Maintaining Ethereum's Future

Transcript

All right. Hello everyone. Thank you so much for being here. I think there's like 20 stages. So, thank you very much for showing up for this presentation. Thank you to the organizers for having me. Um, I'm Cheeky. Um, and I'm going to be talking to you about how we maintain Ethereum's future. But before we talk about that, I think we actually need to clarify what even is Ethereum's future. And it turns out this is actually kind of a tricky thing to reason about because we don't actually know yet everything that Ethereum will enable because of course there are so many ways to use it. Um, but I feel pretty confident in saying that at the very least we can expect Ethereum to be the world's most secure, decentralized,

incredibly neutral programmable money and smart contract platform. And if you need that phrased as a north star, well then here's one courtesy of Tim Beo, an economic layer for the internet. Pretty cool, right? But I guess I'm curious. How many of you think that we are already ready to be the economic layer for the internet? So basically, by a show of hands, raise your hand if you think that Ethereum as it is today is good enough. No more development needed. Anyone oification people? Where you at? There's no one. Well, congratulations.

You are all correct. Uh, yeah, there is still a lot of work left. Um, here was a core protocol development road map that was suggested by some guy, which was really cool because it had these fun rhyming categories. Um, but it turns out it was a little bit hard to reason about. So, what I'm going to do is I'm going to dumb it down for all of you, uh, and give you an overview of what I think you can expect from Ethereum's core protocol developments in the short, medium, and long term. But before we talk about the future, let's talk about the present. A couple weeks ago, actually, we had the Pectra upgrade. Um, and Pekra was really cool because it brought three super exciting upgrades to Ethereum. Starting with blob doubling.

Uh, if you don't know what blobs are, they're basically the way that, uh, layer 2s post data to mainet. And so, uh, by doubling that data availability, we're in essence making layer 2 transactions cheaper. Uh, EOAs were given superpowers. What are EOAs? They are basically the the default wallet for Ethereum. Um, and probably you haven't been able to play with any of these superpowers yet because the app layer hasn't implemented all these things yet. Um, but soon enough, trust me, you will be doing very cool things like adding two-factor authentication to your transactions, batching transactions, getting other people to pay for your transactions, really cool stuff. And lastly, state consolidation. Uh, so before each validator of Ethereum was capped at 32 ETH. Um after pectra this

has been increased to 2048 ETH because essentially we had all these different validators with more than 32 ETH running multiple validators uh which was kind of redundant because it put an an undue strain on the network. So now they can consolidate they can merge their validators into fewer chunkier validators and also basically uh compound reinvest their stake back into their their validator. So Pectra really cool exciting upgrades there. But now let's move towards the future, the short term. And so fingers crossed at the end of this year, you can expect Fusaka.

Okay. And if Fusaka, the main headliner for it is something called Perdas, which is essentially another blob scaling mechanism. Um it should allow us to increase these blobs up to 8x. So layer 2 are going to be euphoric. But also there's some mainet love. Um this plan to have a gas increase to triple digits. So basically minimum 100 million gas. Um, and if you think about the fact that today gas limit is uh is 36 million and probably in a couple weeks it's going to be 45 million. 100 million is a pretty juicy increase there. What about the medium-term? Well, to be honest with you, we know what it's called Glamsterdam and fingers crossed but uncertain first half of next year. Um, and it will be a layer 1 scalability

focused fork most likely. Um, the scoping of this is underway now. So basically over the coming months it'll be much more clear what exactly is going into this fork. But then the long term few years from now right uh it's all about snarkification and snarkification is essentially leveraging the magic of these ZK proofs to have enormous blocks on Ethereum layer 1 that can still very easily be verified by the nodes that you run at home and potentially even your smartwatch. Um to put that into numbers, snarkification should allow us to have 10,000 transactions per second on uh mainet uh 10 million transactions per second on layer 2s. And if that means

nothing to you, it basically means giving Ethereum the prerequisite scale to on board the world. Cool side effect of snarkification gives us quantum resistance. That's going to be really important in the next coming years. But actually, the goal of snarkification is to put Ethereum into maintenance mode, which means no longer having to do these massive upgrades because Ethereum, the protocol, already has the escape velocity it needs to be the economic layer for the internet. So, I've thrown a lot of buzzwords at you in the last few slides. Uh, the TLDDR of all this is we're scaling Ethereum layer 1. Uh, we're scaling blob, which means scaling layer 2s, and we're improving the UX.

But here's the thing. Probably all blockchains are saying that they're doing one or all of those things. So why is Ethereum different? And Ethereum is different because it's doing these things while prioritizing livveness, security decentralization credible neutrality, and censorship resistance. And this is something that I can guarantee you is 100% unique to Ethereum. And the results, they really do speak for themselves. So since being launched 10 years ago, Ethereum has had approximately 16 upgrades, depending on how you count them. Um, and each upgrade has happened flawlessly with zero downtime. Um, but to really understand how an uh how impressive of a track

record that actually is, we probably need to double click on what is this upgrade process actually like? Who is it involved? And so when we're saying Ethereum is being upgraded, what we're actually saying is that the spec or specification is being upgraded. And so the spec, you can basically think of it as the blueprint for how Ethereum works. It outlines the consensus rules for things like um how transactions are processed, how smart contracts are executed, and how nodes communicate with each other. And so uh this spec obviously needs to be implemented somewhere, right? And this is where the client software comes in. So when an upgrade is proposed and approved, you basically have these developers who update their client software to reflect

the new specifications. And who is running this client software? Of course, the node operators, right? Hopefully, it's people like you at home. Uh so we have this essentially the supply chain of node operators running client software which reflects the Ethereum spec. And crucially, when we talk about the people who are updating the spec or the clients, those are generally what we refer to as Ethereum's core devs. And since they have obviously a pretty important role in this process, let's unpack who those individuals are and what their incentives are. Here we have a really, really cool diagram from Trent Van Eps. Shout out to him, which basically outlines all the entities that are working in Ethereum's core protocol

today. And so you can see on the outside there, we basically have 10 different independent institutions. Among them, there's like 30 different teams totaling hundreds of individuals. And perhaps this is a surprise to some of you if you thought that, well, hey, I thought it was the Ethereum Foundation that's doing all this work. And no, that's not the case. Yes, the Ethereum Foundation does incubate, for example, the GU client team. Yes, they hire a lot of researchers to think about the future of Ethereum. But as you can see, there's a lot of other participants. So, starting in the bottom corner there, we have Off-Chain Labs, who you might know better as the people behind the Arbitum layer 2. They actually acquired the Prism client team a couple years ago, which if you think about it, makes sense given how much of an extreme dependency

layer 2s have on Ethereum's core protocol. We also have the Institute for Free Technology, which you might know better as the people behind Status, the OG Ethereum super app. Uh, they have a client team, they have a research group. We have Nethermind and Aragon. uh they do a lot of consulting work especially with layer 2s which helps fund their uh their clients. We have sigma prime who have established themselves as one of the top security auditors in the space that helps fund their lighthouse lighthouse clients. We have teams like ethereum cat herders and the grandian client team. They rely on donations and grants. Uh we have load no sorry we have chainsafe who runs the loadar client.

They also do auditing. They also do consulting. They also dabble in the app layer. They've built some decentralized storage solutions. Um, and of course we have Consensus and Paradigm. These are two massive VCs in the space. They've invested in all the projects that you know. Um, and they obviously have a vested interest in seeing their portfolio projects succeed, which is why they decided to get involved. So hopefully now it's clear to you that no, it's not the Ethereum Foundation that's leading this uh core protocol development in any way. Um, it really is a collective of many different entities, each with their own sort of vested interest in the success of Ethereum who employ core devs to further their interest. And let's be very clear,

Ethereum stands alone when it comes to the diversity of stakeholders involved in this process. And it's all thanks to Ethereum's multiclient philosophy, which essentially allows anyone to participate in building Ethereum's core protocol. And so now you have the context to understand why this track record is so unbelievably impressive because you can essentially consider each upgrade a moon landing when you think about the scale of coordination required and how much uh funds are being secured by Ethereum. But while all that is of course very impressive, the thing people always ask is all right, when is the next upgrade being shipped? So despite everything we've covered so far about the

decentralization of this process and how the comp how complex it is, raise your hand if you think Ethereum's core protocol development should ship faster. Don't be shy. Act like you're on Twitter. Come on now. Yeah. Yeah. Yeah. Yeah. Who's right? This one is a little bit trickier, I would say, because it's not a binary choice. Can it be faster? Yes, absolutely it could be. But what we really want to do is be able to accelerate this process while still maintaining Ethereum's decentralization, its security, still preserving its livveness, which means the 100% uptime.

And this is a tricky thing to be able to do. There are many ways that it can be done. And actually, there's some presentations about exactly this here at ETC. So I encourage you to check those out. But the point that I'm going to make is that we are not going to be able to accelerate Ethereum's core protocol development if we are not able to on board and retain these talented core protocol contributors. And the problem is that today core protocol work only provides a fraction of the financial incentives that are otherwise available in the ecosystem.

And so we basically have this situation where it's not economically rational to work on Ethereum's core protocol. So you can see in this this diagram here we have Ethereum's L1 R&D work on the bottom there. Um low risk, low reward, but crucially it also shows us how by just taking on a little bit more risk, for example, by going to work for a large crypto project like an exchange or a layer 2, these contributors could significantly increase their rewards. And I'm sure you're not surprised to hear this because yeah, there's a lot of money in the crypto space and a lot of these projects would pay a lot of money to on board someone like a core dev with all the specialized knowledge that they have.

Why does that matter? Well, because Ethereum isn't done. There's a lot of work left as we've already established. So, for the sake of Ethereum's future, we really need to acknowledge that having a stable contributor set that is sufficiently incentivized is a strategic advantage for Ethereum's ecosystem. So, this raises an existential question for Ethereum. How do we rebalance these financial incentives to make this work economically rational on a risk adjusted basis? And this is exactly what we're trying to do with Protocol Guild uh which is Ethereum's leading independent funding organization that is specifically focused on funding Ethereum's core protocol work. Our goal is to create

sustainable and robust funding streams for Ethereum's core protocol development that is backed by projects who are building on Ethereum. And so remember this awesome diagram. Well, what protocol guild does is it surfaces uh all the individuals from those teams who are doing this work and puts them into a membership registry. And today this membership registry has 190 individuals, so-called core devs. Uh these are people from all over the world. You can see their names in the background there. And what we've essentially done is with this membership registry, we've made the entire set of these core protocol contributors directly legible on chain.

And this is important because this allows us to build a funding mechanism around this list. So let's quickly unpack how that works. We have a single donation address, a single Ethereum address that anyone can use to send tokens directly to everyone in this list. There is literally no easier way to help fund Ethereum's core protocol work. But what happens when you make a donation? Well, it goes through an immutable vesting contract that trustlessly vests funds over four years from the point of donation. Why four-year vesting? Because we want to create strong long-term incentives for these contributors to stick around and finish the job. How is funding distributed? Based on time. We use the most neutral impact measurement that we knew, which is basically how long have

you been contributing. But we do also use a square root function so that the the newest members their share is actually increasing at a much more rapid rate compared to more long-term members. And in fact, long-term members, their share is constantly being diluted. So now you know about Protocol Guild, you know about this funding mechanism. You're probably wondering, okay, great. Well, when will this work be economically rational? And here's the thing. So today, Protocol Guild has three full-time contributors. I am honored to be one of them. And we are bandwidth constrained. There are only so many projects that we can talk to on a daily basis about helping to fund this work. And the scale of our fundraising ambition is massive. We literally need to raise hundreds of millions of dollars, if not billions of dollars, um,

if we want to achieve our goals. And that's not something that three people can do via proactive fundraising alone. So, how do we solve this? By creating social norms. So, here's a tweet from the man, the legend Danny Ryan back in October of 2021 where he said, "Make it a social norm for projects building on Ethereum to allocate a portion of their token to the individuals who are building and designing the L1 infrastructure they rely on." Fun fact, this tweet inspired the creation of Protocol Guild. So, thank you, Danny.

Um, how do we create these social norms? This is why we've introduced the Protocol Guild pledge. And as you can probably guess, it's a commitment by projects building on Ethereum to donate 1% of their native token to help fund Ethereum's core protocol development via Protocol Guild. So, let's unpack this. Why are we asking for native tokens? Why not ETH or stables? Well, because by donating native tokens, you essentially giving Ethereum's core protocol contributors access to the value being created in the ecosystem while still staying focused on their core protocol work. Why are we asking for a percentage? Well, because a percentage helps normalize contributions. You know, not all projects can make a $10 million

donation, but everyone could in theory make a 1% donation. It's also very easy to make a 1% donation in the sense that you could do it before you have a token. Um, it abstracts volatility. A dollar amount is going to be less, worth less in the bare market. 1% is always 1%. And we also did some math. Danny proposed 1.5%. We crunch the numbers. 1% we think is enough if we can establish this social norm and get a majority of projects to take this pledge. Why take the pledge? Well, you're in this room with me today, so I hope you already know. But to fund your dependency, if you're building on Ethereum in any way, you have a dependency on Ethereum's core protocol development. It might be for data availability uptime. By taking the pledge, you are helping to rebalance

these financial incentives to ensure that Ethereum's talented core protocol contributors stick around to continue maintaining and upgrading the protocol that you depend on. It also contributes to a more resilient Ethereum by providing a new diversified funding stream for this work and scales Ethereum's values. Public goods are goods. Well, good. Um, Ethereum's core protocol development is a foundational public good. How do you take the pledge? It's very simple. Just uh tweet about it, say it publicly. And so here are the first three projects to take the pledge. Shout out to Etheri, Tao, and PONDA. Um and Protocol Guild has now been around for just over three years. And in that time, we have raised $183 million. Um and most of that came from IEG layer, EtherFi,

and Tao. So shout out to them. But as you can see in our donor leaderboard, we have received substantial donations from many different projects in the ecosystem. But I know what you're thinking. $183 million, that's a lot of money. Protocol Guild surely doesn't need any more money. And two things. Number one, that $183 million is worth 63, no $61 million today. Um, but also perhaps more importantly, remember that funding is being distributed to what is today 190 core protocol contributors. Um, we're onboarding new contributors every single quarter. And so, and also the funding is being vested over four years. And so what that means is that the median core protocol contributor that's part of Protocol Guild can expect to receive $55,000 from Protocol Guild

over the next 12 months. And $55,000 is of course a nice amount of money, but it is nowhere near competitive enough with the kind of offers they're getting in the ecosystem. So, if we want the financial incentives associated with protocol guild membership to be enough to rebalance these financial incentives to be able to on board and retain Ethereum's core protocol contributors and in the worst case be a funer of last resort, we still need to scale our fundraising by orders of magnitude. So, unfortunately, despite our best efforts, Ethereum's core protocol development today is still not economically rational. Um, but we are very encouraged by the progress that we've seen over the last three years.

And so if we can establish this norm that projects building on Ethereum donate 1% of their token supply to help fund their dependency on Ethereum's core protocol development, then we can rebalance these financial incentives. So my ask to you, if you know of a project that is planning a token launch, why not encourage them to consider taking the pledge? That way we can all secure the future of Ethereum together. Thank you very much. [Applause] Do we have one minute for questions? One question. Let's go. Yes sir.

Um like I see the point in a protocol pledge. I see the idea of trying to make the ecosystem come together and kind of fund future. In this case you say it's about the core defe. Don't you think it's like for the as a core defaf the motivation the social standing of working for Ethereum Foundation is more of a motivation than more financial incentives is like another additional 55,000 for per for five years I is that can we even if we bring that to like 100k is that from my perspective it doesn't really make like change the needle here as a protocol developer to really continue developing it's more the idea of maybe showing them the social status is and like showing that they

actually contribute to the ecosystem at the lowest level and I think would also argue that's the reason they actually started working there. So don't you think maybe the pledge can also go to other um initiatives programs that might be more impactful than funding developers directly? Yeah, it's a great question. I think there's a few things to unpack there. Number one is that um we are we are fortunate in Ethereum that most of the core core devs are not necessarily financially driven. Otherwise, they would probably work in other ecosystems or not work on Ethereum's core protocol development. Um, I don't think it's a status as much it is as it is the nerd snipe of working on the toughest problems, right? But at the end of the day, even if they're working on the toughest problem, they still have bills to pay. You know, they, you know, we want to support their

family. And so, at a certain point, when they get like literally low sevenfigure job offers from layer twos in the ecosystem, like their wives would slap them silly if they didn't accept that job offer, right? And so if Protocol Guild can raise hundreds of millions of dollars every single year, then we can give the median core dev, you know, a good uh six-figure income, which because they're not financially motivated, is enough for them to stick around. And this will help us achieve our goals much faster than if they all leave. And so I'm not saying that the 1% pledge is the only donation that projects should make.

They should be funding all their dependencies. Um, but this is the one that's specifically targeted on Ethereum's core protocol. Thank you. Thank you all. [Applause]