📺 EIP1559 SmartCon Panel | DC Investor, Squish Chaos, James Wang

hey guys this is ryan sean adams i'm here with david hoffman we are broadcasting live at the smart con summit this is if you're here with us now this is the eip 1559 panel the perfect day to do it the ethereum network has just hard forked its london upgrade and deployed a number of features including eip1559 which is a feature that's been long awaited by the ethereum community and we have three eip1559 bulls here to talk about it on the panel

so this is a panel with three eip bulls moderated by two other eip1559 bulls that's david and myself guys this is broadcasting as i said live at smartcon we also have this broadcasting live on bankless youtube it'll be available in a bankless podcast as well we couldn't be more excited to be here i want to introduce our panelists to you now the first is james wang james is previously an analyst at arc invest he's written a number of works many that emphasize the

real world financial reporting that ethereum offers to the world he's argued that ethereum is not just a cryptocurrency but a global software platform with applications customers and revenue you may have read one of his previous quarterly reports for ethereum that he publishes on his sub stack he recently joined uh a moon as the head of tokens and ammon builds a crypto index products for the ethereum ecosystem and beyond james welcome to the panel it's great to have you sir

thank you ryan love everything you guys have done for ethereum and d5 and i can't wait to chat with you guys well we love what you are doing sir i want to introduce our next panelist squish chaos uh internal medicine resident at university of colorado but you may have known him because he wrote this fantastic almost 80 page report on ether he famously coined the phrase uh triple happening to describe the upcoming upgrades that ethereum is getting to its monetary policy he also wrote one of david's favorite lines i think ethereum should dream bigger dreams is what

squish chaos said here's the dream of eip 1559 here today squish it's great to have you on the panel great to be here thanks for having me our third panelist as well dc investor dc is a long time ethereum bull he's also an nft collector maybe connoisseur dc was the first to put a crypto punk as his twitter avatar one of the very first uh and even before that he was emphasizing the importance of eth as an asset i don't know now whether he's more bullish on eth or nfts hopefully we find out i know he's bullish on eip 1559 and

maybe they all tie together in some way dc it's great to have you on the panel thanks ryan thanks david excited to be here oh man we are excited to have this panel because just this morning eip1559 went live it's been live for about six whole hours it's in the rearview mirror now we are actively burning eth i'm just looking on a website called ultrasound.money we're almost at 2 000 each that we've burnt in the last six hours i want to start with this question how does it feel to be an ethereum at this point like how do you feel about

this upgrade dc why don't you start um i'm feeling great and to me it's incredible um like ethereum is just hitting on all cylinders and it started when we got the eth2 beacon chain live and now we have with eip1559 we've dramatically improved user experience and we are further hardening eth as an economic asset which i think is critically important to the future of ethereum and to the utility of ethereum and now you know we're going to be laser focused on ending proof of work and

moving the proof of stake so i couldn't be more optimistic on ethereum at this point james what do you think do you share that optimism yeah totally i i view this as a product launch you know my background is a product marketing guy i worked in india for about nine years and you know you always knew ahead of time when you're preparing for something when you're about to release a new product that's going to fundamentally change the trajectory of your business like when we launched the first cuda gpu and nvidia became a generalized processor and it could be used for everything from like embody simulations eventually to crypto

mining but you knew that ahead of everyone else um what makes ethereum unique is that it is a software platform that you can build upon and there is a group of super talented people led by a messiah that is able to actually execute on that vision i know you know we've had a lot of questions about the execution ability of ethereum and this really puts that to rest um you know nvidia was such a key lesson in what execution means um when we were competing there was like 50 other companies making graphics cards

nvidia is the only one left today that does that right so being able to execute um and really launch ambitious products that's the biggest predictor of your long-term success not any static modes so to me this is such a milestone release and it really puts to bed those discussions about execution and allows us to look forward to kind of the merge and everything instead of pipeline there you go massive product release for ethereum boils out some of the execution risk squish what's your take on this how does it feel to be in ethereum at this point

yeah um it's pretty amazing i'm i'm fairly new to the ethereum community uh really getting into things just a few months ago when i published my report uh and so i haven't seen a lot of the execution uh from that's been done previously on the network it's the first major upgrade that i've been able to see and obviously like i wrote about it a few months ago but this is an idea that was in the works years ago before i had any clue what was going on in the ethereum world so just to see it all plan out uh and to see it panning out in the midst of this

big drawdown we've had just see that kind of uh engine of innovation just keep chugging um it's been pretty remarkable uh and just to echo what james was saying um the way that you know uh the difference between a product that's going to succeed and fail is by these kind of milestones where you can say okay like this is a concrete achievement that shows that the development team can actually get things done um and i think that that evidence already existed and that's was a big part of my thesis but to see a milestone

kind of come out after i got into ethereum and became a real big part of this it's just um it's fantastic to see so gentlemen i want to actually ask this very open-ended question especially to this panel specifically because we have such a broad range of people that have come into the ethereum ecosystem the ethereum community at different phases and so in your opinion now that eip-1559 is such a major upgrade it's in the rear view mirror it worked we're burning ether and we are now having like one of the

two very important ingredients for ether as ultrasound money and overall the ethereum ecosystem is also growing in its own direction in your opinion where are we in ethereum history uh and which is such a broad question i want to kind of leave that to you the the panelists as to how you want to define that and uh dc as the person i think came here earliest out of anyone on the panel i want to throw that to you first where are we in ethereum history so i i think we're at actually a super interesting and pivotal moment in ethereum's history and i would actually

chalk up the implementation of eip1559 as one of the four most significant events in ethereum history and the other ones are the dow fork which i think people are probably familiar with very early on in ethereum's history the rejection of eip 999 where there was a move or a suggestion that the parity multisig funds would be recovered so that was kind of a rejection of this idea of tampering with the chain um in in situations like that the third was probably when the ethereum community

rejected the inclusion of praguepow and as a hashing algorithm and now the implementation of eip1559 which i think that why this is notable is because one this eip had tremendous community input and support and it's been through a long process years long of being vetted and analyzed to determine if it's worthwhile and now that's implemented it's finally finally created this positive feedback loop

where usage of ethereum now directly accrues value to ether as an asset and not necessarily price financial value we don't know what that looks like but it creates economic value for it as an asset by making it more scarce i think this is a critical moment that will be reflected on for decades from now to be honest james you used to be an analyst over at arc invest which i've always appreciated arc's more nuanced take as to new technologies in this world so from from your opinion where are we in ethereum

history the first um thing that ethereum reminded me of the reason why i kind of quit d fight or quit c5 to join defy was was really it was so obvious that ethereum was turning out to be a computing platform and a technology and you know the most successful cloud computing platform is aws it's not a perfect analogy as as i kind of dug into the details but it does give you a sense of the scale and potential aws didn't start as a computing platform it started as a storage platform the first service it launched was a service called s3 for simple storage uh and this

is like the you know one of the things that eip1559 achieves that it gives this kind of elastic block size right it's able to absorb more computation based on demand i think this is just like the very very beginning of building up a compute infrastructure right now ethereum itself hasn't scaled to scale it needs to go to e2 this is really an optimization for eth1 right now and that to me is how early it is right right now ethereum the amount of developers building on it is tiny it's almost not visible compared to the

number of programmers in the world so um for me it's like ethereum is has made a very important software change that makes the system much more robust and self-regulating but ultimately like the really amazing applications that's going to be built on top have barely begun we have like a handful of them we have like uni swap and maker and chain link but like the real ecosystem takes off when the value of the software above the ecosystem is worth more and more takes up more mind share than the base layer itself right

nobody thinks about aws today as a consumer we just use netflix and the bits to stream through like you know like like water and we don't think about it that's the moment of success and we're like not even two percent there um that's why i'm so excited to like wait for that future to arrive squish is one of the younger members in the ethereum community yeah also one of the people that's written the most lengthy and in detail report on ethereum and ether where would you say that we are in ethereum history where and also where do you see us going yeah i would definitely agree i think

it's it's early um and one of the the coolest things i've gone through just learning about it is seeing all of the different elements of uh the ethereum kind of infrastructure um kind of be developed and see how people are thinking about it um so i guess i would point to kind of like five different elements uh there's the security model uh scalability it's the second one uh the user experience um the product infrastructure what you can kind of do with it and then the fifth

thing would just be adoption um and when you look at all of these elements it's very clear to me that kind of throughout ethereum's history people have been thinking about all five of these elements um but today we're at this pretty incredible junction where um moving forward a lot of really pivotal events are going to happen for each uh for each angle so for security we're moving from proof of work to proof of stake uh and then you can kind of see beyond that a little bit to see staking derivatives and trying to further

decentralize um through those uh for scalability layer twos are already coming out right now but we're already seeing direct layer two on boarding and sharding is kind of on the horizon for user experience obviously eip 1559 is a huge part of that but we're also seeing future eips like 307.4 and app level improvements as well um infrastructure we're seeing new products whether you can collateralize everything now

you can fractionalize nfts um and then we're starting to see the beginnings of some regulatory infrastructure uh which some people are really worried about but if i want in the future an nft to hold uh legal rights or legal value we're gonna need some that regulatory infrastructure too finally adoption i think dc spoke to this but for eth as an asset to be adopted uh kind of as an investment asset eip 1559 just changes the way that it accrues value

and as a project you know when i got into this i thought it was all about d5 and just in the last month i've started to see there's a huge uh aspect of adoption around nfts that doesn't really require the defy engine to be perfect before it gets off the ground and so i guess this is all just to say that we're just in the thick of things there's so much more in the future than there's been in the past but we've already come so far and so it's really great to kind of see where this whole project is going

you guys are awesome just fantastic panels so far um i i want to ask this next question uh maybe we'll start with you squish but uh you know you wrote a paper called the triple happening right and you uh clearly know the importance of narratives you know james talked about ethereum as you know and framed it through the lens of uh you know if you were evaluating this as a company with quarterly earnings what would it look like um dc has been talking for a long time about ethis and asset eat this money store value so i want to ask you about a narrative question james was talking

earlier about the execution risk that has maybe been boiled out of ethereum and i think that's interesting because it strikes me that ethereum has had a negative narrative ethereum doesn't ship where is proof of stake like where eip1559 has been three years where is it now i want to ask you a question about how the execution narrative has changed but even more broadly maybe how has the narrative for ethereum changed within uh the broader markets the importance of narratives in crypto

like no one has to tell anyone listening how important uh they are with analysts with investors with like the developer community so squish my question to you is how do you think the narrative changes for ethereum post eip 1559 shipping yeah i mean i think the first thing i would say is i completely agree i think narratives are incredibly important um but it's not just because we want ethereum to be better as an investment asset uh because that's not really what we're looking for as ethereum investors

we're not really looking for the asset price to out far outpace the actual value of the network we just think the network is incredibly valuable and so we just want it to be fairly priced and we think that's much higher so in in my view the narrative plays a role not really in convincing investors so much but actually just convincing like culture uh we want adoption of of the network as a part of society and we want people to build that infrastructure and if they're only going to build that infrastructure if we show them why it's interesting um

as far as how eip 1559 changes the execution narrative i think execution is a really tricky subject um in the real world we see this all the time and people i guess somehow forget when they're applying it to crypto but you can have failed product launches and that really sets projects back um so you know if if you roll out a new car and it starts exploding like that's you're done um and so you you have to test things you have

to validate things before you roll them out and if that takes extra time it's time well spent uh and we've seen that a little bit recently and there's a project called thor chain that recently went through a number of kind of highly publicized hacks um and so i think eip1559 and and honestly like a number of the the prior updates show that the the ethereum team is taking its time but not because there's nothing there they're taking the time because they're building something valuable right and so we've had um i actually just posted a

thread on this but there have been a number of articles about fast merge options where developers including vitalik have talked about look if we want to merge tomorrow like we can make that happen it's just not a good idea if we want to avoid errors and so if we really prioritize the value of the network we should take our time so i would encourage people to look at the time it's taking to ship as just an important part of like a responsible process and see eip1559 as evidence that

progress is being made uh if you're not seeing it it's not because it's being hidden from you look at the developer meetings like watch the meetings like become a part of this ecosystem it's all public and decentralized so nothing's being hidden from you but products take time to launch and i'm really glad that the developers are taking the approach that they are james how about you i'm interested same question how do you think the narrative changes in a post eip-1559 world for ethereum

first i'll agree with squish that you know it 1559 took longer to develop but for good reason right the risk is now higher than um when ethereum was just a child um and it's funny because it took three years from italy's vitalik's first post to now because it had this three-year like debate and research in the public process of vetting out this idea because you don't know if the idea is good even if it's coming from vitalik just just with a post and you know one a protocol that is always like touting its process for vetting out like theories cardano right

cardano's like oh you know we have this peer reviewed process with university professors now i will take a bunch of squishes in a forum debating each other um writing code over any bunch of ivory tower university professors writing peer-reviewed paper because this is real skin in the game right you're building protocols that actually affect economic livelihood for yourself and for others in the system and you're like affecting changes whereas professors are like mostly in a zero-sum status game so i think this three-year process has been very healthy um on the execution front i

would just say that execution is not something that uh is is mostly interesting looking back it's mostly looking forward the reason why nvidia beat everyone was because it shipped new chips every six months for like five years so the real question is going forward can can ethereum's developer community continue to ship every six months or whatever cadence it is right um like whether it hits the merge date how well that goes is going to be very telling you build up execution credibility by repeatedly hitting it not by you know retrospectively hitting a few

milestones so i think that's very key at some point you know people talk about the protocol ossifying and maybe you know just because the low-hanging fruit is picked the rate of innovation will slow down a little bit at that point the determinant of success is going to shift from purely kind of shifting or shipping new code to almost like more boring like biz dev um and and onboarding the rest of the the world's gdp that's a very different skill set i think ethereum has been okay at that skill set but it's no one's

been fantastic maybe some of the more um traffic companies or ripple has been a little bit more better at that in spirit at least but at some point ethereum is going to have to like just do like the integrations with the boring offline world and things like chain link are really important to do that those integrations so i think execute until we get to eth to prove the economic model um maybe we have some better ideas to put in and then and then concurrent with that really ramp up the sensibility of we have to integrate with reality and the rest of the economy so that we can bring the whole internet

based onto ethereum you see how about you so how does the narrative game change for ethereum post eip1559 we've talked a lot about execution risk but aside from execution risk how does the narrative change for eth as an asset i think the narrative is don't bet against ethereum and i think what we've seen is how ethereum has really become an emergent phenomenon and when problems arise there is a really diverse and resilient ecosystem that steps up to solve it and you can't say

that a lot about a lot of ecosystems in the space right now i think ethereum is very special in that regard now did i did i ever doubt that eip1559 would be implemented to be honest yeah even 1.5 like a year and a half ago i was like you know oh is this going to happen are we going to see it or is eth1 kind of ossified in a way where it can't get a change like this implemented and we're just going to wait for eth2 but i think what we saw was the community stepped up some key developers stepped up and we got it done and i i do want to kind of

reinforce like because i know from the outside it's easy to look in at ethereum development and say oh it's so slow and it's so time consuming but what you have to understand is this kind of decentralized development is extremely tricky this is this is not like a company developing a software product it really is about building consensus among researchers among the community among the node operators and you have to get everyone on the same page and agree that a change is worthwhile and valuable to the network and you have to do that not

you have to do that across multiple clients as well and that is part of the difficulty of doing things in ethereum but that is also the bedrock of its legitimacy and that is why ethereum is so legitimate and is valued as this decentralized network so if anything to me it's kind of reinforced that point of view about ethereum as that decentralized truly decentralized network especially versus some of the other participants that are in the space and i think fundamentally this really does change the value proposition of ether as an asset i talked about it

earlier but now you have usage that is directly driving value back to ether as an asset and when we see the use cases that have gained the most traction a lot of it boils down to that decentralized economy so the more strong of a decentralized asset we have the more uses we can find for it in defy and in other applications so i'm hugely bullish on this for ether and the ethereum ecosystem as a whole so i know david is about to ask a question about if the asset but i'm curious

because what you said just triggered something there for me uh dc so like there was a time you were skeptical that eip1559 would ship i'm just wondering with the rest of the panel show of hands who also went through times where they were skeptical eip1559 would ship james and squish dude just you and me we're we're young and foolish you know we came in early we've never seen what sluggish like narratives look like everything i love it i love it that's old guys cc

that's us i know that's how it goes all right you guys are violating the one rule of don't bet against ethereum but i guess it took us a while to learn just learn my lesson just informed me now the answers that i just heard out of the panelists just talked about various in my in my mind just talked about various different ways that the ethereum process and the ethereum community was just like a very magical rich environment but in the world of crypto it's hard to uh illustrate that to the newcomers especially in such a short like short

success succinct argument when when people come into the world of crypto they pull up websites like coin market cap and then they see bitcoin ethereum ripple litecoin bitcoin cash how how do you guys explain the difference between ether and the rest of the assets in the ethereum or in the crypto world and how does help or change how you guys explain that and and james i'll start with you how is ether a different asset from all the other assets we find in the crypto world

it's a very tough question honestly um and i agree this is like the the first thing that comes up um i think the maybe the first point is to delineate between bitcoin and ethereum and we've done this many times i mean you guys done this many times over at bankless but essentially it's it's a difference between a very um a very fixed value proposition with bitcoin and store value and ethereum which is a moderate moderate plus programmable uh software platform um and it's like i don't think we should try to

sell people on ethereum per se we should just give them things to do that will make the value self-evident to them so instead of trying to tell them hey here's the difference between ethereum and eos or or you know tether sorry or tazos i'll be like hey would you like to deposit a thousand us dollars at six i don't know whatever is the prevailing rate ten percent apy that is possible and it takes about five clicks and that actually triggers a much more productive process with them

because it's something they can understand because they've interfaced with the bank they know the interest rate is 0.5 in the us or some minors percent in europe right which is absurd and then you get them to move the money from from from their bank account to metamask and then next thing they're in a year vault or compound and it is going five ten percent and and the next question for of course is why and then we can get to the mechanism of you know where the yields come from in d5 and what does blockchains have anything to do with this the other thing you can do is just to have them experience the magic of ens i've been

trying to onboard my friends to ens and it's remarkably hard um i would think it's super easy i'm like do you did you want the first hotmail account did you want to be called like i don't know jason hotmail.com if uh you know if you had it that was awesome or gmail like but if you didn't now you're you know john123 gmail.com getting the first like ens account with a name without a number is actually still possible which is incredible right you can get a five character ens address that works not just for sending eth from point to point

in the world which is impossible before um but it even works across bitcoin and litecoin it's a multi address it is email for money that's instantaneous and and it is small enough you can put it on your business card so i try to expose people to these use cases that's why i wrote that article five actually useful things you can do with ethereum um with crypto in 2021 um and then you can if people are interested backstep to theory starting from theory i think is very challenging squish you wrote 80 pages on ether the asset so

in oh those 80 pages how do how did you separate ether the asset from all the other tokens and coins and currencies that we find in this industry yeah i mean uh ether of the asset is different because of its ecosystem it has it has just the most vibrant economy it's being used uh and ultimately unlike a lot of the other assets the activity on the network dr is going to drive asset prices and has driven asset prices today so um and i think that's the biggest difference i think when you buy a lot of

these smaller tokens um you're buying kind of like hopes for the future when you buy ethereum you're buying like current people who are today choosing to burn how many each has been burned already probably over 2 000 yeah right and that's like in the last few hours based on just organic network activity that's what you're buying it's proven they're taking their own dollars and they're burning it to get the value out of the network um and then just kind of going back to like what makes ether the asset different

eip1559 right so just very concretely um before eip 1559 if you bought ether not as an investment asset but you just bought it to pay as gas you know the act of buying it that's demand and that's gonna push up the price but then uh if you're using that ether as gas that gas goes to miners and the miners have to sell it and that pushes down the price and you don't get this very high very efficient value transfer the fees aren't really going to the asset very well

uh and with eip 1559 when you buy one each and you spend it as gas miners are only able to sell 0.70 you know something like that uh there's a net positive effect from using ether as gas that wasn't there before and so where before i think a lot of these assets were being driven primarily from buyers who are buying as an investment holding it and kind of net allowing the price to increase eip 1559 really makes ethereum different

than all the other tokens because now we're seeing that ethereum the network has more activity than everyone else and that activity is going to efficiently uh kind of trickle into the eth asset itself which is just kind of fundamentally distinct than anything else ec i'm super interested in hearing your take on this how is ether different and unique from all the other assets you find on coin gecko or coin market cap and maybe also how does eip159 help differentiate it as an asset

so as an asset i think ether ether is unique in ethereum and in the space overall because and i've talked a lot about this idea of this natively programmable asset with minimal trust assumptions and you really can't find i i don't think the broader market has realized this but i wrote a tweet yesterday saying pretty much my entire investment thesis is underpinned by this idea that the market is mispricing these natively programmable store of value assets because i think they're going to offer tremendous utility to the world of defy

and as the lines blur between defy and just normal finance having that bedrock collateral asset is going to be hugely important and valuable and really ether is the only candidate for that because everything else basically has some kind of like trust assumption or you're expecting there's some kind of road map especially for talking about fungible tokens this is very often the case anyway actually i think nfts are like an interesting in the middle case where they don't necessarily have additional assumptions but ether is unique for those reasons but secondly it's also

extremely liquid i mean there are days when ether volume exceeds that of bitcoin regularly now and you need that kind of liquidity for that kind of asset in order to drive significant economic activity so those are a couple of the things that i'm thinking about and i expect we're going to see even more use of ether for those purposes on the heels of eip1559 you see allegedly uh you are a big fan of nfts and so how does the nft world which for all of his intents and