi-IG or like other kinds of worse trust assumptions uh to it. And so I think uh if we want to uh like really uh make uh issuing assets natively on Ethereum L1 the uh primary way that asset issuance happens which I think it should be then uh the withdrawal time really needs to decrease so that native depositing and withdrawing becomes viable and this basically I think means uh like moving from optim the yeah optimistic proof systems to zk proof systems and like there are more moderate ways of doing it. So earlier in the year

I suggested the two of three OP plus CK plus TE approach. But generally like if you move to ZK then that means that you can the with the withdrawal time is uh as fast as you publish proofs on chain right and at that point know you can do other things to make proofs cheaper and then you can publish proofs even more quickly. And if we do that then like interacting between the L1 and L2s as L2s will become much more effective and I I think we'll see yeah like a lot stronger cross network effects between the different L2s happening. So it's been a while. Optimix rollups are bigger than ZK rollups and the in your talk

basically optimics rollup have a waiting period one week and which is not found in ZK rollups right so what why do you think uh the what what do you think the reason uh the ZK rollup is smaller than uh TBL wise or user numbers wise uh it's smaller than optimistic roll up right now >> okay think for for the TVL question it's just the two biggest ones are like the OP stack ecosystem and arbitrum and both of them just happens to be uh optimistic I think because well they are the two the biggest by TVL because they have been around for a long time and because

they have been around for a long time they started when uh ZK technology was extremely immature and uh OP was the only thing available and I know that both of them are exploring uh ZK tech technology right now. So hope and hoping that some of those chains can start moving to ZK pretty soon. >> Yeah, it's uh really yeah maybe all of uh us looking forward to seeing kind of their emerging uh kind of margin together to uh like optimistic solution and Z solution. Right. So okay Graham uh what do you think about the biggest bottleneck of layer 2 right now?

I I think the uh I'm not I'm not sure it's the biggest bottleneck but I think there's a bottleneck about the uh layer 2 is user experience and when we said about user experience is not only about for the user use the uh layer tools and I think for the uh users they don't need to worry about they don't need to carry about the back logic or back algorithm um uh they just need to smoothly operate on the layer two chains or or the chains and uh not only for the final users but also uh the same as to the developers and for the developers I think the what

they most need to care about is their functionalities or the workflows and they don't need to worry about the uh all the uh like interoperabilities is through the chains and uh I think what they do is once they make everything smooth and I think that that might be the final cause. So which part is not so smooth in layer 2 ecosystem. So basically lolop layer tools the you know popular layer they RPC are just same as the layer one on the the interfaces.

Yeah. Uh what I mean is uh there's a lot of rules there different rules uh with the different chains and when you want to do some real work and develop some apps applications uh you need to follow different uh rules of different layer tools but I think there should be a like uh unify standard to apply so people don't need to care about the different rules they just follow the unique standard and build their own application. questions. >> I see. Yeah, it's maybe related a bit related to the the fragmentation problem. So, yeah, let's yeah, follow up that point in the next question. Yes.

>> Um, so Suji, uh, what what do you think about the bottleneck? >> Yeah, I think actually there's not too many thing to do on layer 2. Um, I think two days ago, um, Ay actually released like a research to the DO, right? Avi say that 78% of income of AAV I think that also apply for compound or other D5 is from Ethereum layer one um and unfortunately they also write they will also quit to maybe they will quit to layer 2 because they just don't want to maintain it u even for AV I think is actually very easy to maintain a lot of layer 2 because they're EVM equivalent

um please don't want to do that. Um if I have you know all these gas fee on 10 layer two or five layer two I don't really have very interesting thing to do right now. So that's I think kind of like the um overbuilding of infrastructure. We only have highways. We don't have like KDV you know that's the problem like you know uh we don't have restaurant. We don't have car. We don't have like gaming center. We just go from one highway to another highway. No one go highway for highways. So that's I think the biggest problem. Um honestly I think um the most interesting things are not even on layer twos. um like base is generally a layer three right or or layer 2.5 define how

Coinbase um define it. Um they have a lot of interesting things but um like Zora was was the social thing but they they kind of like exit their own layer three and go to base. Um Pokemon cards and and prediction market is um polygon which theoretically it's not layer two but it's funny it's very interesting. So I I honestly think um besides the um um ZK especially the the bridging time and uh user experience I think the foundations of every layer 2 should have a strong internal team to think about the applications themselves. Um if because if you're building a phone if

you're building software developer kit but you don't really know what people want at all. It's just not going to work. Um and unfortunately I think most of the layer twos they only have very one one or two um full-time people. They don't even have a small team just to think about what people want. Yeah. So that's I think the problem the biggest problem. >> So basically you are supporting scaling layer one or making one big layer two. >> No I'm actually think that u every layer to have different culture like like even hot pot it's very big same. Okay. Hot pot is very important. If a layer 2 can have all the hot pot or the coupons there, it's good because right now if we

think about Pokemon, it's only it's only on >> layer two focusing on Pokemon or layer two focusing on hotspot. >> Yes, they have to do one thing. one thing if they can do it. Um I think it's very sad that the Starbucks scene of Polygon didn't want well because maybe as maybe because 2022 FTX but even the coffee shop if it went well it's okay. Yeah. And I think we need one thing every layer two need to think about what's your uh culture um where's your team origin from what's your people like um definitely tech is very important but even if you can fit finish hot pot and coffee shop that is so important um I'd say like the two most interesting use

case um I three most interesting use case I see is social network random Pokemon cards and prediction market and these are just so fun >> you don't you don't predict them by the days because when I pitch the idea you think oh no one want to pop up >> okay >> but that's important >> so basically the layer twos are can have such kind of focus domain for for each chain right so maybe it's no there are so many layer two right now right and I don't say it's so many uh but you know uh people some people saying that they know fragmentation and the this is a problem and on the other hand they have a sovereignty to to kind of focus on their own domain like know like you said

no cars or like a poly chain uh sorry uh not polychain it's a a poly market uh which is a very famous prediction market on layer 2 uh it's hosted on polygon um so yeah there's a fragmentation but it's making their own vibes and so starting from discuss fragmentation is bad or not so basically probably yeah know Suji you said it's kind of good on the how about topic >> uh fragmentation I I think that that's very important but I think that really doesn't exist in a way um I will pay extra for my pizza extra delivery fee for my best pizza or my best coffee shop extra $5 $10 just to deliver like 10

minutes early I know um sometimes you won't like a lot of people digital nomad they won't do this but they will get a coupon to do it Let's say Poly Market, it's just on Polygon for so many years. And if you look in their um website, they don't really have a, you know, like a official bridge something. They just have a QR code say if you transfer to this, we're going to deduct some money and deposit to to Polygon. It's actually quite expensive if you calculate the the the bridge fee but people still do it because they are have this eager to have this product right now and people will do it. This is how consumer mindset work. Um the problem is always um

compared to the fragmentation compared to the the fee of bridging of gas fee the product is not that interesting. We don't want to tip the g the bridge another $5 to do it. >> That is the biggest problem. >> Yeah, it's fine. So, Vitalic, how do you think about this point? So, fragmentation itself is good or >> Yeah, I mean I think the thing that we want is different uh L2s going out and serving like different types of users and uh different communities and different applications. The thing that I think we also want is like these ecosystems uh still sharing uh network effects and uh for someone on one layer

two to still have like lots of options to interact with users that are either on L1 or that are on different L2s. And so I think the solution is not like trying to merge all of them into the same L1. And especially because I think if we do then like the tradeoff between uh being powerful enough for some use cases and continuing to like be decentralized will just be like impossible to handle. Um but uh the the I think the solution is to like find more of these like forms of uh like interoperability and uh interconnection so that we can like get those benefits out of the shared network effects but uh

at the same time still like have in L2s that like focus on totally different sets of users. >> So which solution is the best to make our interability? So maybe Justin Drake is talking about uh has been talking about uh base all up to make a one big uh kind of uh no layer two uh which is separated but no combining that right uh or with native roll up on the other hand you supported EIP 7802 uh know you were talking about that last year in Edon right so which kind of solution is the best for you >> yeah I mean I'm like actually less of a fan kind of based rollups than I was

before. And I think for me the reason is that uh like I think especially as L1 scales one of the big properties that uh L2s provide will be uh like not just scalability but also the like sequencing properties. So that includes uh like very fast transaction times. It includes like ME protection and I think it's like different for different L2s, right? So like for inmax for example like you actually have like a type of hyperscaling that the L1 will not possibly be able to get because it's just so dependent on like the the details of like the plasma construction and the design. But for EV like L2s that

are more like EVM, right? It's like there's actually value in in sequencing being uh more separate. Um, and I think uh like most things that matter can be done asynchronously. And uh I like there is value in trying to figure out like a type of synchronous interaction, but potentially like that doesn't need to be every type of block like that. Also, uh like doing that just between L2 and L1 might be fine. Like I'm also a bit scared of these uh protocols that try to sort of merge all of the L2s together because they basically require every L2 to like follow a lot of particular standards. Um and then they have a lot

of the same risks in terms of like centralizing block building. Uh so it's uh I mean like I think there are going to be cases where it's valuable for sets of L2s to do that but like I do think that other kinds of things and just simpler forms of standards uh for things like moving tokens and like making sure that can happen like not necessarily synchronously but like at least very fast will be important. So it's not like a quite condensed level of the availability. It's more like you know uh let's say uh kind of optimal one.

>> Okay. So, what do you think about the solution to fix the no fragmentations and the basically you said the fragmentation you imply the fragmentation is one of the problem of the UX right? Yeah. >> And the so do you do you think uh the existing solution is good enough for that or do you want something else? I think I think the fragmentations might be not that uh problem but uh as long as our layer one can scale up enough and uh uh for the uh basic uh first structures and have enough capabilities and to do everything and uh each layer to can uh remain their own cutters uh uh as we

said before and uh yeah but uh people really need to do things cross the chains. So as I said before that the user experience is also very important. So that in that case the fragmentation might be a problems and we need may maybe there's a solution might maybe be that we need a unifi uh standard to build and uh to make things easier to transfer from one chance to another one. But uh besides the unified standard, I think there's another problem that we might be noticed that uh how we make people willing to use apply this standard and how we um uh can upgrade our old architectures and old

applications to the new standard easily and smoothly. So being EVM compatible uh is is that uh enough kind of no well definfined uh standard uh for your p uh on your perspective or kind of we need more standard just know beyond being just EVM compatible. So I think that EVM no yeah you know being a EVM compatible it's kind of already kind of st one one of the standard right and the people are using the same no RPC and basically your wallets are yeah can connect to their no EVM compatible layer two just like

connecting to layer one right so do you think uh uh we need more standard to to kind of standardize the other layer tools >> depends on the situation I think uh and uh uh more standard means more complications and uh I don't think we need more and more standards and but we need to optimize that uh uh uh is there one way to easy to use as long as there's one protocol that we easy to applies and that'll be enough. >> I see. Yeah. Okay. It's interesting. So yeah, let's talk about the no uh uh non-standard layer 2 uh because you know as we discussed layer 2 has many many types of

layer 2 and the inmax is like quite uh very different uh it's quite uh weird to to many people for example because it has a uh privacy and on the other hand there no EVM compatible layer tools and the basically ad Phoenix or know they have a different type of kind of futures uh different from the other layer do and what do you think is the best use case of the smart privacy smart contract like ADC or Fenix so Suji you said uh you talk about no new use case it's like a hotspot or the other kind of more

related to to uh daily lives and I think it requires privacy sometimes. So what do you what do you thought about the no application on private smart contract? Yeah, I think hot pot you don't need privacy but all the other thing other than hot pot after 900 pm you need privacy you know after 10 p.m. probably and uh um last tech I used to use the ziki.money a lot um unfortunately that shut down the previous one right the first layer one based or no >> no actually uh I think zki.m money is already on layer 2 tech they have to run their own IPC um because I have a friend that forget to withdraw money um and it

take a lot really a good process to just spin off your RPC and and withdraw the Okay. Um that was um shutting down because of the tornado cash lawsuit. Um and I think right now the the biggest problem for privacy folks no matter ZK privacy or there too is um um the incentive is not really aligned. Um, for example, we all know that um cash, we can use cash for, you know, my laundry stuff, right? And you can use um secondhanded train ticket for in Japan, you go anywhere with your secondhanded jar, train ticket, that's definitely

doing money stuff. Um but the incentive is online because um for the train company or for the people who print money like the government, it's it's okay to have the the extra abundance supply and they're they're good with that. They're happy with that. But for the privacy um infra provider, they have much more liability than they just say we don't know what's going on, right? and and and right now um the way the way we view it even after the zenocash victory uh win the lawsuit like partially win the lawsuit is still u very frightening. Um I asked several friends close to Aztec or we Aztec

whether they're going to reopen Dick Money. They are seriously considering definitely not. So this is a problem. um um and they don't you don't have really good incentive to align with that decision while we all know like if you're JR doing the Sika JR trend ticket you know what people doing with the the ticket but it's fine you have extra financial incentive so that's the problem yeah and um and also liability come with it so hopefully I can use the money one day again >> yeah it's cool uh yeah it's really interesting to refer to JR on the ticket stops because uh back to 20s uh no 2000s uh know there was huge discussion about the no using uh the do do you know there

no cash card uh the money card of JR >> yeah the the old Japanese law have no limit on that >> the new one only allow like $200 >> but the old one still can use so I once encounter someone carry on a old JR ticket with almost a million dollar inside and it just a bug just somehow work and and and unfortunately I think right now the incentive and and the frightening effect for developer is so huge even with u big support I think Aztec and other people is uh very frightened to do that yeah again so but again like uh as I mentioned JR 100%

know what people are doing they're they bag trend company they know people are doing that for money laundry and they're fine with that so we need some middle layer you know like just you can play around it and someone uh like state back train company handle liability for you >> and you can do innovation on top of it that's something hopefully we can do yeah >> yeah it's a cool idea on the back to 2000s are no Japanese uh train company like JL wanted to use that IC card no the money card to for for another shopping uh not limited to train but the people talk about the privacy stuff at the time because uh the you know train trip information is one of the most

private information right so they had a huge discussion to prevent uh to to utilize that card for the other reason but today uh people are using that so it's it's what what's really interesting that uh the from the Then people you know obsess about the privacy and prevent that but know people after that uh they kind of choose convenience being convenient and they abandon the privacy even right and the yeah we are yeah using that for know almost any purpose in Japan right now so it's yeah no similar to that if we apply the nozzikim money stuff to there no it's quite no good much because it's solving all the

problem right so uh how uh glam. So what do you think is a what do you come up with as a use case of this private privacy preserving smart contract? I do I do have a scenario of the industry that can uh strongly requirements for the privacies uh and uh uh is public health because uh when in Australia and when I do some business with government and also the uh public health agencies and uh they they have a lots of datas based on the uh the patients with the disability or even the teenagers and they have a strong needs for the keep the patients privacies. So

when we perform the uh uh uh blockchain or or the smart contract to this uh uh I think it's like a big companies or government uh agencies they they treating the privacy as a top uh priorities uh is uh as same as the securities. So I think in that in in that case and uh uh private smart contract is the good case to use and also uh I know that in these days there's a lots of like biometric solutions for the identifications and we need to collect uh many many uh personal datas based on the biological I think

that in that case and as we say we we want to keep a security uh we collect the uh personal biology uh informations but that give a risk to expose the privacies to the public. So I think in that case we need to think about more about the privacy smart contract. >> So basically uh there are many serious use case like know medical stuff and government related stuff. Yeah it's good and basically governments are quite professional about losing data and you know the exposing.

>> Yes. every every time we speak uh we're talking some things with a big enterprise and government they were talking about don't leaking uh datas to others but actually some of the data leaking from themselves so I think in the future and um not no matter to the big agencies or to the final users and we can find a better solutions to keep every everyone's privacies and for their medical record or the anything personal informations.

>> Yes, that's good. So, what do you think? What do you come up with uh other use case of privacy preserving smart contract like Zama or ADC or something like that? Yeah, I mean I think uh yeah the thing with privacy right is that uh like it it gets adopted you know the most uh easily when uh there is a a really compelling use case for why it's needed and uh I mean even you know like we see this with VPNs right like VPNs become much more popular when you need them to do a specific thing and sometimes that specific thing is not even privacy it's

like getting around you like country restrictions on particular services. Um but and so for like blockchain privacy the like different different people are definitely like going to be in in different situations but like the one uh like one place that I've seen where like the the need for privacy is immediately obvious for people is uh like privacy and defi right because uh traders have a lot of different trading strategies and uh they want those trading strategies to be protected and so there's a lot of uh

like private DeFi protocols that are trying to serve that and uh like they seem to be uh getting quite a bit of interest and then the other side of this I think is also uh decreasing the cost of privacy to the point where it becomes okay to just have it by default right and so there I think the analogy is like Like I think maybe the biggest uh success story for of privacy outside crypto the last five years is Signal. And then maybe the biggest success story of privacy outside crypto the five years before that was HTTPS.

And like who here chose to switch from HTTP to HTTPS? Okay, a few people did, right? But who here has switched from HTTP to HTTPS? We all have, right? And like it happened by default to just uh mostly without people really noticing, right? And you know the switch from telegram to signal I think was also uh interesting because uh like there definitely have been a lot of individual situations that made people realize like whoa you know like in this particular case like your data might get um might get leaked. It might get used in all kinds of ways. And then you know we saw Pavo getting arrested in France and then we realized like maybe

telegram is backed by the western and Russian governments. Um and you know you have these like indiv individual situations that made these like step function changes in signal adoption. And now for me and for like pro even the average person I know you know like signal is like primary over over telegram. And so I think like those are both two interesting situations that we can uh learn from, right? Basically like can we make it cheap enough that people are willing to adopt it by default and then like look for like what are the uh the situations that create that comp that compelling need and then be there

to actually meet it. So you mentioned to the the defy you know strategy conceal it um do you think the privacy preserving smart contract solves the me problem because it's a front running MEB is basically uh coming from the information leak to the blocker right >> right so I think that's not really privacy preserving smart contracts that's more privacy preserving me pools but yes that that is a very important use case >> I So and also you talk about the signals and you know the other privacy preserving uh tools outside blockchain space and maybe brave is one of the successful ICO project and you know it

raised a lot of money back to the 70s and is still love by um yeah many many people it's like a billion level people it's it's totally great do you think uh brave privacy uh proin browser is doing well >> do I think what >> uh do you think that brave Brave browser know which is privacy preserving know it's doing well here >> I mean I feel like brave has done a lot of very impressive uh things right I mean both for privacy and like automatically removing uh cookies and uh trackers um I mean I think like the core principle that uh like when you interact with an application on the internet you don't have to like take the application as is like users should have something

sophisticated on the side of the user that that are willing to do some like invasive things to try to make that uh application like less exploitative like I think that's been very good. I actually think we will need uh much more of that in the future. Um I think uh I mean I do feel like like Brave has been like moving more slowly over the last couple of years than I would like. And so you know I hope they move faster. I hope see we see more other things. I think uh figuring out like the right way to uh incorporate AI is also going to be one part of the answer right because I think uh the challenge in these

situations is always uh like how to like if you don't want to be like you know the GDPR dystopia and make people make 15 clicks then like you have to approx do a good job of approximating like guessing your users's intention and like LLMs and that kind of technology can be very good at doing that but then at the same time you don't want to trust it directly right because like AI is also attackable it's like imperfect and so figuring out like how to combine it with other tools and like how to use it in the right way I think uh will be a big uh uh a really good uh like problem to uh go after so no I think uh there's a big opportunity to do many more things like wood brave has already done

>> yeah so outside of the crypto space people lot of user care about privacy but it's quite a tragedy or ironical uh that in crypto space people do not encrypt transaction so much and the outside the crypto space know people are using privacy preserving too a lot no like signal or blave or the other stuff and the what what do you think is the timing for people to realize privacy matters in crypto space so yeah uh so start from yeah let's go >> I I think uh there's uh several situations when people really think about the privacy. So one is uh there's a once their asset value reach a

threshold I think when we talking about transfer couple of dollars and no one care about the privacies but when the uh the value reach a high levels and people do care about the privacies no one want others to tracking or the uh tracing their their transactions and uh that's the first situations uh the second one I think is um uh one people facing the risk of the uh any transactions or other behaviors on the crypto worlds and they will think uh privacy might be the priorities and uh if you don't want to uh others to tracking your the uh uh uh see your behaviors and to keep you safe

I think the risk when they face the risk and they was thinking about the uh privacy When people feel like they attract, right? >> Yes. >> So, Suji, how about this? So, when people do people realize they need privacy or >> um I think a lot of like big um institution have to do some educational job first. Um I'll give you example like um Kraken and OKX. That's the only two exchange I know have relatively routinely app update your deposit address because if you use the same exchange account for a long time basically it's very easy to guess where

you live based on the time zoom and what you buy and what you sell. Um and that's only to exchange. Kraken is a little bit more cypher punk from my understanding. So they do actually routinely update that but I don't see any other exchange following this. It's very easy because it's centralized for them. Um they don't need to solve like a mathematic problem for exchange central there's a lot of like web to privacy way. You can just allow people to one click generate a new address. Um but I just don't think there's enough education. Uh one good example will be right after the FF FTX Vitalik uh wrote a blog about the recotry proof of the asset P u and all

of a sudden like all the centralized entity are very kind of like they just so um rush to do that just to prove they're okay um even though probably some of them not really that okay but they just have to do that to prove they're okay. I think if one single thing happened like a bad news, a big scandal happened, everyone going to do this like um generating new deposit address for um for users and co by the way Coinbase do the worst because they just don't do that uh for a long time. uh but it's very easy technically then um every new D5 wallet will also follow like just theoretically this is also very easy like theoretically one private

key one memor you can generate tons of wallet address right if you ever use ledger it'll give you 10 address it's very easy to just even use use the same private key without updating uh a lot of things and maybe a small EIP can be very helpful Um then if we have um more than one address for one wallet um that actually solve some of the privacy problem um educate the users and then we looking for better mathematical more ziki driven solution I think that's the right way um yeah because um for now unfortunately even the centralized part of the privacy

in exchange is not people just don't talk about it. Yeah. >> Yeah. Incidentbased adoption. Yeah. Yeah. Actually, pretty well. >> I think Vitality need to write more blog and at Binance Coinbase and you're going to just I think they're going to do that very soon. Yeah. More blog. >> Yeah. And I remember that the mount go made a huge adoption to the no self host know the the wallet. >> Yeah. Like like the way no instant make people no more bankruptcy. >> Yeah. So Vitalic cover about this. So what when when is the timing for people to realize or move on to their privacy adoption?

Um I mean I think it's uh the intersection of uh two things right one is the costs uh like meaning like both transaction fees and especially user experience costs going down and the other is uh like it's always like some event um occurring that uh like either like brings a lot more users over or that uh like shows just publicly shows a lot of people the importance of uh caring about the problem. And so one thing I'm excited about is like wallets uh integrating private sense uh by default uh because uh like right now you know like if you want to use like rail gun then you know you have to open a

totally separate wallet and then do five clicks and like it's extremely annoying right like uh the UX of doing a private send should be the same as the UX of doing a regular send. Um, and I think if we can uh if we can get to there and uh like if we can uh improve privacy uh UX of uh wallets quite a bit over the next one or two years uh then uh we'll definitely like step up to the point where like a much larger there's a there's a much larger enthusiast community at least that's uh using these kinds of things and like possibly you know like it's OGs who have a lot of ETH who are just willing to pay like more

expensive fees for everything. Um and then over time the technology improves and it gets cheaper and cheaper. Um so I expect it will happen in stages. I mean I definitely hope that like by you know like five years or so like it becomes much more default. So naturally people move on to the privacy when UX got you know gets better on the cheap no cheaper fee for the yeah let's say cheaper privacy right so I think that there timing for people to move on to privacy I presume that it's like every address will be traced by AI or something like that like know right now blockchain explorer is just know showing other address activity manually right and

people do not trace the other people so much and Maybe virect. Traced address in the world and but in the AI period know people know have more ability to to trace the other people. So every single address will be like bitter. No other no activity will be more traced by many people. I mean, I also expect that like unfortunately we're going to see like some individual events that just like shows people the importance of uh not letting the public um and uh in some places you know like even not letting governments like know exactly how much money you have, right?

Because uh you know like physical violence you know both from the top and from the bottom is becoming a bigger and bigger problem. And I think uh you know there is a a need for people who have uh like a lot of their assets in crypto to protect themselves. And so like that is like a pragmatic thing that uh I expect is uh going to drive uh I mean both people to like being willing to hold more of their assets privately and uh also like to doing transfers and uh like hiding like what other people they're associated with, right? Um, so yeah, I think uh like that that's one of those uh like trends that we'll expect to see

happen. Um and then uh I mean on top of uh that uh yeah the I mean the most important uh thing I think is just like slowly slowly improving network effects like slowly decreasing cost um and uh eventually like we'll see yeah you know the equilibrium flip and like for more and more groups of people. Basically you don't hope some big incident happens right? >> Yeah I mean I yeah I mean like unfortunately you know I predict that in that big incidents will happen that uh like motivate people to be more secure because like that's happened like many times before but uh I mean I also I I

hope it doesn't but I think uh you know the most reliable way to make sure it doesn't is to like actually make a make make sure that we're all much more private and much more secure. >> Yeah. Perfect. So yeah, it's uh little time left uh for this session but the last topic you know at this point is related to payments a bit because it's a huge adoption of the payments happening in layer 2 space and in crypto general and yeah if people uh pay with crypto people care about pricing more but yeah basically it's been a while uh the the other blockchain like strong or BSC they're um actually main actor of act know the sending money or the usual

daily transaction uh just kind of simple transaction sending money to another address and the Ethereum is kind of know a lot of uh new project about the payment on Ethereum happening right now right so what do you think uh is the best way to uh uh utilize uh Ethereum layer one or layer two uh regarding payments like you know the new project is like no expos 2 is like know based back by coinbase or base right or yeah the other solutions no we have many solutions right now right >> so like my ideal for how I think the UX of this should work is that I think uh like if you're someone who accepts payments like a user and a merchant then uh like you and then you know you should

have QR code address or something and then the the user that is making the payments they will be able to scan it and then even if they're not on the same layer two or layer one then like basically the user should be able to figure out like what is the right way to route that uh to route the payments to make sure it happens right like uh I don't think we want a world where like there's a you know an inmax payment ecosystem and then also an optimism payment ecosystem and like uh also an Aztec uh payment ecosystem I think uh like in people who use these privacy protocols for example like they should be able to interact both with each other

and with the outside world. And then the same thing across L2s, right? Like uh people should like like someone who accepts a payment should by default accept a payment on L1 and on every L2. And this is this should be a big focus of a lot of the interoperability work that we're doing. Um but I mean these are like there's no one big solution. And I think it's like a collection of a lot of small solutions that should get better. >> Chain obstruction uh UX based chain abstraction works very well for that.

And >> and I think uh besides the uh software architecture of the payment and uh uh I think there's another field that we need to pay attention like hardware layers because uh when we uh make transactions in the real world the hardware always be the first entries to the uh to to the transactions. So uh nowadays the hardware like a wallet and the postal machines uh their security is uh guaranteed by the factories. So uh the final user it's a black box to the final users and we don't have uh a method to to verify it. So I think there we should think about a method architectures to

let a user can at least verify their own hardwares as some some case and uh this this method could be easy and uh can perform by themselves. I know I do know some method that uh like uh using IR lights and to scan the chips but uh still need a lots of technical devices and building in the laboratories. So uh there may be another level of uh simple solutions for the hardware verifications. So people can do by themselves and we combine both hardware and software architectured togethers to make accessible uh payment.

>> It's super interesting because know about this region uh this uh topic nobody talk about hardware. Yeah, that's why I think that's important because uh we always uh uh by default trust each hardware we bought and uh even the factory is sending you the original devices and there's no guarantees there's something happened when the hardware is in transportations. >> So I think people need a way to verify by themselves at least or one way. Yeah. >> Okay. >> Yeah. uh a little bit like example for let's say TR and other layer too like if you have a like a bad coffee shop and good coffee shop and the bad coffee shop

is keeping give keep give people people coupon people just going to go to the bad one you know same thing apply for hop what other food food industry because people just say hey okay there was some coupon and they just go to the bad one that's what happened for stable coin payment in the past few years um when lay one was very expensive um the exchange are um rebating Tron USCT so that's why people just go to that one they don't really feel the difference but right now the situation is actually lay one is already pretty good um I think Binance chain is relatively neutral and the other chain is doing really good job but I unfortunately I don't see anyone doing this reverse coupon thing to the

existing users right because the existing users they are they're not criminals right I think like we we're developers, right? So, I think uh people here don't really use Tron or whatever. But um if I I I actually see people I actually see people treat people use Tron UC as criminals in the developer conference like, "Hey, how dare you use Justin's chain for sending me money." They're not. They just somehow use it for some reason, right? And the right way is, "Hey, uh you know, you've been drinking like backpack coffee for years. I'll give you like a nice free uh coupon for the good coffee and let's go to my my home. That's the best way. Um so Coinbase did try this thing uh with this little tiny project called Entron uh and

you put USCT to the Entron. They gave you um base USC but they also also limited to base is like hey have to go to my coffee shop not the other people coffee shop. Uh so it's weird. Um if we know something's not really really good and we should have collected effort to give nice coupon and attract the users. Don't criticize user as criminal. They're not they're not they're just somehow stuck there, right? Um so that's something I think very important for anything in in those out layer one that have very important um security issue or flaws that we want to as developer want to fix. We want to treat the user with our own heart and you know warm heart.

Don't just you know criticize them and give them nice nice stuff. >> Yeah. >> And they will come. >> Yeah. >> And the I presume that layer two will uh be kind if anyone there people here please do that. Um I don't see any seeing anyone doing that right now. >> Yeah. Cool. >> So yeah let's wrap up this session. Thanks so much Andy. Yeah we talk about a lot about layer 2 and let's use layer two. Thanks much.