Ethereum’s Three Front War | Justin Drake

now my personal take is that the only way to win the money game is to also win the utility game and the only way to win the utility game is to also win the money game like these two things are fundamentally intertwined welcome to bankless where we explore the frontier of Internet money and internet Finance this is how to get started how to get better and how to front run the opportunity at Devcon Justin Drake presented what he called

his most ambitious proposal to date what emerged from that proposal was the beam chain which fell flat in public discourse people wanted ethereum 3.0 people got not that we bring Justin Drake on the podcast to discuss this reaction fill in some gaps but more importantly discuss the rise of credible competition to the three major components of the ethereum road map Justin Drake after his beam chain proposal talk at Devcon gave a talk at the banket summit that categorized all of ethereum's future Road Map upgrades

of which the beam chain was only one part of into three different categories execution data availability and consensus each one of these categories directly correlates with a large ecosystem player in the crypto space execution competes with salana data availability competes with Celestia and consensus competes with Bitcoin so we present Justin with the idea of ethereum fighting a three front war against two competitors with centralized teams who can ship fast and break things and the highly aifi Bitcoin in its Network effects What is ethereum's strategy for

winning this three front war against three legitimate competitors what's its trick what does it have that others don't this is what we get into today on the Pod let's get right to the episode with Justin but before we do we want to thank the sponsors that made this possible including bankless Nation once again we have Justin Drake a researcher at the ethereum foundation and more recently has been the pillar of the beam chain a proposed path for making some of the upgrades found in the ethereum road map a reality all in one package Justin welcome back to bankets hi guys thanks

for having me uh Justin so I was furiously live tweeting your presentation at Devcon as you were giving it uh the significance of your talk that you were giving went pretty viral uh especially from when you you tweeted a tweet uh that read announcement of an announcement tomorrow at 5:00 pm on the Devcon main stage I will unveil my most ambitious ambitious initiative to date so a lot of people did not know what to make of that tweet which I think allowed people's imaginations to just like run wild uh

and then because myself and a few others were all live tweeting your presentation in real time even by the time you had finished your presentation a lot of people's imaginations had been brought back down to reality um after getting off the off the stage and like checking in on like Twitter post talk what was your first reaction what were the the thoughts that you had after seeing some of the Twitter discourse what's what's your reaction to the reaction sure so interestingly um I had spent the month prior trying to convince the researchers and the devs that this

was not a crazy idea that it was not too ambitious to bring forward and I think the summary of crypto Twitter was that it's not ambitious enough and so I was kind of s very surprised and a little bit shocked by this jsta position of of takes um I think one of the things that um you know the all of the researchers and the devs had as context was that um you know I was only focusing on one single layer of the stack and there was these two other layers the execution and

the data layer which I didn't talk about and there's a lot of ambitious stuff also happening there and then maybe another thing that uh you know the the devs and the the researchers had in the back of their mind is that they they knew that there was kind of a short and medium-term road map with the next coming Forks where some big changes were coming in and maybe that's something that I didn't highlight enough in my presentation because people thought kind of incorrectly that this was a kind of a massive onetime Sprint

um over the next few years and then there would be no incremental upgrades between now and and and the fork but actually it's it's kind of the the opposite there's there's plenty and plenty of upgrades that would that would happen in between and then another like minor thing that I would highlight is that I had this slide which showed kind of a a five-year road map but actually the first year was kind of already complete it was the the pitting phase and so people were kind of very underwhelmed by the The Five-Year timeline which actually is a four-year

timeline and the fouryear timeline is itself kind of this conservative timeline to try and and get all of the devs on on board and and and and not put too much pressure on them and so I think that maybe there's an opportunity to to shrink the timeline a little bit but ultimately I do think it is a realistic one given how slow and how conservative the airm L1 is now one of the things that you did mention is that um a lot of the imaginations went wild in the few hours between my tweet and the actual

presentation and this was a fantastic social experiment right because it allowed for the community to express their wildest dreams and desires um and one of the things that I was very pleased about is that a lot of the community shared this Vision around putting ZK frontend Center in the road map and this is exactly what the the beam chain proposal is all about it's about leveraging this fantastic technology that has matured in the last few years and that is poised to to to

mature even further and be ready for for for for production at at L1 and then the other thing that I was also very pleased to see is that for some reason or whenever like now was the time where the notion of native rollups hit mainstream Consciousness in a very very big way now I've been kind of Shilling native rollups for years at this point um and you know it almost it always felt like this futuristic kind of Science Fiction concept um that had you know never

really received the the the excitement that it deserved and now finally you know uh uh when I allowed people's imagination to go wow the notion of of native rollups uh came in now one of the I guess we'll talk about one of the big things I'm trying to do with the the beam chain is to accelerate the the the the social layer the the coordination part of things um and the the good news for for Native rollups is that there's fairly little coordination to do right it's mostly just technology it's

extremely hardcore engineering and this is engineering that is already being done by the The Wider Community with all of the different ZK vendors and so in some sense it's just a matter of sitting back and relaxing and waiting for this technology to mature and then there's a tiny little bit of coordination to expose the power of these ZK VMS into the L1 but on the other hand the beam chain is maybe 80% coordination and 20% technology and so this is where I feel that I have a a big impact to make okay

Justin it was really interesting for for us to sort of observe these take these reactions to the take as well and so like I want to almost divide this into like sort of uh three separate groups there's the devs which you mentioned who interestingly enough you said they they saw the beam chain propos and they were like this is impossible this is too ambitious and they were surprised at it then there's the the uh ethereum natives like I would say uh David and myself that have been following the road map for for years and we had a certain set of expectations and then there's just like the rest of of crypto okay and I

think each of these camps had kind of a a different reaction to what you proposed I will say for the middle group that the like the group of ethereum natives of of which David and I are are probably part of I think when I saw that announcement I was like okay here we go here it is Zeke you know native ZK rollups on ethereum and so uh when I saw the beam proposal I was just like okay this is great it still feels like part one to a sequel and I'm like I'm missing like the the part two I'm missing like

you know the fellowship the ring I'm missing the two towers and the Return of the King okay it's like it's only part of the movie here and um I feel like I got some of that that that sequel in the bankless summit talk that you went through which was like laying out not just the consensus layer which is the beam chain but also the data layer and also the execution layer and I think David and I want to spend some time talking about that road map because to me for an ethereum Enthusiast that was like almost like okay this is it this is the full picture of what we can achieve in a

4-year timeline um but but before we get there I want to address that group of just not ethereum enthusiasts who've been following the road map everybody else in crypto because uh connecting this to something you said earlier I think when they saw the beam chain and they saw a five-year timeline which was the headline right it wasn't the foury year it was the five-year headline and then uh hearing kind of your reaction where it's like the ethereum devs ethereum culture thought even that was too ambitious they point to that and

they say yep that's part of the problem part of the problem with ethereum culture right now is that it's not ambitious enough it has slowed down and they're looking at things that other alternative layer one communities are doing and they're just ship ship ship it that's what it feels like they're all shipping and so even if uh ethereum researchers or a certain cohort in ethereum are proposing like big things big sounding things like the beam chain if the allore dev's reaction to that is like whoa whoa whoa slow down

they would point to that and they'd say yeah Justin that's part of the problem with ethereum right now it's got too many breaks and it's not ambitious enough and I want you to address that because I think that's something that you have maybe seen and and why you're like you got three different stakeholders here and the dev kind of stakeholder is like whoa this is a lot okay Justin the beam chain is a lot and like are you kidding me four or five years that's really fast is do we have a problem here do we have an endemic problem inside of ethereum where we're

just like going too slow these days things have kind of St stultified and aifi and I'll just put one other case out there that's what we've seen in Bitcoin Bitcoin definitely did that go try to get like Eric Wall's op cat in this is like a 10e decade long project to get one single op code into Bitcoin so uh communities have a tendency to aify over time and are we hitting up against that wall here on ethereum I think that's what the wider crypto Community wants to know that is a fantastic question and I

think um the criticism from The Wider crypto Community comes from a misunderstanding of the strategy of ethereum eum has two constituent Parts it has the L1 and it has the l2s the L1 is competing with Bitcoin it's competing for maximum robustness maximum security maximum quality maximum health it's competing for the moneyness in some sense and then you have the l2s they're

competing with Solana they're competing on maximizing utility and ux and quantity and performance and volume and asking the L1 to compete with Solana is just a misunderstanding of this separation of concerns now I agree that as a community of l2s we need to ship ship ship ship ship every week every month every day on a continuous basis and this is exactly what has been happening look at Bas for

example like every week they raise the the the gas limit look at all of the l2s they there's a lot of effort for example on uh providing pre- confirmations and improving the the the ux and actually if you look at Solana what are the the two key things that it priz itself the most latency and frut and I think that l2s are going to vastly outperform Solana on both of these two metrics

latency is going to go down to zero just one ping time uh thanks to pre-confirmation you can think of this as being an abstraction of the notion of the slot duration right users don't have to worry about what is the exact slot duration in a chain they just want the ux to be instant and then you have the the gas limit which every single day is being raised raise and raise and I invite you to go to this website rollup

WF which shows you that um the total frut which is measured in meag gas per second has grown to 100x versus is the L1 so all of the l2s combined have 100x the frut of the L1 and what is going to happen over the next year is that this 100x is going to become a,x and then 10,000x and then 100,000x C can can we just pause and make sure we understand that Justin so I've got roll up. WTF up

and what you're referring to is are are you referring to megag gas per second As the metric or TPS total like transactions per second so if you look at the very top here in the header there's the totals and then the mid the middle column is meag gas per second so we're at 67 right now and if you look at the bracket that's uh 68 x right so it depends on the time of the day and whatnot but it's 68 x ethereum m L1 L1 and then total uh transactions per

second it's a 23x yes but the thing is that you want to be looking at the gas per second because there's some transactions that are more complicated and so you'll do fewer transactions but those are richer transactions for example so the middle column I think is the the one to focus on okay cool and I interrupted you sorry so you're going on a flow this is 60x right now the middle column uh meag gas per and you're saying something about that uh like increasing somewhat logarithmically yeah so right now I mean it fluctuates every second but like

right right now is roughly 60x what I expect it to be next year is 600x and then the year after that is 6,000 X and the reason is that l2s can just scale in an unlimited fashion they can scale horizontally but they can also scale like base vertically by just increasing the gas limit and this is something that Solana is incapable of doing there is no way that Solana is going to increase its frit 10x per year for the next few years like it's already completely maxed out

uh in terms of the the utilization of the hardware with the the existing clients sure maybe there could be new clients that provide um more resources and allow for the the so-called compute unit limit uh so in in in salana we don't use the the term gas they use the the term compute limit but and essentially what I think will happen is that sonana is going to hit a a a brick wall right where it's maxed out its scalability whereas on the other hand

etherum has a sustainable scalability story thanks to the l2s so Justin I'm now sharing on the screen um a slide from your bankless summit talk and the bankless summit talk happened three or four days after your Devcon beam chain talk and it was kind of a reaction to the reaction to the beam chain talk uh and so like here here's what everyone said about uh the beam chain talk and now let me kind of like fill in the gaps and you you gave this uh straw man layer one timeline slide which I think filled

in the parts that people were missing if they just thought that the beam chain was the only thing that ethereum was shipping and the way that you oriented this slide um sparked something in my brain you uh colorcoded all of the upgrades as they relate to the three components that compose ethereum execution is is in purple so all the upgrades that go into ethereum over the next 5 years are in purple uh data is in Orange so all the the data blobs the data availability all those upgrades are in orange uh and then consensus uh which

is green uh and so uh all of these different like uh EIP upgrades to ethereum kind of fit into these one of three categories and the spark that the the connection that this made for me is each one of these kind of correlates to another very big blockchain in the crypto space uh execution is salana uh data availability is Celestia and consensus is Bitcoin like very hardened consensus and then also the monetary policy for eth is contained in here uh

so that that caused me to tweet this one tweet uh the ethereum road map is more blobs than Celestia faster execution than salana and better money than Bitcoin uh and of course this really kind of illustrates I think the tension that ethereum has been under over the last two years is it it is fighting a three-way war against three different ecosystems that all have very strong merits to them like the moneyy of Bitcoin very hard to fight uh it's like

all Fiat currencies slowly losing versus Bitcoin uh salana execution also very hard to fight not only because they have good execution but people know that they have good execution uh and then blobs more blobs than Celestia I actually think that's the the easiest one to really uh fight against but nonetheless like celesia does have more data availability than ethereum John Cho put this differently um I'm the ethereum guy John is more of just like the equal weighted uh uh interpretation of the same idea which is ethereum he he put

out this tweet which is ethereum's strengths is also its weaknesses its ambitious Vision means it's competing with everyone a little bit be Bitcoin is better sound money than eth salana is more import a more performant execution environment than the ethereum layer one Celestia is going to have bigger faster blocks sooner so there's this vision of like ethereum being like drawn and quartered except not quartered thirded thirded by Bitcoin Celestia and salana and there's this tension here where like

can can this ethereum body pull in and win this tug-of war against three different fronts or is it getting stretched by these three different competitors Bitcoin is better money than than ethereum salana has got better execu and Celestia's got more data availability and right now Justin the current market pricing the market is saying that ethereum is being stretched and it does not have the strength to win a three-way tug-of war and so this is kind of asking we we did a episode with

fatal a couple years ago called the end game and I think this is something that the ethereum research Community has really attracted is endgame researchers endgame protocol designers who think in very logical ways how this whole game ends and then building towards that which ends up being a 5-year long road map but what this sacrific is Justin which Celestia is doing and salana is doing and fortunately for Bitcoin doesn't have to do is the middle game

and the middle game uh is very important the middle game seems to be being lost at least by the validation of the market in this like present part of ethereum's History so I kind of want to like throw all of that at you how how do you react to the idea that like ethereum is actually losing the middle game and the middle game might be a very important thing to to not lose because the middle game dictates how the end game begins yeah fantastic question so uh I think you're right that the easiest to address

is probably the The Da with with celesia the way that I see it is that Celestia in some sense is a collaborative player uh with a because it provides overflow da when the there isn't sufficient capacity on the L1 and so what I expect will happen is that the use cases of that requires the the highest grade security and the highest grade composability we will use uh L1 da U but that's not enough for all of the world and so we're going to need overflow in

the form of igen Da for example or or celesia which you can think of as being collaborative Technologies with eum now you you are right that there is you know competition in the form of Bitcoin which is trying to be the money and Solana which is trying to provide you know maximum utility now my personal take is that the only way to win the money game is to also win the utility game and the only way to win the utility game is to

also win the money game like these two things are fundamentally intertwined and there's actually this quote that I have here from Alan K who's this uh computer scientist who won the the touring award he wrote people who are really serious about software should make their own Hardware right and this is you know an explanation in my mind as to why apple is so successful right is because they are able to make use of the synergies of simultaneously optimizing for software

and the hardware and that what makes them special and I think ethereum has an amazing opportunity in front of itself and the reason is that Bitcoin is not even trying to compete with utility and Solana is not even trying to compete for money right eum is the only system out there that has the guts the ambition the vision to compete for both money and utility and it turns out that there are

these synergies and network effects that are maybe worth flashing out so so when you have large amounts of monetary premium what do you have on the other end you have large amounts of Economic Security large amount of economic bandwidth right and that is fundamentally the driver of utility right if you want to have trillions of dollars of stable coins decentralized trustless stable coins that use a pristine money as collateral the only way to get there is to acove monetary premium if you want to have a blockchain

which secures tens of ions of dollars hundreds of trillions of dollars a blockchain that is unquestionably secure from attacks from nation states or even you know a cabal of nation states all coming together to try and attack the system you're going to need very very large amounts of Economic Security and the only way to get that is through monetary premium and then the other thing happens where in order to get very large amounts of monetary premium you need to have large amounts of utility

and that uh is in the form for example of the burn right like the more activity there is the more utility you provide the more scarcity you have because you're um you have income for your chain which can feed into the token and increase monetary premium but you also have Network effects in the form of liquidity and composability and using the the token as a unit of account right if the only thing that you optimize for is being money what you end up with is a

a a dumb Rock right a pet rock like like gold or or Bitcoin and if the only thing that you optimize for is utility you end up with you know a casino like uh like like sonana like like that is shallow and is is only trading you know uh meme coins what we're trying to do here is to build the the future of Finance right the internet of value and in order to achieve that we need to have both the utility and the money and this is a

unique opportunity for etherum and we should just keep on going and have the conviction to continue in that direction I want to see if I can re articulate what you're saying what I what what I think you're saying I want once again showing the graphic that John charb tweeted out which is for the listeners it is a three-way ven diagram and you have this orange Bitcoin Circle overlapping with this purple Celestia Circle over overlapping with this like cyan salon Circle right like um execution data availability uh money and

then where those three circles overlap at the very center is ethereum uh and so this is I think the design structure that I think nerd Snipes a lot of ethereum Believers it's like wow there's this like unified blockchain architecture that does it all and is like the singularity of all logical conclusions of blockchain designs uh and then of course going back to like the alternative Vision which is like well what what if three competitors just like unbundle this thing and I think what you're saying Justin is that well

ethereum has the benefit of tapping into the synergies that happens when you combine the money of Bitcoin with the execution of salana and the rollup sovereignty of Celestia and so each one kind of has its unique synergies uh you know the utility of salana plus the money of Bitcoin is like your very censorship resistant internet-based currency and financial rails like going Bank list defi trustless Defi and that's very cool and unique and and nation state resistant that's cyppher Punk

values that's what we're going for uh then you have uh you know the combination of money and layer twos like so Sovereign blockchains app chains that can customize themselves into like whatever they see fit businesses that are chains that have the funding because of the money and then you you can combine all of these synergies and only ethereum can really tap into these synergies uh is the design space that ethereum is is going for and so there's each one of these uh overlapping uh parts of the VIN diagram have their like

benefits that I think ethereum thinks that only it can tap into uh but also uh just paying Devil's Advocate Stark net starkware has always been interested on settling on bitcoin and Bitcoin layer 2os like alpen Labs the bit VM is like you actually are starting to see the moneyness of Bitcoin in Scent layer twos and so you are seeing Bitcoin in Celestia overlap in their model and their design space uh in ways that ethereum is like less relevant to and so I think this is kind of the bet is like

is it actually possible to unbundle ethereum and see the ethereum vision happen emergently in other ecosystems and how does ethereum kind of like defend against that uh and how does ethereum like control the moat of these synergies of these overlapping vent diagrams yeah fantastic question so it is totally possible for Bitcoin that currently has a massive lead in terms of monetary premium to also start playing the utility game and the one of the uh

recent Innovations is called bit VM and I think you've had an episode on bit VM and if bit VM were to materialize in in a successful way then we could see rollups on top of Bitcoin there are on you know unfortunately several uh problems with uh with that approach the the the first approach the first problem is that um it is technologically very very difficult to pull off so yes there's there's progress to to do it but it might take several years um okay fine

maybe that's not a big deal the other big problem is that um Bitcoin is fundamentally limited to 4 megabytes per 10 minute of Da so even if you have those rollups um there's very very little opportunity to provide highgrade utility just because there isn't much frut um and the only way to provide more of the you know maximally secure da uh on bitcoin is to make a hard fork and

the community is just unwilling to do these these hard forks and then there's a kind of a third thing which is that bit VM in some sense is a massive hack and it comes with a a long list of caveats one of them is that you can only do optimistic rollup you can't do ZK rollups um I mean they use ZK in the fra proof game but still fundamentally it's an optimistic roll up uh and the the assumptions are not as good as on ethereum where you need to have one of n

uh participants being honest and when you do the bridging in and out of the rollup you can only use you know for example fixed amounts of of of Bitcoin so it has to always be you know uh a 10 Bitcoin deposit for example 10 Bitcoin withdrawals there's all sorts of complications due to the fact that Bitcoin is not programmable now you're right that uh stockar is specifically um looking to build on top of Bitcoin if there's this new um up code called uh

upcat that would that would happen on bitcoin because then a lot of the hacks would go away and you could you know natively do ZK rollups and things like that and I guess the issue goes back to what I said initially is that it's going to take a very very long time for Bitcoin to add this op code if ever just because the the the social layer is so aifi and in some sense against the notion of adding adding programmability but even if we Bitcoin

does get upcat again we're in a position where Bitcoin is fundamentally limited from a DA standpoint so the the bottleneck no longer becomes execution but it becomes da and is something that as far as I can tell you know goes against the the DNA of of Bitcoin we all remember the block size Wars right uh we wanted to increase the block size to you know something uh something like 8 megabytes per 10 minutes or 16 megabytes per 10 10 minutes um this is a big part of the the

history of Bitcoin I don't see them in dramatically increasing the the amount of of of of Da at layer one I uh have some observations on the conversation thus far but before I I I get to those I I want to just ask a follow-up question on on bitcoin because uh like it could be that the end state that we've just defined is just like that's our like um our crypto native version of the end State I I will tell you a lot of the the newcomers in this cycle seem pretty