Can Ethereum Compete with Bitcoin, Solana & Celestia? | Mike Ippolito & Jon Charbonneau

there's just this massive hump that people are not going to be able to get over that they like things that cash flow they can model Etc so growth they like growth growth so the description of the world computer of ethereum and this network this economy of different applications that look like businesses you got a lot of people there very quickly and I think maybe this would be a controversial thing to say but I think ethereum has a better shot at money on a long-term time Horizon than something like Bitcoin does

welcome to Bist where we explore the future of ethereum and ask the question what is ethereum's North Star and does it even need one there has been some angst in the ethereum community growing over the last year as ethereum has become squeezed by its competition Bitcoin story as money is growing in mainstream Society while eth story as a financial asset has not experienced that same level of success meanwhile deeper in the crypto trenches salana has captured the hot ball of money of crypto attracting the marginal new user and new capital into its ecosystem and over in the distance celeste's data availability

continues to progress at a faster rate than what is found on the ethereum layer one this is ethereum's three front war and we covered this in a topic on a recent episode with Justin Drake but this three front war is a technical war and armies are led by generals projects have leaders who make both strategic and tactical decisions in pursuit of a goal what is ethereum's goal what is ethereum designed to do what are the core devs building ethereum has been at peace time for its entire life and has had the

luxuries of building in a peacetime world today more people are thinking that this era of ethereum's life has come to an end and a phase change is needed for ethereum to enter into a more aggressive stance towards this competition that that some in ethereum claim that it's not competing with on the episode today we have John sharbono who recently released one of his best articles to date which thoroughly contextualizes and diagnoses the issue at hand with ethereum and I highly recommend reading this article even if you find yourself averse to the ideas in fact especially if you feel a negative

reaction to the article I even more encourage reading it joining us on this podcast is Mike AO who has always been immensely valuable in these conversations given his breath of knowledge to all the relevant ecosystems and his General pragmatism John and Mike and I were on a panel together discussing this very Topic at Devcon which was the ground zero for the light bulb that triggered John to write the article in question and also for the podcast that you're about to hear today so B ation I hope you enjoyed this podcast with mik pedo and John charno but first before we get into that conversation a moment to talk about some

of these fantastic sponsors that make the show possible Bank the I got John sharbono and Mike bedo with me John sharbono professional lowercase R researcher host of a podcast that doesn't exist writer of the longest articles that crypto can somehow still muster the attention to read and co-founder of DBA John welcome to the bank list how's it going and Mike tribalist EPO professional podcaster host of lowercase R researchers CLA ited Soul Maxi a man who can only turn left and co-founder of block Works Mike also welcome to only turn left is a deep cut

I don't think the audience is going to get that one that's just for you David yeah that will be Lodge in people's heads uh it's great to have you guys uh this podcast is coming on the back of a release of a very long blog post from John Chau very readable blog post I think the length is actually kind of deceiving uh and it was a conversation that we also had on a panel at an event at um Devcon I think this content this post and hopefully the conversation that we're having having today is like a long time coming uh I think the crypto world was very ready to read uh your post drawn um I think it kind of distilled a

lot of The Angst that we have felt uh in ethereum about ethereum about the eth price and I think some people might maybe I'll open up the conversation with this I think some people might be ready to say oh it was just price action like eth price has returned uh now the sentiment is fixed uh but I kind of want to actually decline that idea because The Angst the issue is still there even if price number does go up uh and so John maybe you can kind of just give us a speedrun of the article and your kind of like diagnosis and your motivations

for for writing the article for people that haven't read it um what are just like the big elements that you focused on while you were writing it yeah thanks for prompting it too the panel at Devcon was actually when uh so I had been like kind of jotting down notes on what I thought I was going to do of like a sort of related post um and then after we did that panel I was like this is great I need to like write this I literally went home to my uh hotel after that I was like this is what I'm doing ski events that's what I ended up yes no I ended up like skipping events throughout the week that was like a lot of what I did throughout the week and then the week after and then the week after and then I published it yeah I mean the the the

tldr of it um for people who haven't read yet um is basically like we've kind of had this kind of clear overarching problem in ethereum for a while now that's like it's not a specific technical thing um or like like a problem at a very low level like it's it's a pretty high level Vision thing that like I think has generally been lacking um of when you look at ethereum as now quite a number of like very credible competitors on really all of the different dimensions that ethereum

is competing on um and in each of those Dimensions it's a very clear competitor that is like focused on those things and like you you know what they're like their quotequote like North Star their goal really is um so I mean like very specifically like Bitcoin like everyone knows what Bitcoin does like the whole point of this thing is like it's digital gold it's money um and that you know it's very easy to tell the story because like everyone knows what that is um and then you have like these kind of like Financial rails smart contract platforms I mean salana is the very clear example there of you know everyone knows salana

story whether like whether you you love it or hate it everyone knows what it is everyone knows how it works everyone knows the vision like it is you know totally I want to build decentralized NASDAQ um you know permissionless markets for everyone in the world equal access to information makes sense um and then the other kind of Third Leg of it um is generally I would say like Celestia which is this kind of like big uh kind of rollup Vision which is much more of just like a broader you know we want to make it easy for anyone to launch any kind of application you know make these Unstoppable applications that are censorship resistant you know

everyone can verify these things um you know you have a light note on your phone and so all three of those are like very clear coherent visions of like this is the thing that we're focused on and ethereum has like kind of been sitting in the middle for a while and it's actually been like pretty unclear like what of those dimensions that ethereum wants to compete on and like why is kind of like the more fundamental underlying question of you know if you ask someone like like what is ethereum's purpose you get like a hundred different answers if you ask a hundred different people right um and so I I think that people have

ignored that for a long time because that sounds like sort of like I don't know a semantic thing or like ah it's decentralized you know different people see different things and so I think that kind of like we kind of just like let that fly for a long time um but then I think that people have started to realize over the course of the past year no this isn't just a like oh it makes it you know hard to talk about it or it's like it's this complicated thing that like makes it hard to explain to my mom it like actually ends up creating like real coordination problems um in particular I like the one half of it that I describe is basically kind of

like building coordination um is that basically if we don't all agree on like why we're building this thing that ends up flowing down into okay well then we don't agree on like what properties we need to build like do we need to build a like fast and cheap chain uh that's doing execution all these things you can't answer that if you don't like know what's the use case that we're building for um so that's half of it and then that ends up like slowing down and making a really confusing conversation whenever we try to like actually improve the chain it kind of slows everything down there and you end up with potentially conflicting goals as well

too and then the other half of it is that kind of like marketing part I would say is like Downstream of like having a clear North Star like knowing what your product is um and that does matter a lot um whether you're trying to you know communicate to new developers new investors in the ecosystem like hey this is the reason that we're exciting like come build on my chain um you need to have a clear story to kind of inspire people um and especially if ethereum does actually want to compete on money I mean money is just a story so if we don't even agree internally in ethereum on you know what is the overarching

vision what is the story well then you're never going to be able to like sell the thing um so it's this kind of just like highle kind of perspective and realization that we've seen playing out over the past year of increasingly one is ethereum has a lot of like very credible competitors on different dimensions and then the other half is more internal to ethereum of okay it's really unclear like which of these things that we actually want to compete on and why um and so we need to like really clarify that and then kind of everything falls Downstream when I was reading your article I was getting um like two kind of parallel punch lines uh

that really work well together uh the first is that ethereum has a coordination problem uh and this is showing up in like the all core dev's calls in like discussing what eips ethereum is going going to work on to prioritize um and like some of some of the anecdotes that are out there is that there's some technical debates about you know which what we what should we do next about like you know should it be fossil or multiple concurrent proposers and these are just both technical upgrades and a lot of these are being debated technically but they're actually if you zoom out they're actually more

just like directional differences like what do we want ethereum to be and so like while it might appear to be a technical debate it's actually more of just a what is what are we building here debate and without that debate being answered a lot of progress in ethereum is being slowed so that's like one half of I think the punchline of your articles ethereum has a coordination problem has a North star problem and separately in addition to that ethereum has credible competition uh and these two points really land extra hard when combined is because you know salana Celestia more aggressively moving more

aggressive teams that can like move fast and break things and then you know Bitcoin which is kind of already very far along along like a path for itself it it doesn't want to do too much it just wants to be money money is very big uh but still nonetheless like pretty clear in its like path for what it wants for itself uh and so these two things together kind of create the current like angst that we've seen uh in ethereum Mike you're were part of the Genesis of this conversation on the panel over in Devcon uh just give me your thoughts about what you had when you were reading the article I think part of the reason

it's been I think it's been difficult to have this conversation publicly for a couple of different reasons one is a psychological element of do we want to admit that there's a problem here the second is there are multiple conversations that are getting jumbled up into one and that's why you have some people describing this as a product problem and others describing this as a marketing problem I would like to address or introduce two New Dimensions to that as well and just say there's a when you're looking at an organization whether that's something that's extremely decentralized like ethereum or

a country like the United States or a small startup or Corporation I think these are all roughly the same challenges and you could bucket into that coordination challenge or that coordination problem that you mentioned David and it's there's a leadership component a strategy component a product component and a marketing component and I think just to I want to return to that but the first problem do we have a a problem here it honestly reminds me a little bit of the Maga movement not to bring the politics angle into this I had a really negative uh interpretation originally of that because I was like I

don't want to admit that there's a problem with America I love America I grew up in America my parents told me as the greatest country in the world now I don't know I look at it a little bit differently because the first step to solving a problem comes from admitting that there's a problem or a challenge and I think that basically just judging by my Twitter and anecdotal conversations I think half of people are on the page that hey maybe there's an issue here that we need to address and there's still another half that says we don't want to admit that there's a problem everything is okay but to break down what I think the different conversations that are happening there's a leadership strategy product marketing and I think actually from a

marketing perspective I would I'm going to maybe take a contrar opinion that I think ethereum has phenomenal marketing I don't think there's a marketing problem at all I I don't think that centralized top- down marketing works in the context of l1s what you really want in l1s is Grassroots community-driven bottomup marketing you want a bunch of people to basically Yap the problem and ethereum has that in Spades more so than anyone other than Bitcoin who may be now cardano or xrp but the problem is that they're not getting a coherent input about what to

Yap about so it sounds very discordant you have all these arguments that are going on lots of yappers not much message lots of yappers not much message on the leadership side of things I think that there's a debate to be had around leadership it ends up getting stymied because people say we don't want some centralized top down thing like salana but I think there are numerous different ways that you can be an effective leader and one of those is setting a vision right or a Northstar or a goal or a mission or where we're ultimately going and then empowering and entrusting other people to act on the mission so I I I am

a believer that someone needs to come up with the why someone that has moral Authority and then you Empower other people to come up with the how of actually executing that Vision which I think is the right the right vision for ethereum the strategy side of things you can basically think of strategy as saying no to things and I'm not of the opinion that ethereum can't compete on everything that it's trying to compete on I would disagree that it should compete on every single one of those verticals right now at the same time I think it has to say no to some verticals even on a short-term time Horizon get a

wedge and become the best at one of the things that it's trying to compete on and then in a number of years it can ultimately compete I think on everything that it that It ultimately wants and I mean we'll get to this with John's World computer vision but I would be in the camp that that's probably the best way the world computer leads to the money angle I think and then there's the product stuff um and I think yeah that's everything John mentioned in the article about actually creating a product that people want making it measurable and setting uh you know just quantifiable ways of is this actually what the market wants can we uh take some time and try

and diagnose how we got here in ethereum land ethereum has some very interesting properties uh it started off in 2014 2015 with a pretty centralized team but it very quickly moved to this decentralized EIP process vitalic uh started um started off with this process being pretty hands-off pretty quickly into ethereum's lifespan uh and really ethereum has to its credit pioneered this decentralized coordination model in a way that like the world has never seen before like the level of decentralized

coordination ethereum is like pretty astounding and to me kind of a breakthrough of like what humans can do with like the assistance of Internet protocols and that worked like really well uh for a while especially as we had uh John mentions in his post some very clear North Stars some like temporary North Stars like the merge like the merge rallied everyone in ethereum to get the merge done and again to ethereum's credit got a lot of very big things shipped into it uh and I think a lot of the lwh hanging fruit has been picked off and now we're starting to like ask all right what's what's next

for ethereum and some of these problems of being a decentralized coordinated Community uh are starting to like rear its head uh and also like things age right these systems age as people kind of know the game like different pockets of influence emerge uh ethereum I think really liked in John's post um uh political uh interests have kind of been pushed to the margins and like pushed away from the center the EF doesn't want to be top down and so it's pushed political power away uh and then those

political epicenters the layer 2s like the meev supply chain started like you know things like flash Bots things like optimism uh started became like politically powerful and that influence has started to like work its way back in and now we are dealing with the consequences of that uh and so like that's just an age thing that's a a timeline thing we are now in the year 2024 2025 and so what decentralized coordination looks like is different now than it did five years ago uh maybe this is my kind of like setting up the context for this question but like John help us like diagnose how and why we got

here what are the properties that that got us to this place so I'd say half of it is definitely a natural age thing like this is kind of the natural progression of things um the other half and probably the bigger component component of it I would say is that I think it was quite intentional and that's uh a product of kind of what ethereum's Roots were which were very Bitcoin which is not the case for all of these new you know Celestia salana type chains that you're seeing pop up now these are not people who were like I really wanted

to build this thing on bitcoin but you know I guess we just need to go make our own thing it was just like they are just building a new tech platform um versus ethereum you know had very bitcoiner Roots like those are the people who started the project like that was around at the time um and so I think that was kind of just like that is the kind of cultural inclination of most people in there and so there is a much earlier and more aggressive push to like very intentionally try to decentralize all the decision making you know the whole like emphasis on a very

multi-client architecture um try not to have like a very strong single leader and try to like decentralize the decision-making processes all of these things um and a lot of the the culture of kind of manifested in the technical road map of we're going to push out a lot of the technical complexity um and what that ends up doing is that further um that you know in pushing out technical complexity you're also in practice pushing out uh kind of the political power as well because if you're not building those things that everyone is using now well now the the

layer twos are building those things you know they're buying client teams like all you have all these other different parties that like they end up having a lot of political influence and kind of like what what is ethereum itself doing um so I I'd say it's a mix of those two things of like there there is some level of natural decentralization I mean you see that even in salana now where you know they're they're going to have multiple client teams you know it's not just Labs doing everything it's you know jto has a lot of input in the process fire dancer has a lot of input in the process like that is going to slow things down but they

don't have all of these other points of we're going to intentionally you know uh like our founder and core team are going to be less opinionated about things like they're not going to do that like they're going to keep being opinionated they're not going to have all these l2s that are putting a lot of political influence into the process and all of those things um so it's a mix of those kind of two things I would say m Jo want to add anything no I agree with all of that I think part of this is just natural Growing Pains let's just remember that there were literally block-sized Wars that got fought in Bitcoin over this right there's a really it's really short you

can look it up but nval rakan has this quote about groups don't disagree they Schism and you you can kind of understand why that is having lived through crypto if you consider yourself as being part of a tribe you there's there's a natural cycle to it where you know you're part of one Tri this happened to me with with Bitcoin where that's what gets you into the space in the first place you buy into a lot of the arguments and then once you get a little deeper you start to see some of the issues you're like oh well maybe there's some some challenges here we should talk about that but for whatever reason it is bag bias or people tying

their entire identity to their coin people are less willing to hear that it turns a certain amount of people off there's this kind of debate and conflict and then a whole bunch of people end up leaving and so you can you can see why this this pressure to Schism exists and so I think like John said part of this is just really natural growing pain aigns for a protocol that's been as successful and will be as successful as ethereum going forward into the future and then I think there is a there there my opinion would be that is we're not rewiring human nature here even large

decentralized organizations like the US government which is actually a very decentralized organization has to have some sort of figure head because you you have to people are just wired a certain way after hundreds of thousands of years and just having someone to set a kind of High Lev Vision I think is important and there are numerous examples by the way of dows of the leaders of protocols attempting to decentralize hand over control of the community and then either those protocols aren't as successful anymore without naming any names or

their leaders have come back and so I think we just need to recognize that whether or not the leaders of ethereum want to take on the mantle of that power that power exists and if they don't take it on someone else will ultimately end up taking it on mhm I want to bring up the illustration of the uh three-way vend diagram because I think that also does a really good job of grounding the conversation uh so you have three three circles overlapping uh all overlapping in the center you have the Bitcoin Celestia and salana uh execution uh data

availability consensus is like how I think Justin Drake will frame it I don't know if you guys if you agree with that like the the relationship between the the three ecosystems but I thought it was a pretty useful metaphor here uh and of course drawn your article is is about Bitcoin salana Celestia as being the three credible competitions to to ethereum you know Bitcoin is actually winning versus ethereum in the money but all all three are competing with ethereum and then you have where overlaps altogether is ethereum ethereum is at the center trying to do all three doing all three with some measure some

decent measure of success uh and then also you have uh Celestia with more data availability than etherum you have salana with more execution than the ethereum layer one and then Bitcoin with just straight up more moneyness than and ethereum uh and so these are like the three players here that are trying to like unbundle ethereum uh like the vision the the idea of like ethereum being drawn and quartered comes to mind or drawn and thirded uh by these like three ecosystems and so like I just have this like picture of like this ethereum body with three ropes tied to it and

it's flexing as hard as it can trying to pull data availability and money and execution to it and then Salon Celestia Bitcoin are all pulling those same resources away to their respective ecosystems uh so that's that's kind of like the the grounding I think that helps illustrate this this uh this uh conversation so on the salana celesia Bitcoin three-way Spectrum John uh where do you think ethereum lies in its like uh prioritization and so where do you think it is and then where do you think it ought to lie with uh where it ought

to prioritize things I would say broadly it is kind of in one two three order um I well I'll tweak it to show kind of the evolution of it I I would say initially it was I would say salana Bitcoin uh then Celestia like in the early on where like it really had that kind of world computer vision when it was like only competing with when it was like when it was just starting and it was like very clearly like I would say like more differentiated from Bitcoin like they

weren't trying like particularly the Genesis of ethereum you know you weren't trying to copy Bitcoin um there was less focus on the money there was more focus on the world computer which was like the kind of vision that like I am trying to bring back so I would say it almost like looked more like salana at the beginning which is interesting um and then I think over time with you know especially with the alt L ones and all these other things popped up it started to move more towards like Bitcoin as a prioritization of like we're going to be the money thing with like the minimum viable execution um and then it becomes you know that kind of like the quotes of

like Bitcoin was the The Vision or whatever like ethereum is the execution of that like we're we're just doing Bitcoin with like just enough functionality that you need for all these different things um and then i' would say where that's like started to progress to is still primarily Bitcoin but with like a pretty strong emphasis on the celestial leg of it of you know we're really bought into this kind of L2 Vision um but with a kind of like different L2 vision from Celestia where Celestia's kind of L2 vision is you know

it's very embodied in their like Sovereign rollup ideology of like it is much more of a you know we are just making this verifiable Unstoppable internet it it is a much more kind of like app and user Centric like we we are a platform to like change the internet for you guys versus ethereum is a more ethereum Centric and then like everything kind of comes out from there like of like eth's money and therefore this makes sense as the center of the internet and like all the other things will build on top of us because of that kind of Route um so where I think it is

now concretely is like it's kind of shifted towards I'd say like largely Bitcoin um and that's manifested and a lot of the stuff we were talking about earlier of like you know we end up with this like multi client architecture decentralized leadership people are talking about the issuance and all these things all the time um and then on the technical Focus like what most people are trying to do is like stuff like blobs and P um which is concretely looking you know kind of more like Celestia and where people have been largely ignoring that kind of you know should ethereum execution like does this really matter has largely been ignored for a while and say that's part of the

push of what I think it makes sense to kind of re-emphasize again um is to kind of bring more of that back into it and start that shift over of be a little a little less Bitcoin at least for now a little more of you know focus on the execution the world computer you know this like neutral layer again um and then I think that ends up evolving into like more money in is at the end but the path dependence of those things matters yeah okay so the way that you would say is like ethereum is most like bit Bitcoin with rollups uh you know the Bitcoin plus Celestia and it's competing

with those two things the most and it's kind of disregarded its uh own like salon end of the spectrum it's disregarded its own execution which kind of makes sense because like which alternative ecosystem has grown the most over the last two years which ecosystem has taken advantage of that uh fact that ethereum has disregarded its own layer one execution oh it's the ecosystem that has optimized for layer one execution uh Mike any any commentary here yeah I think a lot of this comes down to path dependence and I have this memory of the

challenge that ethereum has right I think ultrasound money confused a lot of people included and I remember describing to my dad early on you know I had a lot of trouble getting him around the hump of Bitcoin he's like but there's no yield it doesn't do anything productive and you can go and look at guys like Jack Bogle describe People's Natural why they don't like Commodities as an investment in general there's just this massive hump that people are not going to be able to get over that they like things that cash flow they can model Etc so growth they like growth

growth so the description of the world computer of ethereum and this network this economy of different applications that look like businesses you got a lot of people there very quickly and I think maybe this would be a controversial thing to say but even the monetary I think ethereum has a better shot at money on a long-term time Horizon than something like Bitcoin does Bitcoin has sort of gone the meme approach to money and I view it as a counter reaction to the issues that Fiat money is having we

print too much Fiat money so we get a total fixed Supply that's great as a meme that's a really strong meme on a really long-term time Horizon that doesn't work as a monetary property you need some amount of flexibility and I kind of look at ethereum's Monetary scheme and think it's a better long-term scheme the issue is you're confusing people by trying to ride two horses with one us and I also think there's been a misunderstanding as well of where the leverage for l1's really lies because of

these brain damage words like settlement and I'm not of the opinion that most people choose the L1 because of these settlement properties I think there's a minimum viable amount of decentralization you need with the settlement part then it becomes a cost thing but really what it is is it's the liquidity of the L1 and why did so many people choose ethereum last cycle there was this massively liquid asset you could build anything you wanted you could speculate quite a bit and that was super valuable for the network and I think there was this misunderstanding among some people in ethereum circles that said oh

we're being chosen because we're the most decentralized and the market was not choosing ethereum for that reason and so I'm that's why I'm in the camp of world computer focus on execution whatever you want to do and we can talk about how this I think dovetails really nicely with the rollup Centric road map it's all about having leverage and users and liquidity more so than these vague concepts of or one very myopic way to measure decentralization I think yeah I think that does extend into the role of centric road map very well because

uh in 2021 2020 when crypto got you know 100 times more users they went to ethereum because that's where the liquidity was if you wanted to Mint and launch an nft project you did it where the money was so everything went to ethereum uh and that's because it's where the money and users were and just to make concrete examples there as well look at the early dii apps that got product Market fit Unis swap maker a what were those protocols allowing people to do use ethereum in some way

right take loans out lever up get yield trade things me all of those initial use cases were based around having a deep in liquid a one token that people wanted to speculate around right and ethereum I will say is getting its layer 2 energy is what what's powering layer 2os it's the same phenomenon it like not to discredit the fact that ethereum is decentralized and layer 2s want some level of like uh property rights and censorship resistance totally valid and also layer will go to where the money is

the incentives go to where the money is and where the users are and so I think this also kind of brings into a point that I think John said is like well layer twos will follow the liquidity just like users uh and so you can like kind of Imagine an alternative version of ethereum an alternative timeline where ethereum prioritize the layer one first before prioritizing layer twos which is what what is Salon is doing Salon is prioritizing layer one execution and then you you keep everyone on the boat you keep all the users you

keep all the liquidity and then you kind of let Layer Two spawn more emergently from that maybe John you can kind of like run us through that simulation of uh a a road map maybe like salana is where you actually are on the rollup Centric road map you were totally going to do Roll-Ups we love Roll-Ups we love the celesia we love the cosmos Vision we're just going to scale the layer one as meaningfully as possible like what what could have been in this world all of it like I would say like makes sense in hindsight of I I think the key term that we will end up saying here a lot and that like people are realizing more

is like this is all just a path dependence thing of like I think that most of us agree like as V is written as well like the end game of most of these blockchains looks the same um and I I think that ethereum has had a very strong inclination over time to ignore the like what is the Practical thing today and the path dependence of these things and that is probably unsurprising when you have a very you know this like optimistic research driven Community which is you know talking about one shot signatures and these things that are like 50 years away um and you are