DAPPCON 2019: Ask me Anything w/ Joseph Lubin (ConsenSys)

Transcript

always a pleasure Joe thanks thanks for coming great to see you it's straight jumping where where's the theorem at where's the theorem attends everywhere turns out there certainly on stage I [Music] theorems gonna be a long term evolution it's amazing where it's come from or how far it's come considering it was just an idea a very short number of years ago I think we're in a great phase right now where we're working on scalability we're working on

privacy and confidentiality in private context and in public context doing really great breakthrough work on usability on UI and UX and that all said you know people keep saying that we need scalability in order to do useful and important things we've basically built this trust foundation for the planet which will enable us to react attacked systems over the next year's and decades but even now we're essentially building out the financial plumbing for the the decentralize the emerging decentralized economy you're all seeing it it's

decentralized commerce and decentralized and open finance and most of that's getting built on a theorem and we actually don't need tremendous scalability in order to to make prediction markets and payment systems and and lending borrowing really relatively jump there in because there are already a lot of things to to unpack or to go deeper on so one criticism I hear about aetherium is that the narrative changed and I don't well I personally don't see this as an as an issue at all I think it's a little bit

probably coming from the Bitcoin world because in my view kind of the core of Bitcoin is a narrative so my sometimes call it a meme coin so it's this idea of 21 million and then really kind of what guarantees is is a strong narrative about this idea of this concept of 21 million limited supply so with aetherium [Music] probably one of the first ways to describe it was this well computer and then some people have argued well it's maybe not so now you said the word trust anchor or trust settlement or foundation trust foundation right so you do you think that's currently oh I hope the narrative keeps changing I think it is a

characteristic of many people maybe most people that they prefer static things they prefer to think linearly it's much less complicated to live in a world that doesn't change but that's a boring world and that's not the world we actually live in so I think it's great that the Bitcoin narrative is evolving as the Bitcoin ecosystem evolves in the context of a bigger ecosystem that's evolving and and I think the narrative around aetherium has evolved so much more dramatically and I think we knew from the start that we were essentially building an incredibly complicated machine but that it was all ultimately

really a toy a proof-of-concept aetherium 1.0 a very sophisticated proof-of-concept that would enable us to understand what decentralized applications are and in what wrapping companies around decentralized applications would be in and what decentralized organizations are and decentralized identity and so I think we are moving in so many directions really rapidly and and building out the decentralized economy so I think it's moving beautifully on this idea of a trust anchored how so why do I think it's a trust anchor or why do I think

that's a useful narrative oh well no I'm that it's so how far we they're so sure so for example do you extinct right there conceptually and what do you think does it take for example for a central bank to decide we want to issue some well we want to issue our own money on your theorem sure so let me get back to the question that you asked before so the world has been constructed at a necessity organized via top-down command and control hierarchical systems it's out of necessity because communication and decision making as has been slow inexpensive but we're much better at instantaneous communication and Bitcoin

and the theorem have enabled large collectives to make decisions within a very short period of time and so that changes the organizing principle hierarchies are great in some ways and really bad in other ways flat fluid decentralized systems have lots of advantages we can go into that if you want but forever basically we've been dependent on trust systems that are that were centralized and subjective and now we have this automated trust system or this objective trust system and it's it's not a big high throughput trust system right now I think you were the first person I ever heard call it a

Supreme Court essentially and so we can think of especially as we move into aetherium 2.0 where we have the beacon chain we can think of this base trust layer as being the final arbiter I also call it a global settlement layer sometimes and we shouldn't be looking to have the Supreme Court arbitrate between our little disputes that the you and I might have but when we escalate certain situations or or create really efficient ways to to use that base trust foundation it's it's going to be a much

more equitable judicial and execution system for the and so it's there it's usable we need to scale it maybe or out I wasn't necessarily intending to go there but because you mentioned it this idea of a Supreme Court for the for the planet or something like that I think to some extent we are seeing currently it divided between China or like the eastern part of the world and the western part of the world and like like trade wars and in to some extent those parts trying to isolate from from each other do you see kind of a roll forth

room there or do you think that should explicit goal - I actually do so we do a lot of work in supply chain and so it's data provenance it's tracking of materials its trade finance it's factoring of invoices the the really interesting aspect of that is that these are trust systems even with trust systems if you put garbage in you get garbage out but we're moving into a phase in which devices are gonna have their own identity sitting in secure enclaves and they'll be able to sign transactions and so if you can be

certain that a sensor has a tested identity and if it's calibrated and you can be sure that it's spitting out correct information as much as possible you can move that into a blockchain system and the provenance of that data can be as good as we've ever had in human history and so we are seeing a bifurcation in supply chains right now between the west and the east a little bit they're not really bifurcated but there's danger of significant bifurcation and and so I do feel like these automated trust systems may be able to

enable us to remain entangled or to stay connected because we can trust the technology we're still going to have to verify and scrutinize the hardware and software implementations carefully but I do think that we can have different political systems and disputes while trusting that these systems just operate and we can take that as a foundational common good that even if we disagree on everything we still are dependent on that and and accept that should I jump into the central bank question that you asked before on to the next kind of no

no state we stay there so I I saw obviously followed Libre and I guess they have some similar goals you may be in words where it's okay well over it but but if one thing is like looked at the list of companies that were involved or maybe involved there and so on and it was basically all US companies so I felt like to be that global settlement layer or is this global trust anchor you probably want to have something that's more global is in practices east-west thing do you think aetherium is global

enough I mean I mean I would say there is still a Western heavy bias in aetherium probably true so with respect to Libra I know it's I was actually excited about the project for various reasons I don't philosophically believe that we should be part of that project but many projects like that will exist some of them signature Bank and true digital or running one right now JP Morgan's moving to run one the Libra foundation they're perfectly within their rights it gets a little dangerous if Facebook with 2.3 billion citizens is a big part of that so

there's a lot that society needs to think through before it allows Facebook to have more understanding of 2.3 billion people and control over 2.3 billion people but so I definitely support those kinds of systems and they don't have to be maximally decentralized they can just serve their customers I don't think of those systems as a base trust layer and I don't think of those systems as a global settlement layer local regional settlement layer but in order for us to have a bit a trust foundation and a global settlement layer

we need a project that is assiduously focused on maximal decentralization in every dimension that we can articulate and so there are very few projects like that on the planet and I think a theorem is one of those projects it's not nearly as decentralized as we need it to be but we just need to keep pushing in that direction it I think is in the lead but still has to earn the right to be a base settlement layer yeah so I guess in a very similar direction I I thought kind of ideally etherium would be in a place that it would be the obvious choice to

issue a currency like Libre because I mean obviously two things so there's kind of the currency or the token and there is a blockchain and in my view ideally etherium would be in a position that it would just be the obvious thing to do it on aetherium like when Facebook started like actual Facebook started it was the obvious thing to do it on the internet I mean they did so a theorem did issue a token like that it's called maker die it theorem the foundation sure sure sure I checked that there wasn't really in the in the purview of that project oh no I agree but I still think or I would ask you if you agree I think if you theorem would be even further in in its role of being decentralized and

being being this settlement layer it would be the obvious just the obvious choice to to issue Libra would he would issue this token just just on the cerium without even thinking about it like people and now of course they use the internet and they don't even think about should they use their own private network or should say uses public global accessible decentralized thing so there are a bunch of price table tokens on aetherium and they're pretty heavily used and they'll be more and more heavily used you're using them first site and you know they significantly undergird lots of the

activity on the etherion platform what I think is gonna happen is one will emerge dominant but even more likely there will be another layer that sits on top that and in makers even trying to do this themselves really to put other assets underneath do multi collateral die and so I think that has the potential to be more stable especially if it's actively managed if you've got five price table tokens tracking the US dollar as your underlying over a layer to coin

basically I think that's in there can be competing versions of that I think that's going to be the position to be in and I think that's a coin that many would trust and we'll see it'll be an interesting competition you mentioned earlier aetherium is kind of pretty decentralized but not enough so decentralization is well it's it's definitely very multi a multi-dimensional thing so what are specific things that need to be liked or what is part of it so what what do you

think need needs to be addressed and where what are practical things how it can get more decentralized so I guess we could try to enumerate some dimensions number of nodes number of distinct owners of the nodes the number of developers the number of clients of the jurisdictions in which those people reside the power grids in which all the different nodes are sitting so there we could probably list oh and witnessed ahem and what of those or where do you see kind of the

biggest need for a theorem to for the decent place and so governances is a really good one also I personally prefer what a theorem is doing with governance over what hey zoast affinity and D cred and polka dot are doing or are going to do I think so very very early on on the etherium project we planned to put some governance and smart contracts we hope that we would build infrastructure and build some of the governance in into etherium and governance is really hard and i think that there are lots of

different classes of actors in the etherium ecosystem that have significant voice in and so i think it's going well for such a young ecosystem i would be concerned about codifying governance into the protocol this early and I'm concerned that some projects will take advantage so dan Larimer a long time ago noticed that hey all these people are speculators and they love buying tokens but they don't bother to show up to vote for anything so he went ahead and he he built a system that required everybody to vote for everything but they they

made some some modifications so that they would be able to delegate votes and maybe that works a little bit better but I think some of these protocols will end up with VCS and founders being the ones who are de facto or by default in control and so I am impressed let's say with how governance is going in the etherium ecosystem I think it would be great to have more inexpensive hardware devices so I maybe max decentralization along that dimension is if everybody on

the planet runs their own staking node for a theorem 2.0 and max would be that everybody has say 32 ether stake that's not going to happen or some equal amount of ether staked and so we actually have a project within consensus to basically create a very inexpensive device that you can just plug into the wall and be a full node on etherium and and so I'd love to see more of that happen what do you agree that eventually changes or legs the need for governance would go down or kind of the system

would like just stabilize or at some point it's so so the users the users are so diverse that you will probably then never agree to any changes anymore yeah so I think Fattah Vitalik has expressed that he's very interested in getting to a point with respect to scalability and other aspects at layer one of the theorem so that it really doesn't change that much and so you would need much less governance at that level at that point you've got many different kinds of systems at layer two or layers higher than that and they can have their own unique or idiosyncratic governance so yes I do think that's gonna happen and we can finally come to back to the

Christian it was a center of pink so what do you think I mean I know that different central banks have looked into this already looked into well either creating a token on aetherium or creating and token on their own blockchain or something like that what will you say to them is easy theory I'm ready for that and if not when and do you expect it to happen so aetherium main net is not ready for that the a theorem technology is definitely ready for that we did work with the Monetary Authority of Singapore built a real-time gross settlement system there we did a much more sophisticated project with the South African Reserve Bank

project coca where we built better real-time gross settlement system that Central Bank was interested in building infrastructure that didn't have them as a single point of failure or vulnerability or control and so that system enabled I think those five different banks to do all of their daily transactions it it all got processed in two hours and with full privacy and confidentiality netting system so it netted out all the transactions as it should so the technology is being explored by central banks in a different nation we were asked to discuss or

propose how they might issue a central bank currency and one idea that we proposed was just to set up a payment system between the different departments of the government and from there enable companies to get on the system and from there enable the people to get on the system so that that's one path forward potentially I don't see any major nations doing that any time soon there's talk of of China building their own cryptocurrency I am skeptical that that will happen in the next few years and

it's not it's not the technological issue it's just political will and these are super complicated use cases and you can't get it wrong yeah I mean well I mean I guess there's a light lighter barrier to entry I mean it doesn't have to be the the only place where you issue you could just like start with it was a small amount amount or start to I think they're so nicely yeah we've been involved with that project for a long time and we're one of the investors in that project one of the discussions that we had early on and Iceland got into a lot of trouble because of they issued too much money

and it all came flooding back and the financial crisis and so what if Iceland creates a state issued currency that gets incredibly popular globally you're carrying it I'm carrying it it doesn't become the reserve currency for the world but it gets well utilized and they choose to issue a little bit too much of it or a lot too much of it and if something happens that give people pause or if they feel that there's some sort of risk by some sort of event in Iceland all of that all those tokens could come sloshing back on shore and just destroy

the economy there I guess they could figure out how to stop them all up but they're complicated issues to deal with then maybe let's move to a little bit to defy have you used any define personally I have not no sorry no I mean I've looked at it but I find I don't have time to play with it too much alright okay I look at defy polls okay but is there stuff you like or you you think yeah of course so it's a really exciting space maker has been great for a long time I like compound a lot I like the idea of a sort of money market infrastructure

I like prediction markets right so then on that I think maker is yeah this is somewhat similar to the question of whether or not central banks will hue tokens or money on a theorem we had of course is this first token wave but for something to make her for something as maker or like many of the other defi things to really be useful there needs to be a lot more of stuff collateralized and and tokenized and and be accessible

on theorem so another topic that has been of course also discussed quite a few times are security tokens or like just in general more financial products more traditional financial products being replicated on etherium so where what what is this state there and what do you expected to see so we a consensus have done lots of launching of utility tokens and some launching of tokenized securities and we're tooled up to do a lot of that very soon and so I think that's gonna be a very important next wave going forward in the United States in particular there's one piece that

regulators aren't really comfortable with and that's custody so there's secondary market trading which has not really worked out yet but it's it's basically custody of these assets that has to get worked out more to enable the regulators to get comfortable and there are some projects that I'm very aware of that we hope regulators will that we hope will give regulators real comfort and I at some point the floodgates will open because there's a lot of pent up demand

out there and we just have to get everybody comfortable do you think that will happen is yes or in Europe Germany Switzerland but both Germany and Switzerland it's a quite some interesting news around making it well possible or allowing security token so other jurisdictions maybe yeah so it'll definitely happen in all of those jurisdictions I was specifically talking about the American regulators Singapore's pretty gung-ho we we worked with our partners cap bridge to build an exchange in Singapore for private equity it is live

it runs on a platform called aetherium public main net not not a private implementation and it's regulated by the Monetary Authority of Singapore so we actually have pretty serious cross over from the regulated world into public main net blockchain if you go this route often it comes with some form of well additional requirements around K we see AML how well how do you see the tension of do you lose then advantages of well off of what initially the idea or the promise was of an open global yes so we're not throwing out utility tokens we

are extremely we remain extremely excited about utility tokens and we will launch utility token networks that will not be seen as securities by any regulator well that's not true by the regulator in the United States at least so it's really important to understand the utility token and secure utility tokens this differentiation just about like one that's really transferable and the other that's not or no not at all no utility tokens can have lots of the characteristics of security tokens but

there shouldn't be an issuance in enormous quantities to speculators and the issuance should be to people who are pledged to use it or constrain to use it in some way so they are we're often calling them consumer utility tokens so true set is a good example we ran an experiment with the true set protocol where people are incentivized to upload information on token launch projects and correct information on token launch projects and they're awarded tokens in in various different circumstances and that's it's

a clean utility token and we are likely to well I won't say anything but that that's the kind of project that we are confident can be launched in the United States and not be seen as a tokenized security I was super excited to learn about actually German project I wasn't really aware before and wasn't really involved but it's called from them and token or something like that I don't even know but but the exciting thing about it in real estate would yeah it's a real bond exactly but the exciting part about it is that it is that apparently they can issue it as a pure

FC Twente token that can freely be transferred and basically a para paramount that's amazing right so if you theorem fails why if aetherium fails by the theorem won't fail okay the theorem is massively decentralized extremely useful growing incredibly quickly and anti fragile so whatever you throw at aetherium will make it stronger I'm not sure fails in that context right if you're too nice to it what makes a

sir valuable utility it is required for storage and computation on the network and also lots of people believe that it will be more and more in demand so speculation as well yeah so I mean I'm just well there are well a lot of discussion whether that's it's the case whether it is required so I'm kind of personal opinion the fee model needs to change so to actually make it required because right now in theory you can well in theory that is correct for right now it won't be correct for a theorem 2.0 and

there's likely to be burning of ether so absolutely it seems silly to me that Dan Shapiro there there's a bunch of discussion a while ago that the etherium token should have no intrinsic value or there should be no need for it to be on the platform but we've seen more rational discussion recently that these tokens represent the security of the platform and incentive for people to continue to build the platform so early on we didn't talk about the monetary aspects of ether for legal reasons and other reasons we wanted to focus on the

developer ethos but yeah it's important to have the undergirding token be very strong and yes a focus with respect to security and attention for the ecosystem house consensus doing pretty great so we are it's moving to a point of convergence internally where I've been trying to get lots of projects to work together for a long time with lots of success but you know they were sort of extreme their own stuff out and mentoring their own products and now we have our our

commerce and decentralized finance group working with the inferior group working with the the Pegasus Pantheon group working with the Eliseo analytics group working with myth X security contract audit and so things are starting to come together as a much more integrated consensus ecosystem and kind of so probably this is offering that that you can then create whom which companies or what whom are you addressing with this offering who are we addressing yes so a couple of our your customers then a

couple of major focuses one web three developers to the commerce defy open five space token launches etc we do work with major institutions so we've built liquid shares in France it's an exchange and the exchange in Singapore and Congo a commodities trade finance network that took about six months to build with some major energy companies and major banks and and it went live in December so we're all over the map from the individual developer to startups in our

space to major organizations all right so I think I would open it up for for the audience and fortunately so there was planned to have this slide oh and I have questions there but the thing is not connecting to the internet unfortunately we kind of really hope that if we host our event at the University that Internet wouldn't be a problem but apparently it still is so yeah I think just raise your hands and ask questions yeah please thanks for the thanks for the comments really enjoyed it clearly a big kind of

overall issue and problem for cryptocurrency generally the theorem specifically is getting mass usage and correct me if I'm wrong but you may have commented that you hadn't or you don't use defy I'm interested in what you do use on aetherium and and why you use it well we make payments on the theorem and we build applications on the theorem so the many people at consensus are using it and building it every day I'm curious Joe what you think of the you use the

term utility token before I'm curious whether you think that that's a term that people will use in five or ten years or if you think that's an artifact of basically a securities law analysis that perhaps ultimately won't be useful yeah it seems likely that token will just be used and it seems likely that us tokenized security will be called a share I think we'll probably go back to the common language then maybe like just went but I think it's important when you when you develop a new technology and

you're trying to negotiate how it fits in society we need to use perhaps somewhat embellished or awkward language to to point out the differences in in the new scheme just maybe then one follow up here so obviously there was the SEO boom in 2017 and certainly there were I mean certainly kind of the concept some extent got burned I would say the ICO contents well I mean the or at least the the or at least there is or what is the positive view on whatever it's kind of

the the positive narrative on on ICS and we are utility tokens oh well I think we're gonna build better and better systems we're gonna build these collaboration networks that require some sort of membership or stakeholder ship and tokens do a good job of mediating that and whether it's voting or different rights to occupy different roles on a music industry platform or a journalism platform I think we can you know it's software we can make it do

what we want it to do and we can call lots of different things tokens and so the civil project is a good example the civil project is working pretty well right now it's a project for ethical and sustainable journalism it has I think 60 or so newsrooms on the platform it's got a constitution and newsrooms applied to be part of the platform to get that sort of civil stamp and they would be part of the community and the audience of these nerves newsrooms can accept them on the platform and they can also monitor their behavior for ethical violations and the system is working in that there are

challenges and projects are getting refused entry on the platform there was one two weeks ago that was resoundingly refused entry because it was really a Bitcoin PR firm rather than a newsroom and so there there been several challenges and the participation has been really quite high amazingly and these tokens also enable people to evolve the minimum viable Constitution that was put out so I mean that that's a great use of a token I think hi how do you see in Fuhrer changing to facilitate for aetherium 2.0

so in fear is a great resource we are dedicated to decentralization we're also dedicated to building out the etherium ecosystem and make it making it easy for developers to do what they need to do and not have transactions dropped on the ground in fira may stay where it is and serve a certain subset of the use cases that need it and in fira has been paid in the past and they just offered their in fira plus service and and people are signing up because it it just makes things easier and they do a great job really brilliant infrastructure and at

the same time there'll be so many use cases and like clients that just don't need that sort of responsiveness or reliability so that's one path forward that it serves some segments of the ecosystem you know similar to how cloud flare serves some segments of traffic on the internet the other path forward that we've been thinking about for a couple years and different kinds of plans is to figure out ways to decentralize in fira itself and bring in many more actors to either have governance over the infrastructure

or we can package up different notes that that others can run in their own infrastructure so like everything at consensus which is a pretty decentralized mesh of different projects the team makes its own decisions so I I have some input into it but they they make their own choices hi here how do you see the future stability of a team in terms of potential hard folks and competition from other chains like is it safe to build something that has to last for like 5 or 10 years on a team right

now future stability of etherium in the context of possible hard Forks as well as competitors as well as competitors ok I believe a theorem is incredibly stable I believe that we're gonna transition to aetherium to in a very smooth manner I believe that a theorem one is gonna probably run for a pretty long time even while aetherium to boots itself and interoperates with a theorem 1 and then begins life in full as the three or four phases of a theorem to get completed so

I'm not worried about hard Forks making it difficult to have persistent applications and I'm not worried about competition making it difficult if a tremendous project came into existence right now that was 10x or 100x better than a theorem and I don't see one right now but if that happened I still think that aetherium would be very significant ten years from now and and that it will subserve many different use cases even if for some reason it slowed in its development and and was no longer cutting edge I really don't see that

happening I see that they're moving faster than any other project in the space a theorem theorems superpower is as been Edgington wrote once or many times is its decentralization is it's open source Bazaar approach we see problems pop up and people show up enter the ecosystem to address those problems we've got a lot of teams right now within consensus working on a theorem - and a lot of teams outside of consensus working on the theorem - so lots of stability and lots of dynamicism last

last two questions hi there you mentioned that consensus has been working with a lot of quite a few enterprises and institutions quite recently and I was wondering how do you go about communicating the value of atiim and blockchain in general without scaring them of the technical complexities of the of the matter how do you how do we persuade them into the value of the blockchain so we've been talking to institutions for a long time about six months into the existence of consensus we started getting calls because people were hearing about aetherium and there were people in different financial institutions one of them's sitting in the front here that

became aware and so there were these early adopters and lots of institutions and they really got the discussion going in those institutions and then we were in the right place to field lots of those calls so for a long time back then 2015-2016 we were happy to talk to anybody about a theorem and did a lot of Education and little advisory work and eventually POCs back then banks and energy companies and insurance companies etc were all very naive there

was one person who was kind of the blockchain person there actually they were taught the bitcoin person back then and they were the crazy people who finally got their colleagues to pay attention and and so we would have meetings with these organizations they'd come to our our office in Brooklyn New York we had eleven people from the Federal Reserve of New York walked down the streets of this hipster area in Brooklyn in their suits and they just weren't very savvy so we've had long-running relationships with lots of those

organizations and done a huge amounts to educate and foster different kinds of adoption and a year later there were much more sophisticated teams inside those groups now every major financial institution has an extremely sophisticated understanding of the technology a lot of them probably the majority of them are more focused on the theorem technology lots of them are basically all the others are focused on fabric or where are 3/4 the last question if there is any there's another

question oh yeah maybe just raise your hand again okay it's coming thank you consensus is in the middle of many different developments how do you personally stay focused and relaxed with all these things across different time zones and whatnot I don't know it's exciting and important and I work with really incredible people at consensus it's uh it's definitely it gets intense and we may have an argument or two and

we may have some people that don't do well according to certain other people but that that's pretty rare it's just a great situation to be part of and people in this room people in this ecosystem are in it for pretty deep philosophical reasons and so that kind of passionate is very strong a consensus and it's really rewarding not many people get to be like everybody in this room in the forefront in the early stages of a major societal evolution or revolution so I

really don't get tired of it that is a perfect kind of segue to a panel we will have at 5:00 so at 5:00 we will talk about with also putalik a panel about kind of how hopefully hiriam will change society in 10 20 years but for now we are over thanks a lot Joe and thank you [Applause] you