15 Bad ETH Takes with Justin Drake

Hey Bankless Nation, welcome to another State of the Nation. Guess what, David? It's Merge Week. It's finally here. We're talking to Justin Drake on Merch Week, and we're talking about some bad ETH takes. 15 bad ETH takes. We're gonna give them to you. It was probably a year ago, a year and a half ago, when Justin Drake dropped the legendary ultrasound ETH episode, ultrasound money episode on Bankless. And since that time, I guess headed into this monumentous week uh of the merge, there have been a lot of takes about that episode. Some good takes, some not so good takes, and I think Justin is here to um uh talk about some of the bad takes and clear up some misconceptions about ultrasound money. What are we in store for today, David?

Yeah, it seems to be impossible for people outside of the Ethereum ecosystem to produce good takes about the Ethereum ecosystem. Uh I'll and I'll say that knowing full knowingly that I'm biased towards the Ethereum ecosystem, but there's just some real low low-hanging fruit out there, as well as also some good nuanced arguments about some classic bad ETH takes. So some conversations that we're gonna be gonna be going to get into is like the rich get richer, which is a very common take you hear about proof of stake. So we're gonna talk about that. Also, Ethereum is trying to do everything all at once, and it's also being bad because it's having to uh you know split its attention into so many different categories, uh, as well as like unpredictable supply, deflation bad, it's a security, etc. etc. etc. Some very common takes that you've heard around the cryptosphere. We're gonna take them one by one and go through 15 of the baddest ETH takes that you've ever heard.

Alright, get ready for the countdown. Uh Justin Drake dropping some bad ETH takes. I thought this was impossible, but I guess he's refuting them. Alright, David, I wanna ask you the question. I always ask at the beginning of these episodes, what is the state of the nation today?

Ryan, the state of the nation is none other than merging because how else what other state would it be? We are merging this week uh in the bankless world, in the Ethereum world. Uh I don't feel like that needs any explanation.

Okay, well give me the latest uh date and time because I think last roll up when we checked in, we thought it would be Thursday morning. I'm now hearing like Friday evening or early Thursday mor excuse sorry, not Friday. My God. Wednesday evening

Alright.

late, or possibly into like the wee hours of Thursday morning, like 12 a.m., 1 a.m. is okay.

That is the most updated time time frame that we have so far. Yeah, eleven PM Wednesday tomorrow. So that puts us at 36 ish hours, thirty thirty-four ish hours from the time of recording. Uh yeah, so that's gonna be the new time. So it's gonna be late.

Ultrasound money is now saying one day, nine hours forty seven minutes, and eight thousand six hundred and ninety one blocks is the exact time that ultrasound money is predicted.

Rent song.

Alright guys, nice. We will be right back with our episode clearing up some misconception. 15 bad eth takes with Justin Drake. But before we do, we want to thank the sponsors that made this episode possible. Hey Bankless Nation, we are back with Justin Drake talking about 15 bad ETH takes that he is going to refute and talk about specifically around ultrasound money. Justin Drake does not need an introduction on Bankless. Of course, he's been here more than a few times, but he is a researcher at the Ethereum Foundation. He is a blazing a trail through the world of crypto economics, and it's great to have you back. Justin, welcome.

Thanks for having me again.

It's merch week. Uh how are you feeling about uh what's gonna happen this week? Uh and you know for those that maybe aren't as in tune, why is why is the Ethereum merge such a big deal in your eyes?

Right. So I'm feeling extremely excited, but at the same time a little powerless because you know it's now in the hands pretty much of the devs and the operators, the staking operators. So a little anxious, you know, I'm sure there will be some, you know, some bugs, but the good news is that we've really hedged our bets with client diversity. So even if one client, even if two clients, even if three clients, even if four clients go down, uh, it's probably okay. Uh and you know, these bugs will be will be fixed and uh and and and we'll have a a a smooth merge. You know, for me, the six a successful merge means uh finality uh as soon as possible. It's possible that the the

uh participation rate will drop. You know, it might drop to ninety five, ninety, we'll see, uh percent, but that's okay, so long as it stays above sixty six percent.

So

In terms of uh why the merge is you know amazing is that um you know it's basically updating the core consensus engine within Ethereum. If you think of Ethereum as a car, like the the the engine's the most one of the most important components and we're making a massive upgrade here. Um

But uh it turns out that as a second order effect, we're also doing a massive upgrade to ether, uh the asset, the native money of Ethereum. And oftentimes, you know, we talk about uh money Legos, right? We talk about Uniswap being a money Lego, Ave, Maker, etc. But we forget about Ether itself. EFER is the primordial money Lego, it's the meta money Lego. Even you know, non financial applications like ENS use EFER to make ENS possible. Um, and I think EFER, the asset, is about to get a massive upgrade here with the merge.

So I know that that analogy that you used, in fact, a year and a half ago, used that in our original Ultrasound Money episode of um Ethereum really getting its engine swapped out. This, you know, old combustion uh engine that was inefficient, didn't work very well, being replaced for like a a battery uh powered engine, you know, something like uh Elon Musk would would dream up. Um But this story, the Ethereum merge and Ether's ultrasound money, has not yet broken into mainstream. So of course, bankless listeners listening to this now, you're familiar with it because David and I, we talk about it a lot. You know what the merge is. Um but Justin, when we were talking during the break just now, um, you had just given us a rundown of your recent interview circuit. And a whole bunch of major mainstream uh media outlets are now maybe putting some attention on the merge. Can you tell us a little bit about that experience and and what you're seeing from your vantage point?

Yeah, for sure. So I guess in the last few weeks I've been you know overwhelmed by the media. They really want my attention. And I've been interviewed by many large publications, you know, Wired, Forbes, I have the list here, The Economist, Time Magazine, BBC, Politico. And yeah, I'd say that the merge is definitely not priced in in the sense that we're gonna have a much bigger audience now, you know, looking at EFER and starting to appreciate it. But I think another reason why it's not priced in is that the the questions that are being asked and the articles that are being written are still so, so you know, early.

Um, you know, I think there's a big focus on the energy reduction. That's something that mainstream can understand.

But there's you know, more subtle stuff going on. Um, one of the uh things that the press is starting to understand is the massive issuance reduction, you know, 10x issuance reduction. I'd say that's the next easiest thing to understand after the reduction in electricity consumption.

Um, but you know, going all the way to ultrasound money meme, that's that's way too far. You know, I've been trying to

plant some seeds with these reporters, you know, mentioning ultrasound money, uh, but it it it it's still too early. Um

And then when we talk about security, you know, the fact that this is a massive security upgrade from the perspective of economic security, the amount of dollars that you need to attack the system, as well as 51% attack recovery with slashing, that's you know, way over their head. Uh, despite the fact that security is the product that Ethereum is delivering, it's secure block space. So it's you know the most important property, arguably, and the one that's the least appreciated by the mainstream.

I'm just imagining that meme, uh a Justin Drake meme where, you know, he he's being asked by mainstream media about how Ethereum is reducing its energy footprint by ninety nine point nine percent and Justin Drake is in the corner just saying they don't know about ultrasound money. They don't know about how secure Ethereum's gonna be. So I feel a little bit like that.

Exactly. Yes.

Well, this is uh probably a lead in to the conversation that we want to have today, which is bad takes about Ether, bad takes about Ethereum. And I know a lot of these reporters are trying to do their best, they're trying to report on Ethereum to the best of their ability. And you know, granted, crypto is hard, especially when you get down to the relationship between something like ultrasound money and the security of Ethereum. But I think this episode is gonna be a little bit for those the crypto natives, the people that have been passing ideas back and forth, giving out takes left and right on crypto Twitter or whatever medium they're they're on about the various takes that there are about Ethereum and about Ether, the asset. And we're gonna get your get you to weigh in on 15 of them. Justin, you ready?

Sounds good.

The first one we want to talk about, uh, is the merge will never happen. Justin, what would you say to this very frequent take that you hear being put out on crypto Twitter that the merge will never happen?

Wow, okay, so the good news is that there's there's two types of takes. There's what I call falsifiable and non-falsible non-falsifiable takes. Now the the non-falsible falsifiable takes are those that kind of linger on and on and on because it's very, very hard to falsify them. But the the specific take that you mentioned, the good news about it is that hopefully, you know, within the next 36 hours, let's say, we're going to be able to falsify that. You know, we're going to able to have a clear event that we can point to and say, hey, you were wrong. Um, so unless things go wrong, which I don't want to say is not possible because there is a possibility. You know, if I were to try and estimate it, I'd say there's at least a 1% chance that things you know go wrong, but overwhelmingly, like this should go smoothly. Um, so the merge will happen, it will happen within the next few hours, and uh, everyone with that take will be uh you know proven wrong.

Here's uh here's another take that I think is related, which is um Ethereum, the full Ethereum roadmap and the vision for Ethereum will never ship. It will never ship. So the subtext here is Ethereum is always full of promises ever since the world computer, but it won't actually ship anything meaningful. What would you say about that take?

Hmm, interesting. Um

So I think there's a couple things here. Like one is kind of a misunderstanding of what Ethereum is. And to me, Ethereum is the settlement layer for the internet of value. You know, it's a very simple, well-defined thing. But people have been conflating Ethereum with the things that are built on top of Ethereum, right? And we've had DAOs, we've had ICOs, we've had DeFi NFTs, and some of these things have have failed, or at least are no longer in vogue. So for example, ICOs, you know, that was a thing back in 2017, is no longer a thing. And so if you thought that Ethereum was ICOs, then arguably, you know, it hasn't fulfilled its mission. But that's not its mission. We don't want to conflate Ethereum being the settlement layer for the intent of value with its applications. Another thing that uh you know some people do is kind of conflate Ethereum and its mission with the technology. So people will say, for example, that Ethereum is a consensus layer, or Ethereum is an execution layer, or a data availability layer. But it's actually these consensus, execution, data availability, these are components of Ethereum. It's not Ethereum itself. Um, just like the engine, the wheels, and the chassis are components.

And um

it's

it's even though like the components are not fully mature, right? For example, the data availability layer

is the main one that we haven't really shipped yet, um it's we have a a credible roadmap. Is this idea that

Um, you know, we have done a lot of research. We have proven to the community that we are able to do upgrades, that we are able to do hard forks, and it's okay for visionaries, for entrepreneurs to come in and start building today, even though the technology is not fully mature.

Um

and this this is something that we that we experience um.

You know, around uh crypto kitties, right? There was this uh argument being said that it's not worth for me to invest time building on Ethereum because if I were to have a successful application, it would just use up all the bandwidth and we couldn't scale. But I think at this point in time we're in a very, very different place where we have not only the long term vision and the goal set, but if we have all the research done, spec'd out, all the details there.

We have proof of concept and we have this willingness from the community to want to become a settlement layer for the incentive value. And so, you know, that's you know, again another falsifiable claim that I hope will be falsified over the years. And one of the things that we've learned to do is to try and move incrementally, right? And do like these small upgrades. And so actually, the merge is the smallest and simplest upgrade that that we could have designed. You know, we had no withdrawals, we didn't clean up, you know, the ETH1 voting, um, and we didn't do all sorts of other cleanups. We just did the simplest thing we could do. And I think for scalability is going to be a similar idea where we're going to release proto dank sharding, which is the simplest thing we could think of, and then full dank sharding will come, will come when it when it's ready. And another thing, I guess, worth mentioning is that.

Nowadays, it's not just the researchers and the devs pushing forward, it's hundreds of engineers outside of that small team of 100 people that are now pushing the execution layer to its limits via the rollups.

And on that note, since we are 36 away from the merge, you know, proof of stake has always been one of the things that the Ethereum will never complete its roadmap uh vision. Uh the these people that critique this uh outcome of Ethereum will will always say like proof of stake will never ship, and so really the burden of proof at this point goes on to the people that say that Ethereum won't ship because Ethereum has this history of shipping. Uh so to tie that one off um and moving on to the next one, uh take number three, bad take number three, is that Ethereum tries to be everything all at once, and therefore it suffers from being able to be optimized to doing anything at all. So, Justin, what what would you say to the critiquers that say Ethereum is trying to do too many things?

Right. So there's this there, I guess there's two ways to interpret that that bad take. The first one is, as I mentioned, kind of conflating Efer, sorry, Ethereum with the applications built on top of it. People could say it's trying to do too many things, it's trying to do NFTs, it's trying to do DeFi and ICOs and DAOs. But that's like saying the internet's trying to do too many things. No, the internet's trying to do one single thing, which is to be the communication layer for the digital world. And we're trying to do one single thing, which is to be the settlement layer for the internet of value.

The other way to interpret this bad take is that people claim that a firm is simultaneously trying to be a smart contracts platform and it's trying to be good money with with EFAD asset. And that if it needs to be successful at one of them, it it really needs to focus and only do one of these things.

you know, be be more like Bitcoin, for example, if you want to do just money.

Um but my uh my claim is that it's actually the exact opposite. Like if you want to be successful at either, you need to do both at the same time.

And the reason that

Being good at money is critical to being good at uh

at smart contracts, at a settlement layer for the intent of value, is for two reasons. One is because we need so-called economic security. We need to have

trillions and trillions of dollars of economic security so that it's impossible, even for the largest nation states in the world, to go attack 51% attack Ethereum. And the only way to get there is to have monetary premium. Um, and the only way to get monetary premium is to be, or like at least large amounts of monetary premium is to be the the the the best money. Another reason that we need to be money is because.

if uh the the the the asset is also used as economic bandwidth, right? It's this money Lego in the context of of of of DeFi. Um and uh you know pe pe people have been

Um

you know, talking about these money Legos, you know, like did I already say that? Like Uniswap, uh, Ave, and and Maker, but really Ether is this is this

you know primordial uh building block, the oldest one, the most important one, the largest one, the most flexible, the most composable, the most pristine, etc. Um, and if we are going to be successful at building the intent of value, we do need uh that uh

that that that component.

What was the the sorry I I lost my train of thought there.

I think that I think that answers it. And by the way, with uh with that question, you also answered, you know, number four, because we were gonna ask you specifically about whether ether the asset can be both um you know optimized as a as a currency for a smart contract platform and also be a good money. And your answer is not only can it be both, it needs to be both uh for for economic security reasons. Um, I think that brings us to to number five. Oh, did you have something you wanted to add, Justin?