Where is Ethereum Headed? | Mike Ippolito & Mike Neuder

If we have a better money that has better properties than exist today and the financial infrastructure around that is much better, then what businesses could you build in that world that you couldn't build today? That's what excites me about crypto.

Welcome to Bankless, where we are continuing our exploration of the Ethereum roadmap. Today on the show, we are bringing back Mike Neuter, who was just on the show to give his defense of the Ethereum roadmap. And this time we are joined by Blockworks Mike Eppolito, who brings a wealth of pragmatic knowledge from around the crypto industry to add his thoughts to the conversation around Ethereum's current position. Before we get into the podcast, this is your final warning to get your ticket to permissionless. This is our third permissionless, and this is going to be a fanger. Just a look at the speaker lineup. We've got politicians like Richie Pokemon Card Torres, Gary Gensler's Bully, Tom Emmer. We've got investors like Van Spencer, Chris Dixon, Haseeb and Balogee's Freddy Bossin. We've got builders like Sri Rom, Nick White, Alex Glukowski from ZK Sync. And you guys know my thesis about podcaster-organized conferences. We simply produce the best conversations. That's what we do. So you're gonna hear me debate Alex Thorne from Galaxy and Eric Wall about Bitcoin stuff. They think that they've won, but they haven't. Max Resnick and Kyle Samani are going to debate Mahalo from Polygon and Jill from Espresso as to whether or not layer twos are Ethereum. Even Ryan Sean Adams is going to be there in the flesh, opening up the whole entire conference with Chris Dixon from A16Z. And then on the last day, Kane Warwick and I will be on a panel together just a few hours before we go head to head in Karate Combat's most high-profile matchup to date. Their words, not mine. So there is a link in the show notes to make sure that you attend all of this good stuff. There is also a party Wednesday for all of the bankless citizens out there. So if you are not a bankless citizen and you want to go to Permissionless, there is a link in the show notes to get tickets. And if you are a bankless citizen and you're going to Permissionless, there is also a link to make sure that you guys have access to our party. So go get him. This episode will flow very nicely if you have been following along our recent podcast episodes around these topics. Most recently with Mike Noirder's episode just last week, but also starting with Kyle Simani's episode, which many in Ethereum foundationally disagreed with, and also Max Resnick's episode, which people also disagreed with, but I think nonetheless at least found some value from, even if maybe the delivery of his points were a little bit overly spicy. As for me, my ideas around Ethereum continue to be in flux. The direction we are going is directionally correct. And whether we want to re-prioritize different parts of the Ethereum roadmap in different orders, I think is actually kind of a moot point. Since the development teams focused on, for example, the Ethereum Layer 1 execution or the development teams around Ethereum Layer 2 data availability are different teams that are already working on both in parallel. All of these different parts of the Ethereum Roadmap are all happening in parallel. So it's more about how the social layer around Ethereum thinks about our priorities as a community, as a culture.

So what do? Are we even off track at all? Or is it all just narrative and price? I have more thoughts on that. That'll be in the Bankless newsletter soon. So without further ado, I bring you Mike and Mike, but first a moment to talk about some of these fantastic sponsors that make the

Bankless Nation, we're live from the Bankless Studio. I'm here with Mike and Mike. Hey guys, how's it going? Good, how are you? Well, how are we gonna solve the issue of uh how do I call you guys when I want to talk to specifically one of you?

Uh you can call him polyamory, Mike.

Uh that's what I've been thinking. Paul Polyammer.

We're not making that a thing.

So we have it, we have an Ethereum mic. Mike, Mike Neuter. Welcome to the show, welcome to the studio. Thanks for having us. You can just

Just call me Mike One. I'm just going

and then we have uh the new perspective, because we uh just did uh a podcast, Mike Ethereum Mike here. We just did a podcast with Ryan. It's gonna come out uh earlier this week when this goes out, all about the Ethereum roadmap. Uh kind of in response to to the episodes that we did with uh Max Resnick and Kyle Samani. Uh

That's a very popular one, right? The Kyle one, the thing I'll say.

Yes, yes, a very extremely popular one. Everyone likes we just did a kind of like a uh Ethereum roadmap in 2024, kind of answering to some of the critiques uh and and like qualms presented by these two episodes. Uh and we just did so we just did that of the episode. So we're bringing polyamory mic on the episode today. I swear to that'll be the last time I use that. Uh just to bring in kind of like a new perspective onto the Ethereum roadmap because uh Mike flirts with a bunch of different other ecosystems. You love Celestia, you love Solana, you love Cosmos, you love Ethereum. Uh, and so uh I think we can kind of have a very similar conversation uh that we just had uh with uh Mike, Ethereum Mike, with discussing the roadmap, but kind of also just discussing uh where the roadmap fits into the broader landscape of the crypto ecosystem because Ethereum is not in a vacuum. The Ethereum centric roadmap exists inside of the context uh in which it was born, uh which is all the others' ecosystems as well. Uh how do you guys feel about that? Yeah.

Great. Yeah.

Maybe we can uh start Ethereum, Mike, with kind of just like speed running through some of the main points of the uh the episode that we just did. Uh you had this article titled uh My E thesis, uh, and uh it was all about just a particular order of the three resources that uh compose Ethereum. Maybe you can kind of just run us through that.

Right. Yeah. So the the episode was basic basically structured like the article, which um we kind of went through

uh settlement, DA, and execution in that order. And so the kind of

the high level take here is that first and foremost, Ethereum should be and like should strive to continue being.

The most neutral censorship resistant base layer that exists in the in the ecosystem. And you know, I don't think anyone argues about that reality of today. And I think, you know, keeping that as the core kind of founding principle of all the decisions that are made seems very useful. DA obviously is kind of the thing that most people are talking about lately because it really ties into this idea of how do roll-ups play into Ethereum, how do they kind of interact, and what value do they add to the Ethereum ecosystem? And so we took we talked a little bit about potential network effects of DA, how Ethereum DA could come to kind of be differentiated on different axes than just providing the best security and the best censorship resistance for L2s, you know, some of the different constructions. We got a little maybe too technical in the weeds there. And so we can leave that there. But then the the third piece that I hope we can talk more about today, which I don't think we covered too much, was execution and kind of.

What is the endgame vision for L1 execution? You know, I think there's kind of really that's probably where the the biggest spread is among opinion in the Ethereum ecosystem. You know, Justin in his debate with Tolly basically said L1 execution is dead, like we should push all of that to the L2, including app deployment and everything. Max um kind of swings in the complete opposite direction, saying like

Make DeFi on Ethereum great again.

Ethereum layer one.

Yeah. On the layer one.

Yeah, exactly. And I think, you know, there's pros and cons to both of those, and and we can definitely unpack it. Um but yeah, I think that's that's kind of high level of of what we covered in the episode, and hopefully can start us off here too.

Uh so uh blockworks, Mike. Uh

such a much easier name.

Yeah. It's like we should have started with that.

Um I you haven't listened to the uh episode that we just did with Ethereum, Mike and Ryan, but also you did listen to the Kyle Simani episode and the Max Resnick episode. Maybe you can kind of give us your high-level thoughts and reactions as you were listening to those and uh the conversations that spawned out of them.

Yeah, I think I think that this uh I would I kind of reject the framing actually that this conversation tends to take on, which is it ends up getting divided in two camps, which is if you think that execution is the valuable layer that's gonna generate a whole bunch of cash flows and that's where value is gonna accrue, then you're kind of a Solana guy. And if you're a settlement and DA uh person and you think that's where a lot of the value is, then you're on the Ethereum camp.

And my view is that I'm kind of in the camp where we're all building the same thing here. And I think that these things, yeah, yeah. I mean, I think he's right about that. And I think my my long term view on all of these L1s is that they're mostly commodities and that they're gonna.

Converge on relatively the same architecture and stack.

And I actually maybe a um more contrarian point would be, you know, I kind of listened to the Ethereum argument looking at

the execution layer and saying, hey, all this MEV that you're generating today,

the incentives aren't really good because your revenue is tied to a decreased uh or a not great user experience, which I generally agree with. And I think that MEV is going to end up going to the app layer and then get redirected back to users as well. And I agree with that.

And then I think the execution maxi perspective is that, you know, just because everything settles down to one layer doesn't mean that you have to pay a lot to that layer or that value necessarily accrues to that layer.

And I actually kind of agree with that as well. I I view, like, I actually have a long-term pretty neutral view on L1s as assets. I think that they're going to create an enormous amount of value in the next like decade or so because I actually have kind of a Bitcoiner mentality. I think that the thing that's driving activity and adoption today is a structural problem with credit and uh fiat based money. And I think that's what's moving all of this capital into mostly L1s, which is, I view them as commodity based monies that have uh an improvement on.

uh the governance around their supply. And I think that a bunch of the L ones are gonna do pretty well from that.

But then I think that the desirable end state of crypto is, once that capital is migrated, that it

gets redirected into applications that actually create value for people. I actually don't really agree with the whole framing of like this one is better than the other one. I think it's all going to end up being commoditized and it's all going to end up flowing back to the apps and users at the end of the day.

Interesting. I I guess I'd push back on calling it commodity because

I guess at least in proof of stake, kind of a core fundamental premise of having a staking token is that that token has value, right? Because there's like the economic security or the security of the settlement assurances of the chain are like fundamentally dependent on the token.

And so like if everything's commodity,

that kind of implies they're all substitutable. Like ETH is the same as Sol is the same as Adam or whatever.

Yeah.

But how how do you square that with like there needs to be some

Core security like underpinning these applications, if they are going to be like as secure as they need to be, or do you think that's kind of like a meme altogether?

Well I think that I mean I think part of the like my perspective on um polyamory in crypto for a while has been I think that basically there's a very complicated problem that needs to get solved, which is how to build a blockchain and bootstrap an economy on top of that. And I think the way that it's kind of naturally

Wound up working is that you have different chains that are focused on different parts of that problem, right? Um, you've got kind of

um Ethereum, which is maximally focused on how do you be a great settlement layer um and be extremely censorship resistant.

And then Solana is focused in the current timeframe on execution and how can you pack as many transactions as you can into one shared security layer and pipeline and all of that type of thing. But I think what's gonna end up happening is that Solana is gonna learn some of the lessons of Ethereum. I think Ethereum, I would be in the camp.

Probably more of like the max resinate camp of

um increasing the gas limit, decreasing the block times on Ethereum. And I would move the base layer to look a little bit more Solana like. And I do think at the end state, you're gonna end up with, you know, five or six L1s that like have some differences and might be more specialized for some uses cases than others. But I think you're gonna end up with stuff that looks pretty similar at the end of the day.

Uh I think uh I I brought that perspective up to uh Vitalik and and just about the idea like, hey, you know, we there is some slack at the Ethereum layer one level. Like we could add some capacity. Uh and his response to that was I think drawing from lessons of Ethereum's past when we had this like ice age mechanism in the proof of work era, which was this uh we actually would just like intentionally freeze the blockchain every six months until we shipped proof of stake. And it was a forcing function, it was a human layer forcing function to say, hey, we're gonna set a

Like the debt seal.

We're gonna set a bomb. Yeah, we're gonna set a bomb off on the Ethereum block a layer one blockchain. And if we don't, we have to just manually diffuse it over and over and over again until we ship proof of stake. And he kind of alluded to a similar phenomenon going on with solving layer two composability. Whether if we just like add more layer one composability just to like, you know, bias some time, we're actually just like easing off on the need to solve layer two composability. And that's actually the hard problem. And also the problem that mostly only Ethereum, Celestia is also working on this, but Ethereum is really leading the charge here. And so kind of just like reducing that pressure and like allowing a longer lifespan for like emphasis and priority of the layer one is actually reducing what is probably Ethereum's biggest um value driver in the near term future, which is solving layer two composability.

Interesting. So his argument there is investing

kind of resources of the the community, focus on the research and kind of

all core devs layer on L1 scaling actually is just kind of like missing the plot and somehow

a mis a misprioritization

Right.

versus