Top ten takeaways from Devcon VI in Bogota

Transcript

GM GM welcome to web3 Academy it is the weekly deep dive and today we're taking a break from our regular content to feature one of our community members contents that's Sam Andrew who attended Devcon in Bogota last week and we wanted to make sure we kept you guys up to date everything that was happening at Devcon because really Devcon is where it all begins Devcon is one of the largest developer conferences in the world specifically it is focused on the ethereum ecosystem it has thousands of Dev devs that attend and you you really if you're in web 3 you're going to want

to know what's happening in Devcon and what came out of that so shout out to Sam who wrote a great article and we want to share that article and that content with you on today's show but before we dive into Today's show if you are a developer there's some friends of ours are having a cool Conference next we week sorry this week actually that's October 25th that's the bit Go activate conference in San Fran if you're in the Bay Area highly recommend you go check it out specifically it's about 80 developers and it's a great way for any developer to learn about how blockchain development works and what's happening and to get involved

in some hackathons so whether you're an experienced developer or a new developer what I love about these guys they're friends is they are really helping onboard new developers which is what we're all about here at web3 Academy is onboarding more people into the space before we dive into today's deep dive I just want to give you guys an idea of what we're going to talk about we're going to talk about why crypto is the next Frontier we're going to be talking about trust in web 3 and how important trust is and what is its place in web 3 is you know there's this debate of centralization versus decentralization and we're also going to talk about privacy and the

the the place that privacy plays in what we are developing in crypto and in blockchain so before we jump into it though let's just take a minute to hear from our sponsor the future of social media is here and that future lives in web 3 on top of lens protocol web 2 social platforms are broken and right for disruption you see the epicenter of social media is the creators and yet they are the most neglected web 2 platforms like Facebook Tick Tock and Instagram are all essentially robbing creators of their worth creators are a new type of entrepreneur forming new types of businesses yet with web 2 platforms creators don't own their content to the profiles and that's their product in business instead they are

tied to the platforms they choose to create on well just like how crypto is freeing us from Banks web3 is freeing us from these centralized platforms on lens protocol creators own their content own their profile and even their social graphing followers in the form of nfts this allows you to freely from one social application to another with your content profile and followers moving along with you lens protocol enables self sovereignty for your social graph and interoperability across the internet at Webster Academy we believe this is the future of Social and that's why we partner with lens to ensure that the path of social media is heading in the right direction visit lens.xyz to learn more today all right welcome back folks in today's

deep dive we're getting the Devcon download from Sam Andrew so Sam attended Devcon this is Devcon 6 which was in Bogota Colombia a few last week October 11th to 14th Devcon is ethereum's developer conference 6 000 people attended from 113 countries there was 200 hours of programming across four days and 444 speakers and this was the first Devcon since Osaka in 2019 so people were fired up the energy the fives were high and it was held in Bogota to support ethereum's Latin American Community because Emerging

Markets are the highest growth markets for ethereum two-thirds of children today are born in emerging markets and the use case for ethereum is strongest there censorship resistance and low-cost instantaneous transaction settlement are needed there more than anywhere in the world so here's Sam's top 10 thoughts from attending Devcon first high quality conference second energized Vibe third ethereum has no vision intentionally though fourth privacy is the next Frontier fifth privacy is intended and unintended consequences six to trust is

human seven eth doesn't have an illiquidity premium I'll explain what that means later in this episode eight Mev is clear as mud nine Communication Breakdown what's going on and number 10 Colombian crypto is pretty damn cool so we're going to jump into this there's some controversial thoughts in this particularly around ethereum's Vision privacy trust and their illiquidity premium that they have been talking about we want to make sure we keep you in the know so let's see what Sam has to say about Devcon first he talks about how Devcon is such a high quality conference Devcon is probably the

highest quality conference that Sam's ever been to I've never been but I've heard it is off the charts attendees are nearly all developers with computer science mathematics cryptography or academic background there's a high density of brilliant people there are a few Financial types there there's no Shilling no nauseating crypto bro culture the programming is educational speakers have deep domain expertise the audience asks challenging questions and attendees are approachable they are there to learn to meet and collaborate it was astoundingly well organized and designed crypto gets a bad rap for ux but Devcon was anything but it was

beautifully designed in an inviting space with a light festival Vibe the opening and closing ceremonies including engaging videos and colorful performances by Colombian artists number two energized Vibe Defcon was buzzing with energy for four days people were at the conference grounds from 9am to 11 p.m these people are hyped they want to learn enthusiasts hustled all over Bogota to side events attendees mostly talked about the projects they were building crypto winter was mentioned in passing prices were an afterthought the shared belief that what is being built is revolutionary is was palpable it's the largest global group

of committed people that Sam has witnessed and the most attendees were genuine in their desire to build a better future on ethereum it's not amazing it's so exciting to see the energy that we are all creating and that at the largest developer conference in the world everybody wants this ethos this this way of living to make the world a better place it's so exciting to see well Okay the third thing that Sam took from Devcon it's ethereum has no vision was it that's a little bit harsh no well he's saying intentionally in in quotes intentionally has no vision businesses governments non-profits and

Social Clubs all have defined Visions ethereum intentionally does not have a vision not having one is unconventional it makes it harder for people to understand what ethereum is building asking ethereum what its vision is is like asking the internet what its vision is what who do you even ask ethereum does not have an overarching vision of what it is bringing to the world what is created is left up to the ecosystem there are many Visions for ethereum held by different parts of the ecosystem Sam heard several different Visions at Devcon ethereum is simply the substrate upon which applications are developed as such it needs to be

credibly neutral it purposely does not have a central Authority driving its Vision it's a fascinating view on creating this decentralized Tech that can allow so many different things to happen which we talk about so much on the show is it's not you know in the same way ethereum has no vision same way that nfts are not meant for one thing nfts are a tech that are meant for so many different applications and Sam obviously felt that at Devcon number four thing that he took from Devcon privacy is the next Frontier privacy is the next blockchain Frontier Devcon had an entire track devoted to

zero knowledge proofs and if you want to learn more about zero large proofs you can go back to a previous podcast that we had with polygon but let me just tell you a bit about it right now so ZK proof is a methodology that allows one party to prove to another that a given statement is accurate without conveying any compromising information ZK Roll-Ups play a crucial role in ethereum scaling roadmap Aztec and sismo are pioneering privacy on ethereum Aztec facilitates transactions on ethereum without revealing private information it is a privacy first layer 2 ZK roll-up that's a mouthful welcome to blockchain if you

haven't gotten used to that right yet ethereum is a public blockchain so historical account transactions amounts encounter parties as well as all as well as wallet asset value and type is visible for all to see wallet address can be linked to a person and voila your entire Financial history is exposed that's a major problem for a lot of use cases of the blockchain so Aztec facilitates transactions without revealing compromising information they are ensuring that you still can use the blockchain you can still have transactions but you have the Privacy with it sismo provides ZK badges for private reputation Pro portability a ZK

badge is a verified attestation that what is claimed to be true is in fact true without revealing what substantiates the claim to be true if you want to dive more into that recommend you check out sismo you can read their docs but imagine you have two wallets one is a public wallet the other is a wallet with substantial assets you have never linked the two wallets to protect your privacy however you'd like to benefit from something in your private wallet without revealing you're the owner of said wallet for an ant and for example an nft in your private wallet gets you access to an event or your assets qualify you for a loan a ZK badge can prove that you own

said asset in your private wallet so that you can benefit from it in your public wallet without revealing what the asset actually is or what wallet it's in this is just huge that the way Sam is explaining this is this is so important for us to onboard more and more people to web3 because privacy is such a big issue that we all think about in web 2 and if we think we're going to lose that as we move to web3 and you better believe that a lot of media is going to push that when they are trying to take us down as they enforce personally do a lot of time everybody seems to hate nfts and crypto but you can see Helen privacy is so important and ZK knowledge proofs

are going to be really important in ensuring that we have the Privacy that we need as we move everything on chain number five takeaway that Sam had privacy is intended and unintended consequences ethereum privacy is a game changer privacy's intended consequence is increased adoption it's unintended consequence will be a regulatory ordeal and a consequential society societal trade-off verifiable private transactions on ethereum will spawn its mass adoption the Privacy Primitives being developed allow users to control their digital assets history and identity they will they allow users to

reveal verified aspects of themselves such as Financial medical social professional and personal without revealing everything or even who they are privacy will impact will power new ethereum use cases it will enable users to interact with ethereum without compromising their identity and security is a much better form of user privacy than we currently have ethereum's privacy will create a regulatory nightmare that's definitely an unintended consequence here because it's going to be a societal trade-off here if you thought crypto Securities regulation was a challenge it's about to get more complicated other than

Securities Regulators crypto has not been the ire of regulators blockchain transactions are visible and auditable nefarious actors transacting on chain are easy to catch governments haven't bothered much with crypto that's about to change in Sam's View today authorities can get a subpoena for financial Communication location and medical records for suspected criminals but if that data moves on chain protected by privacy Primitives controlled by smart contracts there is no way for authorities to access it there's no organization to subpoena to get the records They remain privately locked the individuals the individual gains unparalleled privacy at the expense of the nation losing sovereignty

Regulators will have a field day Society will have to decide on a trade-off between personal privacy and the common good number six trust is a good thing some crypto enthusiasts believe that no organization or individual can be trusted they Proclaim everything on-chain needs to be trustless and decentralized Sam disagrees trust is a good thing humans are inherently trusting it's in our biology the brain is wired to trust influence infants developer's predisposition to trust others because they cannot survive on their own nature and nurture combined to make us trust technology is not going to rewire that nor should it Society is a collection of

humans trusting each other to varying degrees on any given day we make thousands of subconscious trusting assumptions Sam trusts that the people at the power plant do their jobs so that when he wakes up he can turn on a light and his electronics are going to charge uh we trust that the subway conductor is alert and can safely get us to work we trust that our nieces and nephews School teachers are qualified we trusted everyone on the freeway is paying attention and not going to cause an accident we trust that our plumber is going to fix the water leak in in our bathroom we make so many trust assumptions that we don't even realize it capitalism is an extension of trust

credit is the killer app of capitalism credit is the creation of new money that powers economic expansion and prosperity a bank makes a loan to a business by trusting the business will repay that loan for example a business gets a 100 loan by pledging forty dollars of assets sixty dollars of new money is created to fund the businesses expansion that new money is created based on trust relationships society and capitalism are built on trust at the root layer of ethereum its consensus layer trust is Paramount users need to trust that ethereum is decentralized and sensor resistant beyond the base layer we should continue as we have done in

society in capitalism to trust one another trust scales centralization Powers progress centralized actors who users can choose whether or not to trust building applications on a decentralized base layer is what will bring ethereum to the masses doing away with trust throughout the ethereum ecosystem goes against 300 000 years of human evolution enshrine trust where it matters most at the consensus layer beyond that don't fight human nature and nurture users can choose which centralized players to trust very very interesting View and take from Sam there and a little bit controversial as so much of what we talk about is decentralization of blockchain

and Sam's bringing up a good point about the need for us to enable human trust to be part of it to trust as human as Sam says okay number seven take away each does doesn't does not have an illiquidity premium both subscribe and elocriti e-liquidity premium to eth an e-liquidity premium does not make sense it confuses investors it adds little to the ethereum B full case it should be scrapped the rationale of an eliquidity premium is as follows let me explain what this means to you roughly 20 percent of each today is tied up in staking in collateral it's E-liquid can't be taken out it's state

eventually 80 percent of each could be tied up in E-liquid activities at that point only 20 percent of eth circulating will be liquid hence an an addition to an earnings multiple it should also have an eliquidity multiple of five times five times because if there is only if 80 is tied up then there's only one there's only 20 left so five times that a liquidity premiums don't exist assets have liquidity premiums not illiquidity premiums liquidity premiums are observed across asset classes when a private

company whose stock is illiquid IPOs its valuation increases part of the increase in valuation is the liquidity premium as a public public freely traded security there are far more buyers and sellers it's more valuable when you IPO all of a sudden you have more access to liquid to liquidity where people can invest in you which makes your stock more valuable large cap stock trade stocks trade at higher valuations than small cap stocks because they are more liquid more people can buy them more people have access to them liquid credit trades at tighter bid ask spreads than E-liquid credits again because more people can buy it a home in

New York City is more valuable than our home in rural New York State because more people want to buy it liquidity increases value e-liquidity D reduces value E-liquid assets are higher risk because they're harder to sell capital is locked up to compensate for the higher risk they trade at lower valuations derivatives for staked and collateralized East exist similar to equity commodity and credit derivatives in the case of Trad Phi assets traditional Finance assets the derivative of the underlying asset can be more liquid than the actual asset now Sam suspects the same will occur with eth in this case typing tying up ease

and staking and collateral won't affect the overall Market liquidity liquidity will shift from the underlying asset to the derivative each could have a scarcity premium scarcity premiums do exist they afford two assets like they're sorry they're afforded two assets like rare art and commodities in short supply eth does not have a scarcity premium though because not in short supplies does not hold the attributes of rare art like a Picasso piece it is not one of a kind ether in the form of gas could be construed as a commodity however for a commodity to have a scarcity premium it must be in short supply it must not be available at

any price because it's stuck in the ground eth will never be in short supply eth will always be available to pay for gas the price may be exorbitant but it's still available since eth can't be in short supply it can't have a scarcity scarcity premium unlike Commodities there is no substitute for eth if Eve ever was in short supply ethereum would stop working entirely in which case each value would be zero and I don't think that's going to happen but it's a really interesting point by Sam there's a lot of talk about the eliquidity problem of eth but it's it's overblown it's not true and Sam is clearly pointing out the use the reasons

behind that okay number eight takeaway Mev is clear as mud what is Mev Mev is maximal extractable value okay that's Mev and any of these discussions proliferated Devcon mov is a consent contentious sorry MVP is a contentious unsolved topic maximum extractable value is the maximum value that can be extracted from block production in excess of the standard block reward and gas fees by altering or excluding transactions in a block mbv has some benefits nav extractors fix economic inefficiencies of D5 protocols making

them robust they ensure price parity on decentralized exchanges and forced liquidations nav also results in a poor experience for typical users gas fees and network congestion are higher and the incentivizes validators to reorganize blocks which causes consensus instability Mev could also cause validators to centralize a large portion of solo stakers is necessary to ensure ethereum security it's decentralized that's a good thing as Mev has an increasing impact on validator earnings it will force them to consolidate they'll benefit from economies of scale enabling them to extract more Mev solar stakers will be marginalized ethereum Security

will be compromised Mev could also create private private mempools Traders may send transactions off chain directly to validators the validator includes the transaction in a block and shares the profit with the trader this process circumvents sending a potential Mev transaction to the public mempool private mempools diminish ethereum's permissionless and trustless nature they are also a centralizing force large validators could offer better execution privately to traders in exchange change for profit today Mev is primarily combated by Mev boost Mev boost is a software validators can run to maximize

their staking rewards by making best-in-class Mev extraction software open source solo validators are competitive competitive solo stakers stymie validator consolidation Mev can increase staking rewards by 60 percent Mev boost is used on roughly sixty percent of blocks the concern with Meg boost is that flashbots the creator of Mev boost now wields tremendous power in the ethereum ecosystem flashbots is funded by Venture fund Paradigm so far flash plus has done a phenomenal Good Deed we'll see how it plays out combating Mev is a core part of ethereum research proposer proposer Builder

separation and Builder API are two solutions proposed and if you check our newsletter you can see links to both of these Solutions the Mev debate centers on should and can Mev be eliminated and if so how muv is not unique to ethereum I mean the under a different name exists in Trad fire I don't believe Sam doesn't believe it can be eliminated if it's squashed in one place it merge emerges in another it also serves a per a purpose the consensus of the ecosystem seems to be in line with mine with what we need but the debate continues with how Mev should be allocated should the

welfare of users or the revenue of of valid validators be optimized user welfare is important for Network success validator revenue is important for network security so you need both of these These are critical questions Mev research needs to address Solutions need to offset Mev centralizing forces Sam's number nine take away communication breakdown ethereum and in crypto in general suffers from poor communication there is a Chasm between what is going on in ethereum and the general understanding of ethereum Sam's writing aims to bridge the gap tremendous value and Innovation are created in the ethereum ecosystem if

it's not articulated to the masses its potential will be thwarted we need to spread this more which is why we do this podcast and why we're all so stoked to be spending our time in web 3. Sam's advice to the ethereum ecosystem is to keep things simple when when he was in in Dev con sessions he's saying this is way more confusing than it needs to be stop speaking in theoretical mysticism talks like abstraction in the infinite Garden are inaccessible that kind of talk should be eliminated keep it simple and let's allow the masses to be

onboarded number 10 takeaway for Sam is that Colombian crypto is cooler and he shows a great photo of uh Colombian dancers in traditional outfits having a ton of fun at the conference and closing it out with a big dance show so that's it from Sam on Devcon thanks for listening in we got a little bit more technical today than we usually do on the show so if any of that went over your head highly recommend checking out our newsletter from from today which has links to a lot of these things that will help you dive even deeper or come on

into our Discord we have a we have a post for each podcast that we produce where we will answer questions I'll be in there answering questions Kyle will be in there answering questions we'll get Sam to come over and answer any questions as well so if anybody needs any clarification happy to share and to discuss this with you also need to give a shout out to Sam for writing this great piece so informational and so helpful if you want to follow Sam you can find his newsletter over at samuelandross.substack.com we'll include the link in the show notes you can also follow on Twitter we'll include the link to follow him on Twitter just a big brain that is really downloading so many

useful useful things for all of us to understand crypto and ethereum at a level that really is required as we take this to the masses and as we reach a billion people so that's a wrap on today's episode thanks so much everybody for listening in have yourself a great week Jaybird out thank you for listening to web3 Academy we hope this helps you along your web 3 journey and if it does please share this episode And subscribe so you don't miss the next one nothing in this podcast was Financial advice crypto and web3 can be risky you can literally lose it all in fact if you

invest on account of what we say you probably will lose it all so don't do that in all honesty the point of this podcast is to remove the noise of markets and price and focus on utility and implementation anyway so you should not take any of this as Financial advice thank you friends and see you in the next one