Realtime Ethereum

Transcript

Hello and good afternoon, and thank you for having me this afternoon, evening. While we don't need to know more about why Ethereum, I think you guys have had a few people speak quite emphatically about it. I really appreciate it. We'll be talking a little bit more about how we get there, and in particular, what real-time execution does for Ethereum. Ethereum. And so Ethereum's most valuable instrument, the only asset it really has is its blockspace. And this is what it sells, block by block.

And so you think about 20 years into the future where, you know, the global financial system is running on Ethereum, well we need instruments to be able to manage, risk manage and trade Ethereum's blockspace. And so today, as you have commodity markets around, you know, precious metals, agriculture and energy, we need commodity markets around blockspace and in particular, Ethereum's scarce blockspace. The first step of that is really working with the validators. Validators are the ones that effectively like print or propose the next blocks of Ethereum.

And this is the core service for what we do. It's really an entry point. Think of it as identifying who are the, like, a bunch of oil production facilities around the world, a bunch of oil wells around the world. What we do after we have the oil is where the exciting part comes. And so within the traditional world, within traditional commodity markets, you would extract the crude oil and then you refine it into different grades or different purposes, one of them being jet fuel. For Ethereum, that's essentially the same thing. You basically have a block, but what you do with it changes the user experience and it changes Ethereum.

One of those things is sequencing the block in different ways, and one of those ways is real-time, which I'll talk about very shortly. So Ethereum's blocks are built every 12 seconds. And at the time that we first did that it was revolutionary, but in today's age, it's relatively pretty slow. So we found a way to take Ethereum's 12-second blocks and make them effectively 50 milliseconds or 100 milliseconds, basically making the network feel like it's hundreds of times faster.

So what this means is that within a typical 12-second period, you know, the price of Ethereum in a traditional context, it may not actually change from the start and at the end, but realistically, it does actually move throughout this period. And so if you could trade multiple times within this period, then, you know, traders can make money, you can pay gas, and Ethereum and their validators could be a beneficiary of the fees that you pay with gas. And so what this does is when you change Ethereum from a discrete time network of 12 second blocks, when you change it down to a real time network, MEV, which is front running or sandwich attacks, this starts to just disappear.

It just behaves like a continuous time network. And so who does this benefit? It benefits traders. Ethereum is effectively the largest exchange. It can process transactions down to milliseconds. So traders benefit. The protocols, they see a recycling of money, greater capital efficiency and capital leverage. The wallets and the user experience, you hit transfer, send, trade on your MetaMask, and it just happens within a split second. Payments of course, that will happen much faster.

Validators being the ones who effectively power the network, they are the recipients. And so, onto the next step. So validators, that's the interesting part because they only get paid kind of once every 12 seconds. But if the validator can process or facilitate trades multiple times across that period, the validator is going to make 20 or 30 times what it currently gets paid. And so currently, that's maybe $300 million a year. As Ethereum becomes real time, ignoring everything else, we're looking at about $5 to $6 billion a year.

It's an almost instant change overnight. Now, we've heard a great presentation by Joseph just on agents. And what agents need amongst many other things is real-time execution. Of course, if you are transferring, paying, you don't want to have to wait 12 seconds for your browser window to just cycle around. You want it to be instant. And if there is a settlement or actually something on chain that's going to happen, you don't have to wait two slots or 24 seconds. Agents need machine speed.

The second thing is, how else can we refine the pipeline for creating blockspace? Institutional finance, of course, if I am an institutional player, if I'm BlackRock, I don't want to land a trade on Ethereum. Let's say we tokenize trillions of assets. I don't want to buy or sell an asset and get front run. I don't want to be front run. I don't want to be sandwich attacked. And ultimately, who am I paying these gas fees to? Do these gas fees go to a dodgy validator in some sanctioned country or some sanctioned entity?

How do I insure these things? And so there's zero risk, zero tolerance for these within a traditional finance context. And so what we're working on around the world is basically creating what we call like a separate lane to access Ethereum's blockspace. And so we can basically keep it sanctions aware. We can eliminate all the MEV. So we just process trades on a first-come, first-served basis. And then finally, we have a known set of validators. And so what this looks like at the end of the world, at the end of the day, is basically around the world we have these different consortiums that we're constructing from Japan, which I was just in last week, to Korea as well as the US, you start with who are the institutions that want to come on chain and what are the issues they have.

Well, let's address the front running. Let's address who the payments and the fees are done to. And then supporting that are basically a local set of validators. And so, yes, that's one of the other initiatives we're kicking off as well. Now, where does this all lead at the end of the day? For the last 10, 11 years, you've had many other chains who've said, hey, we're faster, we're better. And so you've seen this proliferation of chains, which has been magical to some degree, but it's also fragmented liquidity.

And with the user experience accelerating rapidly on Ethereum, it goes from really among the slowest network to potentially the fastest. And what happens when you pair the fastest network with much more blockspace? And blockspace is just how many trades can you get into a block? And so this year, and with zero-knowledge proving coming down the pipeline, we're going to have three, ten, twenty times of the capability to process more trades. And when you put these together, you basically have high-frequency trading natively on Ethereum. It basically makes Ethereum the, like, the largest exchange if you think about it, right? Like Binance might have a hundred billion dollars of assets on exchange,

but Ethereum has, what, three hundred billion dollars of assets. So for every dollar that a Binance can make, well, Ethereum could potentially make three times that amount of money. And it starts turning exponential. And so we were in a period where liquidity was fragmenting around to different L1s and L2s. And I posit that in the next few years, we will start to see all that liquidity come right back to the L1, right on Ethereum. And so Ethereum will win the capital and the liquidity game. The question over, you know, which chain is going to run the future of finance, that is no longer a question anymore. And so capital consolidates the ETH.

The ETH burn is increased as well. As a result of that, asset prices increase, and then Ethereum dominates. And the final step to this, which Joseph alluded to earlier, is who controls the payment rails and at the end of the day, you know, if I am, again, I was in Japan or in Korea, do I want to be relying on potentially like US validators to access these payment rails? Do I want to build local priority access to these payment rails on Ethereum or whatever else it may be?

You know, perhaps we could start with a 2 or 3 percent holding of staked ETH here in Korea domestically with Korean validators. We could do the same thing in Japan, in Korea, around the world. And I think that's how ETH will eventually transition to be a strategic reserve asset, where people need to secure that sovereign right or access to the network itself. So I've rushed through this a little bit in the essence of time, but thank you very much for having me this evening. I would like to please ask for your support in real-time execution for Ethereum. Thank you.

Thank you, Kevin.