Speaker 1: We have this idea of private enterprise block chains that
Speaker 1: are in public. That's the vision that's coming forward, and
Speaker 1: Ethereum really is the best place to do that. It
Speaker 1: has the security that we need, the uptime, the data availability,
Speaker 1: and fees are reasonable. Right now, it's a good time
Speaker 1: to launch in Etheroreum because the things are scaling, gas
Speaker 1: vias are low.
Speaker 2: Hey, everybody, welcome into the Thinking Crypto Podcast. I'm your host,
Speaker 2: Tony Edward, and joining me is Preston van Lohn, who
Speaker 2: is the etherorem core developer at off Chain Labs. Preston,
Speaker 2: great to have you on.
Speaker 1: Yeah, great to be here, presidin.
Speaker 2: I'm excited to chat with you as Ethereum just had
Speaker 2: a major upgrade at the Epectra upgrade and have a
Speaker 2: lot of questions for you. What does this mean, what
Speaker 2: does it mean for l two's and much more. But
Speaker 2: before we get to all of that, let's kick it
Speaker 2: off with your background. Where are you from and what's
Speaker 2: your professional background?
Speaker 1: Sure, I am based in Nashville, Tennessee. I'm a software engineer,
Speaker 1: mostly self taught. I was working, I guess before Ethereum.
Speaker 1: I was working at Google in New York City and
Speaker 1: I found Ethereum in twenty seventeen, kind of around the
Speaker 1: hype of icos and people starting to do things and
Speaker 1: getting a lot of attention, and I saw projects like
Speaker 1: Crypto Kiddies that were really overwhelming the chain in terms
Speaker 1: of like the capacity of what you could do, and
Speaker 1: I thought, Wow, this is a really exciting project. A
Speaker 1: lot of people are excited about it. I want to
Speaker 1: help scale this and get it to a place that
Speaker 1: really fulfills the vision of a world computer or decentralized,
Speaker 1: unstoppable application platform. So started looking at that in twenty seventeen,
Speaker 1: and at the end of the year I decided I
Speaker 1: wanted to work on that, kind of like moonlighting. I
Speaker 1: linked up with some folks online, namely Rood Jordan and
Speaker 1: Terrence Soal. We started a group called Prismatic Labs and
Speaker 1: we started just building sharding for Ethereum and then proof
Speaker 1: of steake.
Speaker 2: What was the journey like going from let's say Web
Speaker 2: two working at Google to Web three? Did you have
Speaker 2: to learn new coding languages or was it kind of
Speaker 2: a natural progression.
Speaker 1: Yeah, So my role in Google was the software engineering
Speaker 1: in ADS. I think it was like as a Web two,
Speaker 1: as you could get we had a Java stack like
Speaker 1: in super Enterprise, you know, all this kind of stuff,
Speaker 1: and I would say I would frame it differently. I
Speaker 1: would say, we get to learn new languages. I was
Speaker 1: really excited about the Go programming language, and when I
Speaker 1: got hired at Google, I expressed interest and I said
Speaker 1: I want to work on this language, and they kind
Speaker 1: of laughed and said, well, your background is in Java,
Speaker 1: so here's another Java job. And I didn't particularly enjoying that.
Speaker 1: I did like the challenges of working at a scale
Speaker 1: and impact like Google, but not so much the actual
Speaker 1: programming aspects. So it was mostly a mix between like
Speaker 1: a personal interest to have a positive impact on Ethereum
Speaker 1: and an opportunity to learn something new. I would say
Speaker 1: that when we for most of us that started the
Speaker 1: Prison project, this was our first Go project we'd ever
Speaker 1: worked on. It would make it to production, and that
Speaker 1: was the interest of like, oh, I want to learn
Speaker 1: this kind of cool, shiny tech and work on Ethereum,
Speaker 1: and really really enjoyed it ever since then.
Speaker 2: My backgrounds in digital marketing, so I know a lot
Speaker 2: about what Google has been doing. And you mentioned you
Speaker 2: worked in the advertising side of the business, and this
Speaker 2: is a hard question, but I'm very curious about your
Speaker 2: perspective on this. When do you see blockchain and web
Speaker 2: three with micro payments and tokens disrupting that publisher and
Speaker 2: advertiser model the way it's set up right now where
Speaker 2: Google is the middleman, right, but eventually maybe kind of
Speaker 2: like what the Brave browser and the Bad token are
Speaker 2: doing that we have that moment.
Speaker 1: I think that's a great use case for blockchains. The
Speaker 1: hard part about this is fraud detection and like spam, right,
Speaker 1: so why Google is taking so much of a cut
Speaker 1: when they do ads that I don't remember these act numbers.
Speaker 1: I think it's like they take forty percent of the payments, right.
Speaker 1: It may have changed since then, but what you're really
Speaker 1: paying for is as a website owner that wants to
Speaker 1: serve ads, you want to be sure that these ads
Speaker 1: are not going to be like viruses and scams and
Speaker 1: these are the kind of things. So Google has invested
Speaker 1: a lot a lot of energy and time into fraud
Speaker 1: and scal detection, and then they have a really really
Speaker 1: complicated auction process that's kind of like their secret source
Speaker 1: of ads. Even working in ads, they had no access
Speaker 1: to it, so I don't know exactly how it works,
Speaker 1: but you can imagine that's a really really hard problem
Speaker 1: to solve. So with that said, there are a lot
Speaker 1: of really innovative and cool techniques that are coming through
Speaker 1: in blockchain. I imagine that there's some kind of zero knowledge
Speaker 1: proof stuff you could do where you could have some
Speaker 1: assured assurance that the code that's going to run is
Speaker 1: does what it says it's going to do, and maybe
Speaker 1: it's like verifiable and like you can only do one thing,
Speaker 1: which is like to serve the ad and through there
Speaker 1: it's a race to the bottom on fees. Right of
Speaker 1: in terms of middleman, you have some kind of infrastructure
Speaker 1: aspect which can probably be solved by a blockchain. You know,
Speaker 1: there's like even maybe ethereum blob space would be interesting
Speaker 1: for this because ads are typically ephemeral anyway, you run
Speaker 1: a campaign for a couple of months maybe so you
Speaker 1: can post your data there and maybe that's served by websites.
Speaker 1: There's a proof that the code does exactly what we're
Speaker 1: supposed to do, and then the platform fees would be
Speaker 1: super small. Like that's the great part about blockchain is
Speaker 1: it's a risk to the bottom on fees. And another
Speaker 1: thing would be the payments coming through very quickly with Google.
Speaker 1: I think the publishers are paid out maybe monthly, and
Speaker 1: if there's any problem with your account, they can stop payment.
Speaker 1: I remember there was a class action, a lawsuit for
Speaker 1: publishers they had flagged as malicious maybe or whatever the
Speaker 1: reason was, they canceled your account. If you had any
Speaker 1: pending payments, like payments you had legitimately earned, they would
Speaker 1: not pay them. They just stopped. They said, you've we
Speaker 1: don't approve your activity. We're canceling everything your account. Any
Speaker 1: pinning payments you have didn't come through. Google lost that lawsuit,
Speaker 1: but that wouldn't have been a thing on a blockchain platform.
Speaker 1: It would have been streaming like by the by the
Speaker 1: block basically. So there's definitely a better world out there
Speaker 1: for advertising. I'm really interested in seeing how that goes,
Speaker 1: because as much as people dislike ads, you know, there's
Speaker 1: some when when when you do get that one once
Speaker 1: in a lifetime, I guess AD that appeals to you,
Speaker 1: it's like, okay, cool, like I found something I was
Speaker 1: looking for. Or maybe with the innovations in Aire or
Speaker 1: some like promoted things, but they're more applicable to you.
Speaker 1: So I'm optimistic about that we can have an impact.
Speaker 3: There, oh for sure.
Speaker 2: And I'm curious if too, or to see if Google
Speaker 2: itself decides to integrate blockchain, as they've been dabbling and
Speaker 2: exploring certain things on the Google cloud side. Maybe they
Speaker 2: integrate the ethereum right, Maybe they're the ones who make
Speaker 2: the updates here, even though it may be taking money
Speaker 2: out of their pocket, but if they see disruption down
Speaker 2: the road, they make the change.
Speaker 3: But we'll have to wait and see.
Speaker 1: Yeah, And like in the model I describe, maybe they're
Speaker 1: one of the actors in the system that uses their
Speaker 1: fraud detection activity as like making attestations to say, like
Speaker 1: you can run this ad because I've verified it, I'm
Speaker 1: a trusted source. Here's the proof of what I did,
Speaker 1: and so on. And there's some there's some utility there
Speaker 1: that they would earn revenue from because it's there are
Speaker 1: more actors than just the advertiser and the publisher. There
Speaker 1: is you do have some things in between that are
Speaker 1: worth paying for, and that's I think would be a
Speaker 1: good use case.
Speaker 3: Oh for sure. Tell us a bit about off chain labs.
Speaker 1: What do you guys do the off Team Labs. So
Speaker 1: this is our company is the ones that built the
Speaker 1: Arbitrum L two and we also developed the Prism consistence
Speaker 1: client for Ethereum. I could dive more into either of
Speaker 1: those if you like. Those are two big things.
Speaker 2: So let's talk about Arbitram given that it's a layer
Speaker 2: two and why Arbitram was created, and you know essentially
Speaker 2: it's mission.
Speaker 1: Yeah, the mission is simple, it's to scale Ethereum. L
Speaker 1: two's we think of as an extension of Ethereum. They
Speaker 1: they make a trade off to say we can go
Speaker 1: faster here through centralizing. The sequencers say we're going to
Speaker 1: organize the transactions first and first out. So the first
Speaker 1: one we see is the first one's going to be
Speaker 1: landing in the block, and you don't have to trust
Speaker 1: the sequencer. At any point, you can exit the chain,
Speaker 1: you can force the transaction to go through. So it's
Speaker 1: it's a trade off that's made in centralization, but you
Speaker 1: still have the same security guarantees as may net. The
Speaker 1: sequencer can't steal your money, they can't print money, they
Speaker 1: can't censor you, they can't stop you from doing what
Speaker 1: you want to do. You're still able to do everything,
Speaker 1: So With that model in mind, we're able to create
Speaker 1: a blockchain that goes fast. It goes I think two
Speaker 1: hundred and fifty millis second block time strikes super super fast,
Speaker 1: and with that you see a ton of activity. Fees
Speaker 1: are cheaper for users. Users like this, they get faster confirmations.
Speaker 1: That's appealing if you think about how are we going
Speaker 1: to make this a real world thing and actually use
Speaker 1: it in the real world, like maybe example being you're
Speaker 1: at the grocery store and paying for your groceries. If
Speaker 1: you are on Bitcoin, you don't want to wait ten
Speaker 1: minutes for a block to come through. And Etherium likewise,
Speaker 1: it is twelve seconds when you swipe your card. If
Speaker 1: you're paid by a card at the kiosk, it's like
Speaker 1: a three second thing. So it needs to be better
Speaker 1: than that. And Arbatrom's saying, look, we can do it
Speaker 1: in two hundred and fifty milliseconds, go super fast, and
Speaker 1: there are basically no trade offs made in terms from
Speaker 1: the end user. You still have all of the principles
Speaker 1: that you care about as an asiriend user.
Speaker 2: Now, there have been many Layer two's build on top
Speaker 2: of Etherorem. I think there's a I've heard somebody phrase
Speaker 2: it the roll up race or something like that. What
Speaker 2: do you think happens over time as etherorem layer one
Speaker 2: becomes better. We we'll talk about the Petra upgrade, and
Speaker 2: then there has to be some sort of consolidation of
Speaker 2: the L two's.
Speaker 3: So how do you see that playing out?
Speaker 1: Yeah, the way I see the vision of the rollup
Speaker 1: centric rode map. So you have a really strong L one.
Speaker 1: This is where all the settlement happens. This is where
Speaker 1: the applications that need the absolute best decentralization, like everything
Speaker 1: at the base layer here, and then you have a
Speaker 1: a a cluster or like a huge number of L twos, right,
Speaker 1: and these can be tailored for specific applications. Maybe they're
Speaker 1: called app chains, and you can call it however you like.
Speaker 1: But the vision that I see is not necessarily consolidation
Speaker 1: saying like some app chains or l twos are irrelevant,
Speaker 1: so we'll merge them together. Rather, I think the L
Speaker 1: twos are going to look as one homogeneous layer. So
Speaker 1: when the big thing that Ethereum is working on is interoperability.
Speaker 1: So when you have this homogeneous interoperability, it feels like
Speaker 1: one layer. Like maybe it's slightly slower in terms of
Speaker 1: instead of two hundred and fifty milliseconds to do some complex,
Speaker 1: complex multichain transaction, it takes one second depending on the
Speaker 1: slowest link in the chain there. But from a user perspective,
Speaker 1: you would be able to express I want to borrow
Speaker 1: an NFT from this chain and then deposit it into
Speaker 1: a vault in another chain. And I want to buy
Speaker 1: tokens over here and put them over here, or create
Speaker 1: a new app or play a game and use funds
Speaker 1: from another chain. It's all going to feel like one
Speaker 1: big thing you're just going to understand, like am I
Speaker 1: on L one or am I in the L two space?
Speaker 1: And with that in mind, I think of it as
Speaker 1: like a nation of cities with highways in between. And
Speaker 1: before we had this in the US, before we had
Speaker 1: this infrastructure of interstate highways, every city would thrive kind
Speaker 1: of on its own, but when they were connected, that's
Speaker 1: when the real innovation, or not innovation, that's when the
Speaker 1: economy like really took off. Like we're able to freely
Speaker 1: trade with other cities. That's going to be really huge.
Speaker 1: So I'm super bullish on the idea that we'll have
Speaker 1: a strong L one with this interconnected layer of L twos,
Speaker 1: like there will be hundreds or thousands. I think every
Speaker 1: major institution's going to win have one, and they're going
Speaker 1: to be able to realize the benefits of blockchain while
Speaker 1: also defining their own parameters. For a while, I think
Speaker 1: at twenty eighteen or nineteen, there was a big excitement
Speaker 1: around like enterprise blockchain, right where you can have this
Speaker 1: consortium of institutions that would run their own blockchain so
Speaker 1: that they can interact with each other with trust minimization.
Speaker 1: I think those things will be done now on L
Speaker 1: two's where they're saying we can have our own rules
Speaker 1: while still benefiting from the L one security and with
Speaker 1: the techniques of zero knowledge. They can do this all
Speaker 1: in public without revealing any information about what's happening in
Speaker 1: that blockchain, because that's another aspect that people say, well,
Speaker 1: block chains are completely transparent in public. That's not always
Speaker 1: a good use case for certain users, but there will
Speaker 1: be solutions for them too. So I mean, it's it's
Speaker 1: going to take over the world in every aspect of
Speaker 1: financial applications.
Speaker 2: I really believe that the President. I've never heard anyone
Speaker 2: explain it like that. So that's really great. I have
Speaker 2: a ton of follow up questions. You know, you mentioned
Speaker 2: that different entities or corporations and so forth can have
Speaker 2: their own L two. So do envision a world. Let's
Speaker 2: say we use Apple as an example. Apple can do
Speaker 2: certain transactions on the enterprise level, maybe to manage or
Speaker 2: supply chain and so forth.
Speaker 3: On the L one.
Speaker 2: They could create their own L two and that could
Speaker 2: be customer facing. Maybe it's integrated to the app store.
Speaker 2: It enables, you know, some new features for customers and
Speaker 2: so forth, and that could be a setup that they use,
Speaker 2: Like that's a model that other companies can use as well.
Speaker 1: Yeah, exactly. I think. So Apple can launch their own
Speaker 1: L two and they have the ability to say, like
Speaker 1: applications that run on iOS or whatever, maybe they run
Speaker 1: in their own L three like L two on top
Speaker 1: of the Apple L two, And so they can keep
Speaker 1: their Apple ecosystem really really tight. And that's a big
Speaker 1: benefit or a big need for them because they have
Speaker 1: a really tight control on the supply chain. So they
Speaker 1: want to make sure everything in the Apple ecosystem is excellent.
Speaker 1: So they can do that and define the rules and
Speaker 1: still say to users, you know, your property is your
Speaker 1: property and you can take that and it's a top
Speaker 1: of application as Ethereum l too.
Speaker 2: Wow, there's so many possibilities there, And right away I
Speaker 2: thought of QUIN and you know Base and how they're
Speaker 2: leveraging that and how that's impact their revenue and.
Speaker 3: What they're able to do. So it's it.
Speaker 2: And just like Base, they don't necessarily have to have
Speaker 2: a token, right, it could just be an ulto without
Speaker 2: a token exactly.
Speaker 1: Yeah, And with some of the innovations within Pectra, you
Speaker 1: can natively have like sponsored transactions, so maybe or your
Speaker 1: chain doesn't have gas. You know, there are no fees,
Speaker 1: Like you can really tweak the way things work. It
Speaker 1: doesn't have to be a copy of how the Ethereum
Speaker 1: L one works. You can really define the rules the
Speaker 1: way you wish. So having the concept of gas or
Speaker 1: like a payment for gas may not work for Apple,
Speaker 1: but they can enable you to do that through L
Speaker 1: two's you know, they have dependency on L one, so
Speaker 1: you're able to like force a transaction through whatever it
Speaker 1: may be. But when you're actually transacting within the Apple space,
Speaker 1: you may don't have to you know, have like ETHER
Speaker 1: for gas or UCC for gas or whatever it may be.
Speaker 3: M hmm.
Speaker 2: That just opens up a world of possibilities. And I'm
Speaker 2: assuming you know, once we have regulatory clarity here in
Speaker 2: the United States, we could see a lot of companies
Speaker 2: start to do this right, build their own L two's
Speaker 2: I think, if I'm not mistaken, Sony and I was
Speaker 2: just talking to Yatsu and Amocha brands yesterday about this
Speaker 2: creating Sonium. If I'm not mistaken, I believe that's an
Speaker 2: Etherorem Layer two. I'm not sure, but I think so.
Speaker 3: Yeah.
Speaker 2: But it's just fascinating that the possibilities here and and
Speaker 2: how these ecosystems can be built for these different companies
Speaker 2: and brands to enhance their business customer retention because they
Speaker 2: could issue NFTs and different things on chain. So it's
Speaker 2: just it's just so fascinating. So let's talk about the
Speaker 2: Ethereum Petra upgrade. What is this upgrade and what does
Speaker 2: it help Etherrem to achieve.
Speaker 1: So the Pectra upgrade is an upgrade to the Ethereum
Speaker 1: L one. We have three I think three pillars of
Speaker 1: this this upgrade, that being there's a innovation in account
Speaker 1: obstruction and that's like an improvement on user the user experience.
Speaker 1: The end user experience. We have some optimizations for the
Speaker 1: validator user experience. So there's like the folks that are
Speaker 1: staking on the chain and are actually running and participating
Speaker 1: in block production and at the stations. And then we
Speaker 1: have some improvements to scaling that come through as like
Speaker 1: a side effect of those of those features. So I
Speaker 1: want to like dive into a little bit of each
Speaker 1: of those things. Let's start with account obstruction, I think
Speaker 1: is the most interesting. So what we have in Pector
Speaker 1: we have this EAP called seven seven oh two, and
Speaker 1: this allows normal user accounts, which we refer to as
Speaker 1: eas or externally owned accounts. This is a distinction between
Speaker 1: a user and a smart contract. So the EOA being
Speaker 1: a user, they don't have the ability to run I
Speaker 1: guess like complex transactions in the sense that a smart
Speaker 1: contract could. So one example being there's this really annoying
Speaker 1: ux where when you have an ARC twenty, a normal
Speaker 1: token that you have to approve a contract like UNISWAP
Speaker 1: to move it on your behalf. So when you wanted
Speaker 1: to trade it, you actually had to approve the router
Speaker 1: to take the funds and do all this, and that's
Speaker 1: a two step process. You have to make the approval
Speaker 1: and then make the transaction. Now, with this improvement in
Speaker 1: seven seven O two, the IP seven SEO two, you
Speaker 1: can deploy a piece of code to your account that's
Speaker 1: that are just for that one transaction and then removed,
Speaker 1: and that piece of code can do multiple things. So
Speaker 1: you could say I'm deployed to my account and then
Speaker 1: execute this the instructions are approved, the transaction, make the
Speaker 1: trade on UNI swap buying ETH at this specific price
Speaker 1: with this slippage, and then at the end, if it
Speaker 1: all succeeds, then you remove the code afterwards, and then
Speaker 1: the activity I wanted to do works, And there are
Speaker 1: a lot of possibilities you can do with that. That's
Speaker 1: like the I think the most frustrating experience I've had
Speaker 1: on Ethereum was this approval process. But there are other
Speaker 1: things you can do, like allowing sponsored transactions. So maybe
Speaker 1: there's an app that wants to say we're onboarding users
Speaker 1: and for the first like six months, we're going to
Speaker 1: be paying for the gas for everybody. The way they
Speaker 1: can do that is you create an account with them
Speaker 1: to deploy the code, and you can make all of
Speaker 1: your transactions off chain, and that the app will submit
Speaker 1: the transactions on your behalf. They can mutate your account
Speaker 1: just with the permissions you gave them. They'll pay the
Speaker 1: guests and that's revocable at any time, and you reclaim
Speaker 1: your account at any time, and you've set the parameters
Speaker 1: so you can only do what they say. That's the
Speaker 1: beauty of bark chain is it's verifiable to only do
Speaker 1: what the code says. And the pector's been out in
Speaker 1: like two weeks and I think there are already dozens
Speaker 1: while it's to support this type of behavior, I actually
Speaker 1: didn't expect it to be that quick, but we're seeing
Speaker 1: that innovations in ux already, so that's super, super exciting.
Speaker 1: Other things in Pectra that came along were on the
Speaker 1: validator experience side. One thing that was a trade off
Speaker 1: we made for simplicity with Ethereum was you said, if
Speaker 1: you want to be a validator, you need thirty two
Speaker 1: EAS to do that, and your validator account thirty two
Speaker 1: ETH is also the maximum you can have, So the
Speaker 1: earnings you make the interest you make is not compounding. Right,
Speaker 1: If I earned one ETH this year, I have thirty
Speaker 1: three eighth, Well, only the first thirty two ETH was available.
Speaker 1: Balance for my validator to have weight to produce blocks
Speaker 1: or at testations. That was kind of a blemish. I
Speaker 1: think that could be easily improved. And what we did
Speaker 1: was we said, let's increase the maximum effective balance from
Speaker 1: thirty two to twenty forty eight, and we added the
Speaker 1: feature where you can consolidate your validators, so instead of
Speaker 1: running dozens of small validators, you can consolidate them into
Speaker 1: into smaller fat validators. Where the benefit is that you
Speaker 1: have now compounding interest, which is definitely appealing, and your
Speaker 1: validator is having to send less messages because that one
Speaker 1: validator now has the way of mini and so it's
Speaker 1: one message has a more profound impact on deciding the
Speaker 1: head of the chain. So validators are voting on what
Speaker 1: is the head of the chain. So why is that important?
Speaker 1: The important part about this is less networking traffic. And
Speaker 1: when you have less networking traffic, it means you have
Speaker 1: capacity for more networking traffic. So it's a scaling opportunity
Speaker 1: of saying, if we get a lot of folks consolidating,
Speaker 1: which I think people are slowly consolidating, that will have
Speaker 1: less messages flying over the network, meaning we'll have more
Speaker 1: capacity for messages, so that's interesting. We also on the
Speaker 1: scaling side, we have a data availability layer, so where
Speaker 1: L two's and other users can post arbitrary data as
Speaker 1: a thing called blobs. And what Ethereum did with blobs,
Speaker 1: or the way blobs work, is they have a fee market,
Speaker 1: just like normal transactions have guest fees. When the chain
Speaker 1: is having a lot of activity, the fees go up.
Speaker 1: Blobs have their own fee market, their own fee space,
Speaker 1: and we said it's a dynamic it's the same dynamic
Speaker 1: fees where we're sort of targeting and equilibrium. We want
Speaker 1: to have three blobs in every block. When there are
Speaker 1: less than three blobs, the gas price can come down,
Speaker 1: and when there are more than three blobs, the gas
Speaker 1: price can come up. And each block can have a
Speaker 1: maximum of six. What we did in Pector we said,
Speaker 1: we said, let's set the target to six, so effectively
Speaker 1: double the average number of blocks we will have and
Speaker 1: set the maximum to nine just so that we're not
Speaker 1: getting blocks that are too big. And with that we've
Speaker 1: effectively doubled the capacity that the Ethereum blockchain is having
Speaker 1: for blobs. This lets more L twos come on board,
Speaker 1: or L twos to go faster and post more data
Speaker 1: without increasing the costs for their users or the costs
Speaker 1: for others.
Speaker 3: That's great.
Speaker 2: So it seems like on multiple fronts there's improvements, improvement
Speaker 2: and transaction speeds, lower fees. It benefits the L twos
Speaker 2: of course, so this is really great. Do you feel
Speaker 2: this is this is like maybe a hard question. I
Speaker 2: don't know if I'm thinking about it correctly. Sure that
Speaker 2: this is the major upgrade for this cycle. Can there
Speaker 2: be future upgrades that make things even more efficient? Or
Speaker 2: this might be it for a while.
Speaker 1: This is I mean, this is a really big upgrade.
Speaker 1: This upgrade. Peicture had the most EPs of any upgrade,
Speaker 1: the most improvement proposals of any upgrade we've had so far,
Speaker 1: and Ethereum's upgrade cadence is typically around twelve to fourteen months,
Speaker 1: a little over a year every year we upgrade. I
Speaker 1: think we'll have a shorter upgrade coming up called Fusaka,
Speaker 1: And the intention with Fusaka is to continue scaling blobs,
Speaker 1: So instead of targeting six, I think the target's like
Speaker 1: forty eight. It's a huge, huge improvement, a huge capacity increase.
Speaker 1: And maybe misremembering that it's either the target or the maximum,
Speaker 1: but we'll have as many as forty eight bobs per
Speaker 1: block through innovations in Pierdas. That's really exciting. And the
Speaker 1: fork following that is at least a year away. Let's say,
Speaker 1: like Fusaka is able to get out this year, we
Speaker 1: might be able to get the next fork Lamsterdam in
Speaker 1: twenty twenty six. That feels a little optimistic, but these
Speaker 1: things are working in parallel, so while we're while we're
Speaker 1: wrapping up the next fork, we're already starting on the
Speaker 1: fork after that. So I don't want to undersell the
Speaker 1: capabilities of Cordex. When they're when they want to get
Speaker 1: it done, they'll get it done. So that's very very
Speaker 1: likely that we'll see two forks in the next two years,
Speaker 1: and depending on your definition of a cycle, it could
Speaker 1: be within the cycle. But the exciting innovations in the
Speaker 1: Clansdam are scaling the l one, increasing the throughput of
Speaker 1: l one chain, continuing to scale blobs and work on
Speaker 1: user experience in that order.
Speaker 2: There's a question I often get from people, whether it
Speaker 2: be in the YouTube comments section or an x and
Speaker 2: I know the answer, but I want to get your
Speaker 2: perspective on this. They say, why is black Rock in
Speaker 2: some of these institutions choosing Ethereum to tokenize. You know,
Speaker 2: they usually kick off with Ethereum when etherorem is slow
Speaker 2: in the transaction speeds. Give us the maybe the elevator
Speaker 2: pitch on that is it the decentralization and the security
Speaker 2: that's the top of priority for them versus Okay, maybe
Speaker 2: the fees are a little bit high, but we know
Speaker 2: eventually Theorem is going to address some of these with
Speaker 2: these upgrades.
Speaker 1: Well, I think that these institutions prefer legacy tech. If Ever,
Speaker 1: if you're a software engineer working at these institutions, is
Speaker 1: probably really old code like Java, really simple and safe
Speaker 1: stuff or older because they need to get it right
Speaker 1: first and I can't afford to have any any mistakes
Speaker 1: or any outages or anything like that. Ethereum has been
Speaker 1: online for ten years. Over ten years has never gone down.
Speaker 1: It's really really reliable tech. It has a lot of
Speaker 1: insurance I would say, kind of like insurance policy in
Speaker 1: terms of tech, where we have things like client diversities.
Speaker 1: So not only is there a single implementation of Ethereum software,
Speaker 1: there are multiple There are like a dozen in different
Speaker 1: implementations and with that in mind. It says, if there's
Speaker 1: a bug in any one of those, you can quickly
Speaker 1: switch over to another implementation that may not have that bug,
Speaker 1: and you stay online all the time. That makes it
Speaker 1: really appealing for institutions that every second they're offline there
Speaker 1: let's say like hemorrhaging reputation or value of some kind,
Speaker 1: and they really can't afford to take that risk. Ethereum
Speaker 1: is the safe bet. It also has prioritized decentralization as
Speaker 1: an aspect that it will not compromise on. We can
Speaker 1: make a lot of trade offs to go fast, but
Speaker 1: when it's a trade off that comes a decentralization, Ethereum
Speaker 1: doesn't want to make that trade off. They want to
Speaker 1: say we can go fast and maintain this high bar
Speaker 1: of saying we want to be the most decentralized blockchain
Speaker 1: out there. We want to everyone to be able to
Speaker 1: run the blockchain, and for those with the reasonable amount
Speaker 1: of funding can can be a block producer. You don't
Speaker 1: have to be a consortium of miners like a mining
Speaker 1: pool to mine a bitcoin block. You need like a
Speaker 1: ton of equipment. Like it's it's not it's not something
Speaker 1: an average person can do, where an Ethereum. They say,
Speaker 1: if you have consumer grade laptop, you can run a validator.
Speaker 1: You don't need this expensive capital expenditure there. And so
Speaker 1: for for institutions like Blackrock, I think they see this
Speaker 1: as a really appealing idea and with the flexibility to
Speaker 1: say they can make their own rules in the L
Speaker 1: two space, they have specific requirements. Yes, maybe, I'm sure
Speaker 1: they do believe in this cyberpunk blockchain vision of like
Speaker 1: there are no rules, you do whatever you want. But
Speaker 1: at this but at the same time, there are laws
Speaker 1: where people are and they have things like KYC they
Speaker 1: have to do and they have to have have accredited investors.
Speaker 1: And while that's like kind of frustrating for the cyberpunk vision,
Speaker 1: they that this is progress towards getting to that vision.
Speaker 1: So they may need to say we can only let
Speaker 1: people certain verified users onto URL two, or they may
Speaker 1: have say, like there are some things that are permissioned,
Speaker 1: but that's a flexibility they really want and they can.
Speaker 1: You know, just like I mentioned earlier where we had
Speaker 1: this idea of private enterprise blockchains that are in public,
Speaker 1: that's the vision that's coming forward and Ethereum really is
Speaker 1: the best place to do that. It has the security
Speaker 1: that we need, the uptime, the data availability, and fees
Speaker 1: are reasonable. Right now, it's a good time to launch
Speaker 1: in ethereum because things are scaling, gas fees are low.
Speaker 1: People who have been around for a while, remember it
Speaker 1: costs like one thousand dollars to deploy a contract at
Speaker 1: one point because gas fees were outrageous and to do
Speaker 1: like a basic transaction was like ten dollars or something.
Speaker 1: So now we're in a space where even l one
Speaker 1: is pennies. You know, it's it's incredible, So it's a
Speaker 1: really good time to choose that they're in.
Speaker 3: Oh for sure.
Speaker 2: And you know, as far as adoption in a broader market,
Speaker 2: you know, do you see e theorem? Its swim lane
Speaker 2: is more on the enterprise level. You have the L
Speaker 2: twos which can service retail consumer markets, but then you
Speaker 2: know you have like Solana and some of these other
Speaker 2: folks Cardano and so forth, they're not really servicing enterprises
Speaker 2: like etherorem So are there swim lanes more on the retail?
Speaker 2: You know, we saw a ton of mean coins on Solana,
Speaker 2: but do you see that way or you know, are
Speaker 2: you guys going for everything?
Speaker 3: And I don't know how you view it.
Speaker 1: I think that we're all building the same thing, and
Speaker 1: people are making different decisions on what order to build.
Speaker 1: Solana has taken them approach of let's put everything on
Speaker 1: L one and put a ton of resources on it.
Speaker 1: They've made a trade off in decentralization in the aspect
Speaker 1: of it's really hard to run, you need a lot
Speaker 1: of equipment, and so people just use our PCs, you know,
Speaker 1: they connect to centralized providers. It's hard to be a
Speaker 1: validator without having some sponsorship where you need a large
Speaker 1: amount of tokens delegated to you to actually be profitable.
Speaker 1: And Ethereum says we've got a strong L one and
Speaker 1: we're going to invest heavily in L two's supporting L
Speaker 1: two's and they've established that, and now they're returning back
Speaker 1: to the I mean, the roadmap hasn't really changed, but
Speaker 1: they're returning back to saying we are still prioritizing L
Speaker 1: one and putting the message out there that the L
Speaker 1: one is first again. So that's really really appealing. Think
Speaker 1: you when you look at distributed systems, there is no
Speaker 1: distributed system that says will have one really big fast computer.
Speaker 1: That's just that's not how it works. You say, instead
Speaker 1: of having one really big fast computer, you have many,
Speaker 1: many less fast computers, like not supercomputers, and then the
Speaker 1: collective computing power is greater than a single big, big computer.
Speaker 1: It's it's called horizontal scaling. So instead of having like
Speaker 1: adding more round, you just add another computer and they
Speaker 1: talk to each other. And so that's the vision that
Speaker 1: I see for all blockchains. I think even high capacity
Speaker 1: l ones are going to reach some point. You're going
Speaker 1: to reach a throughput capacity that you cannot just the
Speaker 1: limitations of physics will not allow you to go any farther,
Speaker 1: and you'll have to horizontally scale. That's true if you
Speaker 1: want to onboard the entire everybody on Earth, right, that's
Speaker 1: like the scale, the highest scale you can imagine, you're
Speaker 1: going to have the horizontally scale. You just can't have
Speaker 1: one thing. And so Ethereum is saying will be the
Speaker 1: root of trust, the root of security of everything, and
Speaker 1: everything will orbit around Ethereum as like a universe of
Speaker 1: ethereum or a like a solar system of planets, but
Speaker 1: it's more like a galaxy. I guess where Ethereum is
Speaker 1: the center of the galaxy. You have all these spaces
Speaker 1: you can go and they're all interconnected through interoperability. Some
Speaker 1: of them build on top of each other. You have
Speaker 1: l ones, L twos, L threes and so on. Like
Speaker 1: they you can deploy an L two on an L
Speaker 1: two and so on in a recursive, recursive fashion. So
Speaker 1: there's a lot of possibilities with that, and I think
Speaker 1: that all of that surfacing down to ethereum is a
Speaker 1: really strong use case for it.
Speaker 2: There am you know, honestly, Preston, I've never thought of
Speaker 2: it that way because I've my perception has been these
Speaker 2: L twos, there's so many of them, some of them
Speaker 2: seem useless. But the way you're explaining it, I it's
Speaker 2: kind of like click for me, like a Aha moment
Speaker 2: that if you're trying to scale for servicing enterprises globally
Speaker 2: and talking about a lot of transactions, a lot of
Speaker 2: companies and so forth, you need a lot of these
Speaker 2: L twos and they're not necessarily cannibalizing each other because
Speaker 2: there's only so much each of them can do in
Speaker 2: a sense, and people in different parts of the world,
Speaker 2: different industries may choose different L twos and choosing you know,
Speaker 2: eth as that security.
Speaker 3: Layer of course, so it makes sense.
Speaker 2: You know, I think your analogy of like the solar
Speaker 2: system and then even corporations building their own L twos.
Speaker 3: Uh, that's that's really interesting.
Speaker 1: Yeah. I think that's the vision, that's the roll up
Speaker 1: since you grubmap as I see it in my mind.
Speaker 3: For sure.
Speaker 2: So let's talk a bit about Arbitram. You know, as
Speaker 2: an L two what youth cases are you targeting? You know,
Speaker 2: what can people do on Arbitram and you know what's
Speaker 2: been on your road map?
Speaker 1: Yeah, so Arbitram, you know, I let me say this,
Speaker 1: I mostly work on L one side of things, so
Speaker 1: I will explain Arbitram as I see it almost from
Speaker 1: an insider, don't. I don't know much about the inside
Speaker 1: of Arbitram other than how it works and what I
Speaker 1: see for Arbitram or what was so interesting for our
Speaker 1: team to join Octane Labs because originally we were an
Speaker 1: independent team just through grants, and then two three years
Speaker 1: ago we joined forces with Octane Labs to scale ethereum.
Speaker 1: We have the same vision and what I see Arbitram
Speaker 1: doing is they are investing heavily in to DeFi so
Speaker 1: decentralized finance as we see a lot of innovation there.
Speaker 1: There are some really really exciting platforms that are launching
Speaker 1: on Arbitrum. You can see through the net inflows of
Speaker 1: value into Arbitram is consistently, at least at the time
Speaker 1: recording this week has been very, very high. I think
Speaker 1: that's really strong for Arbitram. There's a lot of use there.
Speaker 1: They have some of the best people building this tech.
Speaker 1: So in Arbitram we have innovations like stylists and what
Speaker 1: stylist is or stylist says says you can deploy smart
Speaker 1: contracts that are written in other languages than Solidity and
Speaker 1: can run in a more performance environment alongside the EVM. So,
Speaker 1: more specifically, in nerds speak, it means if you write
Speaker 1: in a language like Rust, you can compile it to
Speaker 1: webs or WAM and that can run in a WAIM interpreter,
Speaker 1: which is orders and magnitude cheaper than the EVM. So
Speaker 1: you can do some complex computation, like maybe you're launching
Speaker 1: an NFT and you want all of the attributes to
Speaker 1: be randomly generated on chain. Nobody knows what they are
Speaker 1: until it launches. That computation maybe is expensive for an
Speaker 1: EVM operation, but if you did it and the was
Speaker 1: them interpreter. It's fast and cheap. That's a really exciting
Speaker 1: innovation that only Arbitram is doing right now. Then they're
Speaker 1: tackling problems they see through. You see issues like transaction
Speaker 1: spam where because of the first and first out model
Speaker 1: of Arbitrum, it's kind of fair and you can't have
Speaker 1: MTV in a fair space. So what people are trying
Speaker 1: to do in terms of mvs are trying to background
Speaker 1: transactions and so you see a lot of after like
Speaker 1: a high value transaction comes through, maybe some whale bought
Speaker 1: a big token and they had a high slip badge.
Speaker 1: Is they kind of like messed up the market with
Speaker 1: someone wants to come behind them and naturalize the market,
Speaker 1: kind of average it out, so we see a lot
Speaker 1: of spam. What Arbitram has done is come up with
Speaker 1: this idea called time Boost, and time boost is an
Speaker 1: express lane for those actors who are looking to backrun
Speaker 1: and they can pay a premium to the dow with
Speaker 1: dolls earning eth and they say that you have the
Speaker 1: rights for one minute that your transaction can be included
Speaker 1: fifty milliseconds before anybody else. So you get the small,
Speaker 1: small priority for one minute, and that is revenue for
Speaker 1: the dow and that's amazing to see the doll earning
Speaker 1: even more revenue. That's great for Arbitrum and the doll.
Speaker 1: And then they have this technology that users can do
Speaker 1: to deploy their own L twos or their own ol threes.
Speaker 1: They have Arbitram Orbit and so we're seeing really cool
Speaker 1: innovations in gaming. Arbitram investing heavily in gaming. There's some
Speaker 1: really cool apps on there, Like there's this proof of
Speaker 1: play team who's built this like pirate game. The name's
Speaker 1: not coming to me, but the company is called proof
Speaker 1: of Play and they run multiple I think they're L
Speaker 1: threes to settle on Arbitrum, or maybe they're their own
Speaker 1: L twos. They don't recall, but they're doing some of
Speaker 1: the highest TPS transactions per second consistently when you go
Speaker 1: to the website roll up dot WTF or maybe it's
Speaker 1: roll ups. I don't recall, but there's a site that
Speaker 1: shows like the throughput of roll ups in real time,
Speaker 1: and it's really exciting to see that one of the
Speaker 1: highest performing chains is an Arbitram game. It's super cool.
Speaker 2: Talk to us a bit about L three's and this
Speaker 2: is a new question for you because I am still
Speaker 2: learning as I go as well. Obviously I understand L
Speaker 2: one L two's how does an L three or even
Speaker 2: L four come into play.
Speaker 3: And what use cases? Like where where does that fit in?
Speaker 1: It's a great question. So an L three is really
Speaker 1: just an L two deployed on top of an L two,
Speaker 1: So it's another abstraction like an L two is to
Speaker 1: the L one where you and in the case they're
Speaker 1: talking about earlier, where this would be great for Apple,
Speaker 1: where like apps within the Apple ecosystem where their own
Speaker 1: layer within that Apple L two. But let's say for Arbitram,
Speaker 1: you have these app chains like proof of Play. They're
Speaker 1: running their game, they're running really really fast, and their
Speaker 1: base fees are arbors based fees, which are lower than
Speaker 1: the L one. So the more layers you have, the
Speaker 1: more opportunities you have to compress and batch these transactions
Speaker 1: and reduce the cost. So if it costs fractions of
Speaker 1: a penny on Arbitrum, I think I sent a transaction
Speaker 1: the other day and it wasn't even one one hundred
Speaker 1: of a penny to do it. If that's what you're
Speaker 1: paying for your bats transactions. You can run an L
Speaker 1: three and it's so cheap that you say, I'm just
Speaker 1: going to pay all the gas costs for my users
Speaker 1: because it's it's reasonable for me to do. You can't
Speaker 1: do that on an L one, it's too expensive. It's
Speaker 1: hard to do that on an L two, but on
Speaker 1: L three you can. You can easily do that. And
Speaker 1: that's why I like things like proof of play. They're
Speaker 1: doing a ton of transactions per second. Every move you
Speaker 1: make in the game is a transaction. And then they say, well,
Speaker 1: there's no gas. I didn't pay any gas, I didn't
Speaker 1: have any revenue or any money on are on that chain,
Speaker 1: And when they go to post these transactions down to ARBITRM,
Speaker 1: it's very cheap. Maybe it's like ten dollars or something
Speaker 1: where if you did it on the L when it
Speaker 1: would be hundreds of dollars because you're batching transactions or
Speaker 1: buying blobs rather. But that's the real benefit of that
Speaker 1: is you're doubling. Well, it's exponential, right, You're multiplying the
Speaker 1: gas savings you're getting by adding a layer on a
Speaker 1: layer two.
Speaker 2: Interesting, So is there a ceiling to this as far
Speaker 2: as how many layers can be stack youre or it
Speaker 2: just depends on the ecosystem and what they're trying to achieve.
Speaker 1: I don't think there's a technical limit. Maybe like the
Speaker 1: limit is how far someone's willing to go. I think
Speaker 1: we saw I think the Arbitram team, the DevOps team
Speaker 1: experimented with this and they got like to like layer
Speaker 1: seven or ten something like that. Just something silly to see,
Speaker 1: like how many layers can we do? It's like that
Speaker 1: if you've seen that movie Inception. Each layer you go down,
Speaker 1: the time moves a little slower. It's kind of like
Speaker 1: this where each layer you go down, the fees are
Speaker 1: even cheaper and cheaper. But maybe you get to some
Speaker 1: point where it doesn't make sense anymore, Like I can't
Speaker 1: imagine a need for a layer six or seven, but
Speaker 1: maybe like let's take a big app like World of Warcraft.
Speaker 1: Let's say a World war Craft wants to launch on
Speaker 1: Arbitrum and they want it to be an L three. Well,
Speaker 1: so they have L three where this is like their
Speaker 1: route of the game, where like all the account spaces
Speaker 1: but all of the realms are on a layer four,
Speaker 1: and within the realms there are dungeons, like if you've
Speaker 1: ever played that when you go into a dungeon with
Speaker 1: a party, that like kind of creates a new space
Speaker 1: and that runs on its own. So maybe they're launching
Speaker 1: ephemeral L four L fives to do this particular activity
Speaker 1: and when it's done, it comes back to that chain,
Speaker 1: and when they log out of the realm, that comes
Speaker 1: back to the three. I mean, it may make sense
Speaker 1: in certain use cases, but to have that capability is
Speaker 1: really interesting. And I wonder if that's sparking something in
Speaker 1: your mind, because that's I haven't actually thought about it
Speaker 1: that way, but that sounds really appealing to me.
Speaker 3: Oh for sure.
Speaker 2: You know, you mentioned gaming, and I don't know if
Speaker 2: you can speak to this, but you know, I think
Speaker 2: the Web three gaming space is kind of waiting for
Speaker 2: its Farmville moment, you know, to have kind of that
Speaker 2: viral moment everyone wants to play this game. Oh it's
Speaker 2: Web three and you can earn NFTs and tokens or
Speaker 2: is it a traditional game like World of Warcraft or
Speaker 2: somebody GTA six or something like that that has to
Speaker 2: integrate this technology in it for us to have that
Speaker 2: tipping point moment if you want to call it that.
Speaker 1: Yeah, we'll have to reach a critical mass at some
Speaker 1: point where where we've really made it in terms of
Speaker 1: the gaming space. I know that these folks are really
Speaker 1: thinking about it, and there's strong interest to say we
Speaker 1: should have a standard for interoperability within games. And the
Speaker 1: more they talk about it, the more it sounds like
Speaker 1: this idea of NFTs. So the theorem community of Blackchain
Speaker 1: community pitched a few years ago and it was dismissed.
Speaker 1: I think they're going to come back to it. I
Speaker 1: think the problem that they're having to solve is around
Speaker 1: traditional problems like intellectual property, like who owns that, kind
Speaker 1: of like the lawyer speak of things. From a tech aspect,
Speaker 1: it's ready, the tech is ready for that, it's ready
Speaker 1: for onboarding, and I imagine that folks are already building
Speaker 1: prototypes and ideas. It will be really appealing to have
Speaker 1: this cross game patibility where I can take my Fortnite
Speaker 1: skins into another game maybe I'm playing counter Strike as
Speaker 1: a Fortnite character, Like that would be really interesting and
Speaker 1: that all player bases and ecosystems are benefiting. And if
Speaker 1: it's if it's really appealant users, I think it would
Speaker 1: be really profitable to these games. There are certainly ways
Speaker 1: that things people are willing to pay for this. In fact,
Speaker 1: like we're seeing a lot of like launch pad platforms
Speaker 1: that are saying create your own token and part of
Speaker 1: the trading fees sponsor your project. And you could see
Speaker 1: a very similar thing with like they'll unlock the items
Speaker 1: and then if there's if they're sold on the markets
Speaker 1: that the developers are still realizing profits from that, so
Speaker 1: you can fund indie Maybe it starts with indie games.
Speaker 1: I actually imagine that's probably what it is, because they're
Speaker 1: have more appetite for risk. And then when you see
Speaker 1: Triple A Game Studios adopting this idea, it's going to
Speaker 1: be really really big. And then when we see anybody
Speaker 1: do that idea that I mentioned, like well the Goorcraft
Speaker 1: where they launched their own L three and then they're
Speaker 1: they're having ephemeral blockchain spaceis for for users like that.
Speaker 1: It's going to be on all ad that's like all
Speaker 1: on chain application of gaming, which we have not seen yet,
Speaker 1: and I think that's going to be really cool.
Speaker 3: Yeah, I can't wait for that.
Speaker 2: You know, I used to play a lot of games,
Speaker 2: not as much anymore as I have a kid now
Speaker 2: and everything, but I'm still just so curious and fascinating
Speaker 2: as to when we're going to have that moment. And
Speaker 2: you know, I love the idea you mentioned where you
Speaker 2: can have interoperability between the games where you can move
Speaker 2: skins and different things that that would be really fascinating
Speaker 2: and would make things interesting. President or We're up on time.
Speaker 2: I wish I could keep it for another hour, but
Speaker 2: I got some wrap up questions there for you. First,
Speaker 2: if you could create your own metaverse, what would the
Speaker 2: theme be?
Speaker 1: Wow, my own metaverse. I'm big into aviation. I like
Speaker 1: to fly for fun and have pilot's license, So I
Speaker 1: would probably make a space that's like everyone can fly
Speaker 1: around and it's pretty realistic but kind of fun at
Speaker 1: the same time. That would be really fun for me.
Speaker 1: I love to fly and I love all things saviation related,
Speaker 1: so that would be cool.
Speaker 2: Yeah, that'd be awesome as well in an immersive world
Speaker 2: where I would love to do that, being a helicopter
Speaker 2: or an airplane, that would be awesome.
Speaker 1: Yeah.
Speaker 3: Rapid fire questions. Favorite food.
Speaker 1: Chicken, rice and broccoli. I like that really boring meal.
Speaker 1: It's my favorite favorite musician or band Anthony Green of
Speaker 1: Circus survive.
Speaker 3: Favorite movie, A Night's Tale, favorite book.
Speaker 1: Favorite book. Oh, I don't know. I haven't been reading
Speaker 1: much faciently. It's been quite busy.
Speaker 3: And when you're not working at off chain labs, what
Speaker 3: are you doing for fun?
Speaker 1: Flying? Oh?
Speaker 3: Yeah, that's right.
Speaker 2: Yeah, uh President, I got to have you back on.
Speaker 2: I appreciate your knowledge and explaining uh this, these upgrades
Speaker 2: and all the things that are happening on your theorem.
Speaker 3: But thank you so much for joining me.
Speaker 1: Yeah, it was a pleasure to be here, and I'd
Speaker 1: be happy to come back anytime.