We’re here at Ethereal Summit, one of the
main events kicking off Blockchain Week 2019
in New York City.
Here we met with Joseph Lubin
to talk about the future of Ethereum.
Yesterday Jing from Plasma Group spoke in
a panel very enthusiastically, very impassioned.
There’s this meme that Ethereum is failing
and all these competitors are going to take
over Ethereum, because it doesn’t scale, but
it does f%*king scale, and it scales today
and all of this sh!t is working in production,
and all these other chains are really doing
is that they’re marketing harder and they’re
meaning harder, they raise their billions
in ICO money and they’re like: oh, yeah, we’re going to
take over Ethereum with our five daily active users.
No, that’s such bs, and so if anyone as part
of the community can really do anything to
help us here and move along – it’s meme harder.
Like tweet about it, tell your friends,
Ethereum does scale.
In her closing remarks about
Ethereum’s ability to scale.
And I just wanted you to comment on that,
can Ethereum scale was the question,
and if so, what are the main developments right now
in the ecosystem that are making that happen?
So I think the point, as she punctuated that
panel quite brilliantly and entertainingly,
was not so much about its ability to scale.
It’s that it has already scaled quite significantly.
So she’s part of the Plasma Group, it’s a
group that is pioneering a class of different
solutions for scalability essentially, recognizing
that we have this base trust layer that can
handle 15 to 27 transactions per second.
And above that we have state channels of various
different varieties in zkSTARKs and in zkSNARKs
and TrueBit and Plasma.
And Plasma is this class of technologies that
enable you to have less decentralized platforms
sitting at layer two in the Ethereum ecosystem
and they can benefit from the full trust in
some cases, sometimes they benefit from partial
trust, but if they’re linked in really rigorously
they can benefit from the full trust of the
base trust layer, and you can get the best
of both worlds.
So you get high transaction throughput per
second and you get to the security of the
base layer, and by that I mean, if you have
a game that you’ve brought in network,
you brought your own network basically for your
game or your exchange or some other application.
Everybody using your system, if they have
assets on your system they can be confident
that if you’re incompetent or if you’re corrupt
it doesn’t matter so much, it’s a pain in
the butt, but they can still pull your value
tokens back to safety and you’re not vulnerable.
So that’s happening.
So I think we’re at many tens of thousands
of decentralized transactions per second on
the Ethereum network right now.
And other points, that I believe she was making
and that I think Emin was making, is that
we’ve got all this scalability for specific
use cases, so it’s architectures of networks
that are specifically tailored for the application
and we can do a lot of that and we’re not
running out of capacity to do that.
So we’re not reaching any limits soon with
the base trust layer at 15 to 27 transactions
per second, but the base trust layer within
18 to 24 months is going to multiply its capacity
by about a thousand times.
So that development is Serenity or Ethereum
2.0 and Ethereum 2.0 is divided into 4 phases,
3 major phases, in computer science terms
they’re numbered 0, 1 and 2.
Phase 0 is getting close to, it’s 8 different
groups that are building their own clients
according to a specification that’s really
very stable right now.
A bunch of different test nets that each uses
and there’s one test net for everybody that
So within a small number of months we should
have a fully operational test net and, possibly,
by the end of this year we’ll have a fully
operational real phase 0 Ethereum 2.0.
So, good chance it’ll go live this year.
So there’ll be different ways that it gets
connected with Ethereum 1.0, ether tokens
will move from Ethereum 1.0 to Ethereum 2.0.
There may be bidirectional mechanisms and
there may be a way in the not too distant
future to use the Beacon Chain, which is basically
the phase 0 proof-of-stake to finalize transact
or to finalize blocks on Ethereum 1.0.
Okay, so you mentioned proof-of-stake, and
I wanted to ask about another point yesterday
that was sort of contentious.
Was that panel about proof-of-stake versus
proof-of-work, and I know Ryan Selkis from
Messari was sort of critiquing proof-of-stake.
If you have a million dollars, would you put
it on Ethereum 2.0 or Bitcoin?
If you’re actually balancing a portfolio,
I’d say it should be 80/20 Bitcoin.
If you put a gun to my head – it’s 100% Bitcoin,
because I have kids.
So could you comment on that move?
So I don’t know that he was critiquing proof-of-stake.
The question that was put to him was if you
had a certain amount of money to invest in
either Bitcoin or Ethereum 2.0.
He said that he would put it 80% or 100% on
Bitcoin, because Ethereum 2.0 isn’t released yet,
there’s still questions and he has children.
I don’t think he was fully discounting proof-of-stake,
I think he just knows that it has been proven
that proof-of-work works.
And so if he was faced with the conservative
decision of investing his child’s college
fund, he would make the prudent choice, which
is kind of the choice we made on the Ethereum
project at the start, intended to go proof-of-stake
and, unlike what was said on that panel, there
are proof-of-stake systems that are working,
different flavors of proof-of-stake systems.
But we were aware of edge cases in all of
the systems that were working at the time
that could potentially take down a network.
So those systems weren’t incredibly valuable,
and we figured that if the Ethereum network
is incredibly valuable that well resourced
actors would potentially exploit these vulnerabilities.
So we knew we could make proof-of-work work,
and the intention was to do that and and do
the research and get to the point where we
were very confident in proof-of-stake,
and that is done.
And that’s pretty much good to go, it’s implemented
and running and just need all the different
clients need to be synced.
Could you summarize why that’s so important
to move to proof-of-stake?
Proof-of-work is a mechanism that keeps all
the different nodes of a network in sync.
So it’s a ConsenSys formation mechanism.
You get the trust characteristic from blockchain,
from having all these nodes kept in sync.
So proof-of-work is one of a class of ConsenSys
algorithms, they all essentially find a leader
and everybody follows in behind that leader.
And this is a brand new one, it’s a decentralized
mechanism where you don’t really elect a leader,
the leader wins its role and wins the right
to propose the next state of the system by
showing everybody the next block that’s valid
and everybody validates that and crypto economics
causes them to all fall into sync.
And proof-of-work, unfortunately, requires
very expensive custom hardware, enormous amounts
of electricity and wastes huge amounts of
computation and it benefits efficiencies of scale.
So if you’re a well-resourced actor you can
have an unfair advantage over just you if
you’re running it on your
game machine at home.
Proof-of-stake fixes all of that, proof-of-stake
trades all that expense for a crypto economic
bond essentially Ether that you put into a
smart contract on Ethereum, it burns orders
of magnitude, less electricity, so you’ll
be able to run it on your pad or phone at
some point pretty soon or some jewelry at
some point in the not too distant future.
It doesn’t waste a lot of computation.
It has very low barriers to entry, so my sister
could do it or somebody could set up a warehouse,
and my sister wouldn’t be disadvantaged compared
to that warehouse, because essentially it’s
probabilistic in terms of how much you’re
called on to participate depending on how
much you’ve invested.
And so it’s a more secure system and a fairer
system, so be more equitable.
Because it’s sort of based on probabilistically
selecting validators for each new block, you
can have a single validator pool for many
different sharded blockchains.
So right now we have a single validator pool
that keeps Ethereum’s blockchain secure, so
all the validation power is focused on that
one blockchain, they split all that validation
power into 1024 different shards that would
weaken all the different shards and people
would notice that shard number 37 is really
weak and these other shards would gang up
and it would be madness.
But from this one validator pool in Ethereum
2.0 groups are selected and randomly allocated
to validate the different shards, so all the
shards are secured equally and they’re all
secured with the full validation power of
the entire network.
I also wanted to touch on the debate between
public and private blockchains.
So, yesterday debate.
I missed that one.
Not a debate, I mean the larger debate.
John Wolpert & Paul Brody discussion, the
two former IBMers.
So IBM then we have E&Y, former IBM.
And the question I guess is, they were pretty
much convinced of using public blockchain,
Ethereum’s main public blockchain
for large enterprises.
So that’s not something that is always the
case especially for enterprise blockchain,
talks a lot about private blockchain.
We do a huge amount of work in our solutions
group, where we have hundreds of people around
the world and we’ve built lots of enterprise
blockchains, private permission blockchains
for companies and for consortia, and banks,
and central banks.
And you absolutely need to build the right
architecture for each use case, and there
aren’t a lot of use cases on public blockchain
right now that are appropriate for enterprise
use cases, enterprise solutions.
One of John Wolpert’s arguments is that Ethereum
will be the base trust layer, the base settlement
layer that many different side chains and
other technologies will link into it.
We’ve got a group called “Aztec” that built
a protocol that enables obfuscation of transactions
on public Ethereum, so as tech protocol is
super cool and it will be live on public Ethereum
pretty soon, that’s very similar to what Ernst
& Young built, so Paul Brody described Nightfall,
which also enables the shielding of public
transactions on public budget.
That’s the security.
So that’s essentially public Ethereum isn’t
fully ready for primetime, for all use cases,
because it’s not scalable enough yet and because
it doesn’t have sufficient privacy and confidentiality
for all use cases yet.
We’re solving privacy and confidentiality
by using private networks that can link into
a public Ethereum or link into each other.
We’re also solving it with those two protocols
that I just described, so many different classes
of transaction or use case can now or soon
be done on public Ethereum, and we’re solving
scalability of the layer 2.
And moving to Ethereum 2.0.
Awesome, that’s really great.
I think that’s all we have time for.
Thank you so much, really appreciate it.