Dec 7, 2022

Vitalik Buterin and Ethereum developers are among CoinDesk's Most Influential 2022, following the blockchain's historic upgrade known as "the Merge" earlier this year.

Video transcript

One of the most defining moments for the world's second largest Cryptocurrency by market cap. Ethereum will be the years long process culminating in September when E developers pulled off a massive upgrade to its protocol known as the merch, it was no small task for the hundreds of developers and client teams to build coordinate and successfully swap out Ethereum core from proof of work to proof of stake. That's why vital Butter and Ethereum developers are among coin esque most influential 2022. Earlier this week, I spoke with Ethereum Foundation protocol support lead Tim Biko about how Ethereum is weathering crypto winter in the wake of fx's fallout. Take a listen. You know, I think from Ethereum perspective. Uh and especially at the protocol level, uh you know what happens uh all of the craziness that happens in the crypto space. Uh you know, whether this is in D I or, you know, on centralized exchanges um doesn't really change how we go about, you know, working towards, towards making Ethereum better. Um So the merger is the big thing we worked on uh this past year and now ever since that was live on the network, people have been focused on all of the the future upgrades you're going to bring through Ethereum. But the volatility of the space doesn't really change, kind of how, how quickly things happen, everyone is still still kind of working, working on improving things. All right. So how has Ethereum developed since the merge? What data can you share in terms of growth and health of the network such as how many validators have grown, et cetera? Yeah. So um at a, at a high level, what we were hoping to see at the verge was ideally nothing, right? Like we wanted to transition to be as smooth as possible for users. Um And for the whole network and that's kind of how we, we would know that it was, it was a success. Um And the main metric that we use to track uh the health of the proof of stake chain is what we call the participation rate. Um And this is really kind of the, the, the core metric that tells us, you know, our people online doing, doing their job. Um And so when the merge happened, uh we saw basically the network go from 99 point something percent, which is what we, we usually get uh down to about 95. So a tiny blip for a few hours. And then ever since then, it's been pretty steady around 99. So this tells us like, you know, the transition was successful, people are still kind of uh people are still kind of uh Vaid on the network, they're not having issues doing that. Then that's really the most important thing. Um The other thing that's been really nice to see after it emerged is uh the, the stability in terms of block times on the network. So before it to merge, uh when we use proof of work, we would always target about 13 seconds for blocks. Um But because proof of work is this random process, you only get an average of 13 seconds and you get, you know, a pretty big distribution. Um And now after the merge, we get these blocks every 12 2nd except if someone is offline. And like I was just saying this happens, you know, less than 1% of the time. So this means that for if you're in users and developers, um the the network kind of creates new blocks in a much more stable way and, and, and that's been shown in just like, you know, a, a better kind of market for gas prices where because we know that blocks are always coming, transactions get included at a, at a regular pace. Um So yeah, we, we've just had like, how is that market for gas prices these days? Um It's pretty good relative to last year. So uh I, I haven't checked it today but, you know, transaction fees have been like relatively low just because usage has gone down um in the past few months, a big focus of all of the protocol teams right now is helping to reduce the cost on layer two as well. So layer twos, you know, things like uh Darkwa optimism, arbi um they're already live, they already have products today that are cheaper than the Ethereum main net. Uh But we, we really want to spend uh a lot of time and effort to make them even cheaper. So, you know, in 2023 1 big thing you you'll be hearing about is just how you know, we can reduce the cost on a or two by another 10 X or more. Um to make sure that we can on board way more users and enable use cases where high transaction costs just don't work. So Ethereum developers have decided to consider eight Ethereum improvement proposals E I for inclusion in the network's upcoming hard work, which is called Shanghai. What are the most important of these proposals in your view? And why? Yeah, yeah, that's a great question. So it's worth noting there's kind of two different statuses for improvement proposals. One is like considered for inclusion, which means, you know, we're not quite sure we're going to do it. And then, you know, when we officially include something which just states included. Um So the the most important thing that we wanted to do after the merge was enabling beacon chain withdrawals. And this is basically the only big thing that's already being included. And I think this is, it's pretty obvious why we want to do it. So we did not do it at the merge just because of the complexity and the merge was already a pretty big upgrade for Ethereum. And we didn't want to add any kind of risks of bugs or what's not happening. So we didn't include the ability for validators to withdraw. But now, obviously, you know, validators have been doing this for a very long time, you know, some for over two years. And so it's, it's a, it's a good thing that, that enable them to withdraw their capital and, and even if people want to remain validators, you know, say you might have staked in a centralized exchange and now you want to run your own validator or you want to use a staking pool. So giving people the ability to kind of not only get their stake back but also potentially move it to a different provider. That's the number one priority for everyone. Well, certainly it's causing a lot of anxiety in the community. I think. So what? Well, let's talk about that e tied up on the network. When will staker be able to access their tokens? Can you give a timeline? So short answer is no. And the, the reason for why we don't have AAA direct timeline is just um because there's other things we are considering for the upgrade in parallel like upgrades to the em upgrades to scaling. Um, we still don't yet know like what's the full scope? Like we're gonna do withdrawals, but there might be, you know, two or three things that come alongside it and I think we're gonna need to figure that out to have an exact timeline. Um, that said, I don't think anybody, we would want to like significantly delay withdrawals over any other feature. So if there's something that would, you know, add months to the, to the time uh for withdrawals to happen, I don't think it'll be coupled together. Um And the hope is that in the next week or two, we can basically finalize this list for Shanghai. So that um so that we're able to provide a clearer timeline. Uh But, you know, if you want like a very high level one, like, of course, in the first half of next year, it, it, it, it will happen. It's a pretty good ballpark figure. So how is the network addressing censorship issues like tornado cash? So, um yeah, there's a lot to unpack there and I think this is where withdrawals is actually quite, quite helpful. Um So the, the reason why the censorship issues are a bit more problematic now than they were a proof of work. Um Proof of work has to do with how um how MEV is handled on the theorem. Um So in proof of work, um the way we would do MEV was, was very uh trust based. So there's only a few big mining pools and proof of work, the MEV providers. So teams like flash bots can go to every one of them and basically have agreements with them where they're going to send user transactions, trust the mining pools to not exploit, exploit that information. And, and, and that's basically how the, how the network works. And with the merge and the transition to proof of stake, we have way more validators uh on the network. And we wanted, we wanted to ensure that any validator, you know, can, can participate in and extract Mev, regardless of, you know, whether they're connected to flash bots or not. Like you don't need like an agreement with flash bots. Um But the downside to doing that is that um before and proof of work when Mev uh Mev uh bundles were sent in miners could always add extra transactions at the end. Whereas in proof of stake, we need to give a whole block to validators for technical reasons because um we, we want to make sure that um we don't have to trust, there's less trust involved. And this means that if a lot of the uh the market places where you know, this, this this exchange between people building blocks and validator happens, add censorship requirements, that's something that you know is outside of the protocol but can still affect the blocks that get built. And when people talk about censoring relays, this is what they mean, they mean that there's this infrastructure that sits between people building blocks and validators that mediates kind of the auction for like what's the best block to, to be sent to a validator? And that kind of marketplace can add extra censorship conditions, you know, uh that we don't see on our protocol and, and, and, and there's been, you know, there's been a lot of pushback by that in the community. And I think that's, you know, it's, it's, it's great that the Ethereum community kind of came together and, and, and highlighted that this was not something uh that, that, that, you know, they wanted to, to support and we're starting to see more and more alternatives basically where there's not just one marketplace where builders and, and validators exchange blocks, anyone can create one. And so there's more and more uh more and more of these alternatives that are coming with just different, uh you know, different requirements on what they think should be censored or not. And hopefully by having a diverse set of those, you know, we can limit the impact of the censorship on the network in, in the short term. And to that end, we have to wrap up, I do just want to ask one last question on, you know, your overall outlook on Ethereum and especially with respect to concerns on the regulatory front because now there seems to be some dithering between the sec the CFD regulators in determining whether or not Ether is a security. Yeah, I mean, I'm not a lawyer. Um and you know, I don't have AAA an informed view on that. I think when we think about designing the protocol, we think first and foremost about like technical soundness and security and, and also like Ethereum being used across the world, right? Like obviously the US is, is a big place and it's important, but it's also not the entirety of the world. So I think from the perspective of all the people working on the protocol, um it's not the main thing people spend their time thinking about, they spend their time thinking about how do you build the secure scalable and just like safe platform for people to use and how do we get it to use by, you know, as many people around the world as possible versus the I don't have much. OK, then tim your your most immediate to versus long term outlook on the potential for Ethereum that is most important. So the the most important thing in the short term I think is withdrawals. So like we were just saying, you know, it's really important for people to be able to get their stake back and, and to be able to kind of make decisions about where to allocate it. I think the biggest thing, long term is just, you know, can we build this and can we build new experiments and things on the theorem that we can't do anywhere else in the world that you can't, you know, build in the real world because institutions won't let you or there's just not the infrastructure to do. So. So this is why, you know, I do. What I do is we've already seen tons of these, you know, we've seen, we've seen NFTS, we've seen things like ens, we've seen quadratic funding on Bitcoin. Um My hope is just, we can build like 1000 of those things that uh were just not possible anywhere before and, and have the smartest people in the world come and decide to, to build them on Ethereum. That was the, the foundation protocol support lead Tim Biko.

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