134 - Ethereum Uncensored with Justin Drake

Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, fantastic episode today. Timely episode Uncensored Ethereum. The topic is censorship on Ethereum. Is it possible? We brought on Justin Drake, who is one of Ethereum's top researchers, to answer this question in detail. The question of how hard is it to actually censor Ethereum?

A few benefits and takeaways for you today. Number one, is Ethereum really censorship resistant? We ask Justin this question. We find out where the weak points actually are. Number two, how do we preserve censorship resistance in Ethereum in the future? Justin talks about the roadmap towards doing this. He's bullish.

Number three, weak censorship versus strong censorship. This is an essential mental model that Justin gives us for trying to understand censorship on Ethereum and how it can occur.

And number four, how the community can censor the sensors. This is the nuclear option. We talk about a social fork near the end and what this would mean and how it would play out and the dynamics behind it. David, this was a fantastic episode. Not the first time we've had Justin Drake on, of course. He was on for our ultrasound money episodes, moon math, cryptography. There's a lot of other episodes we'll include in the show note details, but I don't know. This is one of my favorites, I guess, you know, because we get into a topic that we haven't really explored, and it is actually linked to the ultrasound money topic because ultrasound money does rest on Ethereum being censorship resistant. We talk about that too. What were your thoughts?

Yeah, of course, good money requires, you know, censorship resistance. You can't have money being a system that only works for some people. You have to have money that works for all people. And that also goes with a very good financial system. So, you know, there are these core properties of what makes good money and good finance. And at the start of a long list of properties that makes up these things comes censorship resistance. So, in order to have ultra sound money, you must have ultra censorship resistant Ethereum. And so that's really the topic of today's show with Justin. And every time we have Justin on, we get down to what really feels like the basement of crypto economics or crypto primitives. And so it's why everyone feels so educated when they come out of a Justin Drake podcast is

Professor Drake.

Professor Jake, yeah, we really get down to the bottom of things and we do it in a very thorough way. These are long episodes because we cover absolutely everything. And so I feel very educated coming out of this. And I think just the big takeaway here is I'm reading this book, Ryan, called The Code Book. And it's just a history of ciphers and cryptography before cryptography was really about just like codes. And it talks about this arms race between code breakers and code writers. And inevitably, the pendulum generally shifts towards the defenders, as in the code writers. And this is what cryptography has really instantiated ever since we like invented it in the 60s and 70s is that the power always shifts to the defenders. It's just a matter of can the defenders come up with the mechanisms to keep themselves in power. And with blockchains and public key cryptography, we have these tools to put so much power in the hand of the defenders. And what that means is the individual, the people who are trying to remain censorship resistant and free from oppression. And so this is a line that Justin uses in the podcast is that we have the core primitives to always put power in the hand of the defenders. And it's just about getting that power to everyone. And so this is a podcast that explores how we enable everyone in the world to become censorship resistant in money and finance.

So listen to this episode with Professor Drake. And you tell us: do you think Ethereum can maintain its censorship resistance over the decades to come? Of course, premium subscribers. If you are a bankless premium subscriber, make sure you stick around after the show for the debrief. That's David and I's opportunity to talk about the show that was. It's our raw, unfiltered thoughts to the Bankless Nation. We've got some thoughts on this episode. It was technically a very difficult episode to do. If you were not a Bankless Premium member, go click that link and upgrade, and you can get access to that podcast as well.

Well, let's get right into it with Justin.

Bankless Nation, we are super excited to be joined once again by Justin Drake. He is a researcher at the Ethereum Foundation. You might know him as the guy who originally explained ultrasound money to all of us. Legendary episode, that on the bankless feed. But of course, you can't have ultrasound money without censorship resistance. That's got to be a core property of any sound money. That's what we're going to talk about today. Gold, of course, can't be censored. That's why it's been held up as sound money throughout the ages. And our sound money currencies have to be cryptocurrencies, have to be censorship resistant too. And now, as we introduced Justin, of course, there's recent talk that Ethereum can be censored. It's been in the headlines lately. And there's talk that proof of stake is a vector for increased Ethereum censorship, that all it takes is a government agency to sanction a few addresses, and Ethereum censorship resistance will be brought to its knees. That is the topic we are going to discuss with Justin today. Justin, welcome back to Bankless.

Thanks for having me.

So here's what I think people want to know. I know we're going to come about these questions from a very bottom-up approach and base principles approach, but I'm going to just set this out for the listener. I think what people want to know is how hard is it to censor Ethereum today?

How can we design Ethereum to make that harder,

more censorship resistant? And how does all this compare to other cryptocurrencies? So we're going to get into all of those questions, not sequentially, but that is the thrust and the theme of this episode. Justin, you ready to dig in?

Let's do it.

Okay, why don't we start with some foundations, the basics here? Why is censorship resistance an important topic in crypto? And what is it?

Right. So, censorship resistance is this idea that

transactions that are valid and paying transaction fees should get included on-chain. And you know, one of the reasons why it's important is because of this kind of mimetic chain. Basically, censorship resistance is required for credible neutrality.

Credible neutrality is required for legitimacy, and legitimacy is required for monetary premium. And monetary premium is required, it has actual utility because it leads to economic security.

with staking and it also leads to economic bandwidth when you start using ETH as collateral money in the context of DeFi.

And so if you start,

you know, attacking or weakening your sensory resistance, then

everything starts to crumble apart and

Ethereum no longer can fulfill its mission of being the settlement layer for the incentive value because you need trillions of dollars of economic security and you need trillions of dollars of economic bandwidth. And you can only get that with censorship resistance.

So how core is it to Ethereum values then and the promise of Ethereum, right? Is censorship resistance one of the central principles, the pillars of Ethereum, or is it sort of a a secondary feature, a benefit? We can kind of take it or leave it?

Right, so the way that I think of it is as a pillar to credible neutrality. And there's kind of three pillars to credible neutrality. One is censorship resistance. The other one is actually scalability. And the reason is if you want

A platform which is going to be the sentiment layer for the internal value, it can't just cater for the 1%, the rich. It needs to be credibly neutral to the whole world. And that's something we're working on. And then the third pillar to

credible neutrality is full programmability, basically Turing completeness. Because once you've reached that escape velocity with programmability,

you can cater for any application without any bias within the context of the Internet of Value. You're not

You know, programming in a very specific application with all sorts of unintended consequences down the line. And you know, obviously Ethereum has the third pillar of credible neutrality. We're working on the second one, which is scalability. And I think it has a huge head start on the first one, which is censorship resistance.

And I think that really illustrates why this concept of censorship or censorship resistance in the crypto space is

Core to the ethos of this whole entire experiment. The through line I hear between all of those three pillars is something like inclusion or accessibility, where if we generate a crypto system, a blockchain that only includes the people that can pay for the most expensive transactions, then we are discluding the rest of the world. And then the rest of the world will reject that system because they're forced to. They can't participate in that. So that system is not inclusive of them. And when we talk about censorship resistance, we're really talking about is everyone included? And if we have two competing systems, like two versions of Ethereum, and one is including more people than the other, the version of Ethereum that includes more people is going to be adopted and considered legitimate by the world. And so I really think this inclusion idea is really, really important to run through as we talk about censorship resistance. Is that a fair shelling point to focus on, Justin?

Exactly. And it can be summarized in two words equal access.

Certainly. Can we talk about just let's define censorship? What does to censor mean inside of the context of crypto?

Right. So

censorship can be hard to define because you might want to take the perspective of the censorer. But it turns out that in Ethereum specifically, we have an extremely clean definition, which I call economic censorship.

And one of the nice things about this definition is that it doesn't involve any humans. It just looks at open and free and efficient markets. And basically it states that if you have a transaction which is valid and which is paying the base fee,

and it can be included in the next block, meaning that the next block is going to have some unused gas.

Then if it's not included in that next block, it's being

economically censored. So there's no kind of economic reason for someone to be.

Censoring a transaction, a rational, a purely rational actor who wants to maximize fees will include that transaction because it's a valid fee paying transaction and there is block space available. And the reason why I'd say it's unique to Ethereum

is because we have EIP 1559.

And one of the things that EIP 1559 gives us is this idea of a dynamic block size. So we have

a gas limit, which is two times the gas target.

So the gas target is 15 million gas, the gas limit is 30 million gas. And what that means in practice is that the vast majority of blocks have unused

gas.

And so if you're seeing simultaneously two things one, unused gas, and two, a transaction which is pending in the mempool and could have been consuming this unused gas, then you have kind of a mechanism to detect the censorship.

And so what you're saying is that there is an objective way to see if there is censorship or not. This is not like, oh, I feel like I'm being censored. Like, no, no, no. Like there is like a binary outcome of like, yes, this is censorship versus no, this is not censorship.

Exactly. And

It's something that machines can detect. Is there censorship? Yes or no? And it's something that we can set up a you know alerts for. So if there is censorship, then everyone within the community can get alerted, you know, very, very quickly through automatic notifications.

How does it feel for a user to be economically censored? Like what is the user experience of that? And I'm imagining a few things. So if you're censored, let's say I want to send some ETH or a token to a censored address. I can never complete that transaction. Validators, miners, never pick it up because my transaction is being censored. Is that one way a user might experience it? Maybe another way is I can't complete a transaction on this censored DAP or the set of smart contracts because the miners or the validators never actually process it. Is that how a user would experience it? Or put us in the shoes of a user and tell us what censorship looks like at that level?

Right. So it turns out that there's two very different types of censorship. Type one is what I call weak censorship is this idea that transactions do get included on chain, but they get included with a delay.

And the reason is because some of the blocks, a fraction of the blocks, are not including that transaction.

And so let's just take a few examples. Let's imagine, for example, that 90% of the blocks are censoring. That means that your average block time is going to grow from

one slot to 10 slots.

Your perceived average block time, right?

Well, no, the actual average block time, like the time it takes for your transaction to get included on chain. I guess I should call it inclusion time, not actual block time.

Okay, cool.

So the inclusion time will be 10 slots, which is 120 seconds, which is two minutes. And so

You know, it's a UX degradation.