SotN#18: ANTICIPATING! w/ @TimBeiko (EIP1559, ETH 2.0, Elections, market crossroads)

Transcript

that's i don't think we'll take all that much time i think we'll take like 30 30 minutes plus or minus five maybe maybe 35. okay youtube's online it says the bankless state in the nations are

brought to you by wiring wiring is defy's first self-building community run project which i just get really really excited about wiring is a system that seeks out yield in defy and it does that in a number of different ways a very aggressive way is with the vaults where you can deposit your preferred asset of choice and different defy experts will come in and generate a strategy for what to do with your deposited token right and so it'll go find ways to get yield in that deposited token in d5 for those who want to just earn yield on their stable coins the urn system is for you where you can deposit your preferred stablecoin and wiring will go and figure out which money market on d5 and defy is producing the best interest rate whether

it's dydx it's compound or ave it looks around d5 to see where the yield is coming from and it directs coins automatically so you don't have to check them out at yearn.finance to get started and also check out the stats page to see what other people are doing as well we're also brought to you by monolith monolith is your cool new defy account your defy savings account your defy checking account except the cool thing about the monolith defy account is that it gets software updates right you actually get to increase the usefulness of this over time so here are some of the features monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know defy and what it is you can you can add money to it you can put that money to work uh in

compound and accessing yield uh but you can all and you can also swap through uniswap what was cool with monolith is that they will send you a very sexy monolith visa card that connects to your smart monolith smart contract wallet on ethereum so it's a really awesome tool to live a bankless life with a a savings account that gets software updates so this is something that you're never gonna find out in the real world but you can still do real world things with you know real money and like buy your groceries so that's just fantastic coming soon to monolith actually already here to monolith is now you can buy die and get it sent to your wallet directly right so it's also being an on-ramp so you don't have to go through your centralized exchange like coinbase or

gemini or wherever you can just go straight from your bank account right into your monolith checking account smart contract wallet so check them out at monolith.xyz destination welcome to episode 18 of state of the nation we're super excited to have you with us live today if you're watching on youtube we've got a special guest tim baco of course it's myself ryan sean adams and david hoffman who are hosting the state of the nation today so if you're new to the nation what we do is talk about what's happening particularly in the previous week topics that are relevant related to some of the

big picture stuff we talk about in the podcast we talk about the newsletter and then drop some insights and action items and today is going to be absolutely no different we're going to be talking about a few things today the first of which is eip1559 if that if that like phrase doesn't make any sense to you this is really ether's perpetual scarcity engine super important to the economics and future of ethereum we're going to dive into that particularly where is it we've got tim baker who's going to tell us a little bit about the development and progress of that we're also going to be talking about the things that are driving the market right now particularly six uh and david has that in mind um before we get

to the the question i always ask david a couple things coming up in the bankless community so david vitalic is coming on next week right we're we're we're actually doing a recording with him this week and that episode will be released next week what are we going to talk to vitalik about yeah and this has a lot to do with what the state of the nation is this week uh the ethereum 2.0 as it has been is around the corner but uh this one seems real this time for real this time this time it feels different right uh and especially with the very large amount of new entrants into the defy world i think and it's really been like two or three years since the conversation of why eth2 has really been you know mainstream like

really the last time the last time we were uh the community was really talking about why proof of stake you know why sharding like why why do we why did we choose these things i think i think it's a time to revisit those choices revisit those design choices and so we're bringing vitalik onto the bankless pod to rehash some of the age-old conversations as to why proof of stake is important you know why are we doing sharding instead of something else so this is gonna be a great episode yeah that's gonna be awesome vitalik is i i personally listen to every single interview or thing that vitalik put puts out so this will be fantastic we also have a token report that is dropping this week we only do one of these per quarter

and i was looking at some of the graphs from last quarter and the growth in d5 was like absolutely insane i feel like that's down playing it it was just mind-boggling so we're coming out with that q3 looks different than previous cues let's say oh my god you three eats all the other cues for for breakfast man it is just a killer quarter for d5 and you'll see that in the numbers that lucas is putting together so catch that on the bankless newsletter if you're not signed up there's a link in the show notes to that uh david we're also doing a a new roll-up round uh later this week on the youtube channel another reason to subscribe what's the roll-up round david yeah so we were trying to figure out

where do we fit news and current events that happen on a weekly basis in the bank list program right and so we're creating a new show called roll ups round uh this show is going to be very short and succinct so 30 minutes make call that short and you know in the light of things that move quickly and go fast roll-ups so we're calling it roll-up round and this is where we go through some of the same questions every single week such as what's in the news ryan what's on your mind uh what are you looking forward to and so it's kind of a way to keep in touch and really a nice in a nicely packaged roll-up which is why we call it the roll-up round this will be very well packaged so this this is one of those episodes it's not like the podcast where like podcasts

could go in 90 minutes and you're like what david and ryan are still talking but like up rounds they're gonna be we promise 30 minute range and it'll be like like a 30 minute bite size content for you to get the the latest information lastly david tomorrow i'm super excited about this it's the invest ethereum conference yeah and you're actually going to be speaking in that uh there's like one day left right so only one day left to grab tickets so so only one day left to grab tickets so what should folks do yeah there is a code in the show notes uh called bankless that's what it is and there's also a link in the show notes where you can use that code to get 25 off of your ticket it's and what i'm going to be talking about

is ether the triple point asset right and so you guys all know this thesis but it's been over a year since i've really given it as a talk uh and that was to the uh an ethereum native event right uh run thrown by by consensus uh this is coindesk so this is different different audience uh like wants to tune into something you know not so like utopic that the ethereum community is used to giving so i'm excited to give this thesis out to a different audience yeah and i'm also excited that coindesk is throwing an ethereum event it feels like the first of its kind and i bet as this is successful there will be many more all right david let's get to our first order of business i'm gonna ask

you the question i always do what is the state of the nation this week the state of the nation is anticipating we are anticipating and this has and like i'll say in the nations this has many different uh meanings and and uh places where it's relevant uh one thing we are anticipating is eip1559 that is the main subject of today's state of the nation another thing that we're anticipating is the rollout of ethereum 2.0 as the test net continues to chug along uh but in addition to what's going on in ethereum there's also the elections in front of us right there's also fears of covid what's gonna happen is there a nut is there a third wave or is just the second wave kind of like hanging on too long is the vaccination real there's a lot of

things that the world seems to be anticipating another one is is how many more public companies are going to put bitcoin on the balance sheet a lot of things anticipated around that so as a nation we are anticipating do you think david the skews like more nervous anticipation or like more optimistic anticipation yeah i mean i am a permabull so take that into account so i'm on the optimistic anticipation side of things but there are plenty of reasons to hedge that optimism um so we will get into those in the second half of the show very cool all right well let's get into our first order of business and uh to do that i want to introduce you to tim baco

he is a product manager manager on the consensus protocol team specifically focusing on their mainnet bay zoo client uh tim if you're there we you know welcome to the nation it is fantastic to have you sir hey guys thanks a lot for having me welcome to hey tim i love that background dude that is just killer thanks nicely done all right you know what um we want to talk to you about eip1559 and you know first let me say we have really appreciated and when i say we i'm i'm talking like myself of course and and david i think i speak for him but also the entire bankless nation very supportive of eip 1559 and specifically the work you're doing to kind of herd

the cats on that initiative and to sort of manage the project and also to communicate updates to the community i feel like if anybody wants an eip 1559 update what's the latest you are a fantastic source for that on twitter and other places so first of all thank you very much like like seriously thank you very much we really appreciate the work you're doing that's great to hear and uh yeah there should be another update uh out later this week so uh i'll be sharing that fantastic more updates are better my friend all right so uh as we get in i you know um we're of course people on the bankless journey are very familiar with eip1559

we've written articles about it we talk about it um often all of the time but uh maybe for folks that aren't as familiar with it tim could you give like your word in your words just a quick explanation of what eip1559 is sure um it can be hard to explain very quickly because it touches a lot of the parts uh in the theorem uh but one way i i think about it personally is it changes our fee markets the off volatility in fees for volatility in block size so right now all of the ethereum blocks are you know they have a mac size and they're mostly full so they're mostly always the same size and we get a lot of variants and fees

because the way we decide which transactions to include is through a first price auction um and that leads to a lot of inefficiencies so people basically overpaying because they they have to pay you know the highest possible price to get in the block so what 1559 does is it proposes instead we'll stretch our blocks to twice their current size but only keep them half full on average and the way you keep them half full on average is you set a minimum fee for a transaction to be included in that block and if there's more transactions that want to be included you raise that fee if there's less you lower it so you kind of smooth it out the volatility of transaction fees um but in i guess in response to that you get blocks which might vary in sizes

more than they do today um and another part of 1559 that's that's not worthy is that in order to securely set that minimum fee um you want a way for which miners are agnostic to it so because otherwise they would choose for that fee to be as high as possible all of the time um so what we do in that case is we we burn the fee so the minimum fee need to be included in a block that part of the transaction fee gets burnt um and that leads to 1559 having this nice property of when more and more people want to use ethereum there's more demand for block space the fee that gets burned goes up uh for each transaction and burnt means no one gets it it's just gone completely from circulation exactly

so tim when uh eric connor first introduced this eip he presented it as a way to make transactions on ethereum easier right we can kind of obfuscate gas because of the eip uh and that was kind of like it seemed to be the main incentive towards getting it included into ethereum it's just going to be a a quality of life update for transactors and wallets right and that's also fantastic that's something that we absolutely need but then then people like me and ryan figured out that this is actually a a different mechanism in addition to that that burns ether right and you know me and ryan are always kind of totally focused on ether the asset and the way that it relates to ethereum and so this changing of ether's monetary

system was a big deal for us and so we started kind of branding it as like uh what what ryan called as ether scarcity engine right on ethereum which is totally separate from the usability feature of eip1559 and what you just explained is that eip1559 changes fee volatility for block size volatility so everyone is kind of seeing something different in eip1559 how do you kind of coalesce all of these different things into one definition and if if there was a a simple or easy way to explain what is the goal of eip1559 have you thought about that yeah i i think about it or not though i

think that's like the best and worst thing about 1559 so the fact that it's you know multi-faceted uh means a lot of people support it so obviously kind of the ether investor community as you said are kind of excited about the fact that it burns ether uh the ux motivation i think are really good as well because it goes from ethereum being a network that's always full that you have to wait to use to a network where like next block inclusion is the default rather than the exception and that has a ton of nice ux properties both for transactions on chain being included uh quicker obviously but also for layer two solutions that need to post commitments and whatnot on chain it makes their operation much smoother so it is like this this pretty big ux

improvement um i work on a client team so i tend to take a very client-centric approach and this is where the sort of blocks block size volatility bit is very relevant uh to us um and like you mentioned that the economic parts are also interesting and and it's very hard to concisely describe 1559 i think you kind of have to go with your audience and you know start with that the angle they're most familiar with and and slowly you kind of build up the rest um but like i said i guess this is what gives it a lot of the support in the community so that's good it's also what makes it very hard to analyze and to reason about uh which which is which is worse you know because it's you're optimizing for two to three

things at the same time rather than one and so it can it can make it sometimes harder to to just communicate exactly oh we're doing this for this reason and this thing will be better yeah and i think that offers a pretty good rationale for like you know why eip-1559 even though it does seem to have completely unanimous community support seems to be getting out the door relatively slow and you know mainly it's because it's such a comprehensive change to the core the core way of a blockchain function so it's a big deal in of itself but it also impacts so many different groups of people in specific different ways so we need to have each individual stakeholder and how they are impacted differently accounted for in this change

yeah absolutely and and i think yeah it is at least as as i'm aware probably the largest change we've done on e4 through like a single eep um and and as we're working through this change we're trying you know we're talking with other stakeholders last week uh we put out a report uh that uh a couple of folks from the cathedrals and myself worked on uh where we interviewed 25 projects we're still looking to talk to more of them to basically get all their concerns about the eep and try to understand stuff like you know how should we support legacy transactions how much time do they need you know uh to implement support uh what do they need from us to do that as smoothly as possible and whatnot um and you know we've already started doing

things based on that report so we had conversations before about whether we should just convert legacy transactions to 1559 transactions and keep them both kind of forever um and still burn the base fee on legacy transactions and it seems like that's an approach that'll work for for basically all projects uh so it was occurred to be able to confirm that um just last week we had the implementers call where we were discussing more at the client level how do we deal with sorting the transactions uh as as we propagate them over the network uh because now this base fee component is something new that we're introducing so we just need to make sure that you know everything from like the clients to the smart contracts to the uis for those smart contracts um kind of can work with 1559 um and are

are aware of uh of of of the fact that it's happening and what it implies for them you know david earlier mentioned that there was uh some unanimous uh there was unanimous support in the community and i i certainly see that from the uh the investor community but if you kind of broaden it out one of the interesting things you brought up the the report tim that um that you guys put out with the cat herder and that interview i think those questions so like 25 different projects some of which were on chain applications wallets exchanges miners a uh no investors but i i i guess the assumption is investors are like full steam head guys um but but there's no technical change

sorry yeah the other thing too is the report was focused on like changes projects needs to do you know you'll buy or sell either but you don't need to you know do much more than that exactly okay so um but but i i guess one takeaway was that um eip1559 does not have completely unanimous uh support across all stakeholder groups at least that was sort of one takeaway i read from the article for for the detractors or people who are i guess a little more bearish on 1559 why so i guess there's two there's two groups uh of people that were that were against the first miners were strongly against uh i think

yeah i think we talked to uh eight or nine of them and all of them minus one were against and the one that was not against was neutral so you know i i don't think there was positive thing uh there's a couple reasons there i think the first the first being obvious is the part of the transaction fee that's burnt directly goes um you know away from their income so there were risks that if you know uh a large part of transaction fees are burnt then smaller miners become less profitable at least some more centralization of mining um so i think that was one big category of risk there's also some some concerns about potential attacks on the mining side uh and and miners saying that uh uh

yeah there would be better ways to do collusion under 1559 although that hasn't been proven uh in any like extensive uh description that i'm aware of um and and finally a lot of miners were supportive of it but would like to see it just like on eat 2.0 uh so so kind of further further out uh so that's you know that's one big group i think there's it's a whole kind of can of worms you know how minor should be considered in the ecosystem and whatnot uh you know i i have opinions on that but i think you know it's the community's job to decide if and how they want to you know take that into account um there was another i guess category of people who were who were opposed who are not necessarily minors um who

i think that the two biggest pushbacks that they had on the eve were uh that it was this very complex uh change that doesn't have like a formal specification highlighting you know this is all the impacts that it's gonna have and these are all kind of the second order impacts that this will have um and and and that makes it harder to refute the eat because you can't just point to you know this statement and say actually this is wrong because we don't have this kind of exhaust exhaustive description there's some work that's being done on it uh so tim rufgarden who's like a leading game theory and computer science professor is working on an analysis comparing 1559 to our current fee market so that should help inform a lot of that um there's a lot of

i guess intuition behind it and vitalik just put out some slides yesterday or today i believe uh giving giving some more of that but i think there's not like a there is a technical specification but we don't have a clear economic specification and that's something that uh some people would like to see before they feel confident you know moving all of the theorem to this new system um and i think that was really kind of the biggest objective there were a lot of smaller objections but i think if i had to put like a meta one it's just the fact that there's not this solid economic spec in a way that people can point to and then argue um yeah i get i guess on the first just with with the miners um you know serious question tim do you

think it's important for us to listen to to um hear what miners said like if if you ask any anybody right who's making money on something hey we're going to make a proposal let's say that the u.s healthcare system we're going to make a proposal that cuts revenue to the u.s health care system right like they're going to oppose that right like naturally but but but it still might be better for the system as a whole to you know increase efficiency in the united states healthcare system or implement some some other mechanism right but like it's obviously politically they're going to oppose it but i guess uh my question is why should the opinion of miners actually matter for

something like eip1559 so i think you know at the very least we need minors to run the chain uh you know and so if they are so opposed to it that uh you know they will not upgrade uh then that'll become a contentious upgrade and i personally would like to avoid that it'll be much harder to get it through um i think you know and it's worth asking miners if there's changes that they would like to see obviously aside from like not burning the basey at all or stuff like that that would make it easier um i haven't heard back like any kind of you know proper proposals or specific things that they'd like to see changed um and it's also worth noting like i guess we don't have good data on how

much of the fee will actually be burned because when we say 1559 burn fees it burns the base fee but there's two parameters in the fee under 1559 there's a base e and a minor tip um and we need to have this minor tip because otherwise miners can just mine empty blocks right they won't have any incentive to hold the states to run transactions and whatnot so in theory like the minor tip just has to be just has to make it slightly profitable for miners to hold the state and to execute transactions and and and there will be some minor incentivizers to do it um in practice though i think with d5 you'll probably see a lot of transactions with a fairly high tip because the opportunity cost of not being in the next block is so high

that you know it's worth way over paying on your tip few so that's still part of the revenue that the miners will get and if you look at fees on chain historically basically aside from like icos and d5 um fees were always very very small relative to the block reward uh so i i don't have the latest numbers but like for a very long time in ethereum history fews were like 95 of the total minor income and uh sorry fees were five percent and the block reward was 95 uh whereas now recently we've we've switched where oftentimes the fees are bigger than the block reward um and so miners will still be getting part of that increase because a lot of that increase is driven by people who

absolutely need to be in the next block um and and the question is how much so if people i guess like who understand this data or have you know good hypotheses about how it would evolve uh could kind of communicate that and share that i think it's one thing that could help with minors if we were able to say hey we suspect you know i don't know between x and y percent of your income will probably disappear due to the base fee but between y and z of the fees will probably still would probably still go to the miners because of uh you know these unchanged transactions i think that would maybe help just like have a better conversations with them um but yeah i guess at the end of the day we do need miners to mine the chain um and if they're extremely opposed to it

and no other miner will step up the mine in their place uh it'll just make the upgrade much more complicated than it has to be i got it and miners certainly have been doing fairly well these days with transaction fees they have been um it's not an exaggeration to say ranking in the revenue from ethereum in unexpected ways um yeah so i you know i i take your point although i will say hopefully game theoretically as long as there is any revenue to be made from ethereum some miner is going to step up uh heck david and i will start running uh gpus in our office if the other miners do not want to do that um but but let's address the second um i guess uh objection pool that that you mentioned and that's the the folks

saying that hey eip1559 is is too complex we need more modeling we need to understand everything it's going to touch i've heard a counter objection to that to that that just says hey basically guys you can model all you want but it's kind of like like covet and coronavirus right like you don't actually know what's going to happen until it's out there doing something and then it turns out all of your models are going to be wrong anyway so there comes a point in time where you just have to say hey like we've done the best that we can and we just have to test it in the real world um so uh you mentioned vitalik slides and i'm gonna pull those up here but but maybe you can kind of wait weigh in on that uh that counterpoint to just say like hey

the only rea the way we're going to actually test this thing is in the real world so we may as well get started in the real world yeah and to be clear those are not mutually exclusive right now we're doing both in parallel so as we're waiting for this economic model we're taking the spec as is and we already have a 1559 uh test at running between uh us nethermind and and uh the vulcanized team who's building on geth so we've we've been using that as a way to just a like debug the spec make sure that you know we can actually implement this and different clients can agree on it b find you know bottlenecks from an engineering side like i mentioned earlier how do we actually deal with legacy transactions what's the best way to do that um so

we're able to do that work and and you know build up gradually more complex test nets that give us real-world data which even at some point we can have you know bug bounties on and whatnot um and in parallel we can do this simulation and r d work to try and lay out kind of the the the more formal analysis of 1559 uh so on on that side i mentioned earlier tim rufgarden is doing like a proper economic review but uh barnaby uh who's a researcher at the ef has been doing kind of an in-between approach where he's running a lot of simulations in in python notebooks about different types of agents using 1559 what what the equilibriums would converge to and whatnot um so i think

for a change like this you basically want to have all of that data we probably won't know exactly what happens in to it until it goes on main net but hopefully we can reduce most of the the biggest risks um and and a lot of people talk about you know having 1559 on ethereum 2.0 as well and i think this is also a chance we have to you know try 5059 out on ethereum one make sure that like it works but then if there's other you know secondary benefits we want from it we can then have those on e2 and at least had a first run of it uh on our current chain tim i'm just skimming these slides from vitalik and you know hey vitalik's

a pretty smart guy right um and these slides actually look simple enough that uh that i could probably understand them it was there anything new that uh he he put together in these slides or is it just sort of a summary and a restatement and a simplification of yeah it definitely is like a summary and a restatement uh and and the first coup post live she came over get you know some of the economic intuition around like why we want that um and yeah i i i i find those slides are pretty good yeah somebody who like you know is pretty familiar with ethereum obviously uh but maybe not so familiar with 50 59 at a high level this is probably a good a good intro very good we will include

those in the show notes then yeah so tim we've been dancing around a number of different uh subjects and a lot of a lot of it has to do with modeling uh is that where we are currently with eip1559 or what are like the next steps that we need to overcome to get this thing closer to getting shipped yeah so uh i actually i have a checklist that i've shared publicly it's called mainnet readiness checklist uh that lists basically all the things we probably need to do uh to get 1559 live i can share it in the zoom chat here i don't know if you'll be able to uh then share it on on your screen um but this gives like a good idea of like what we'd like to see before eip1559 moves through kind of

business as usual on the courthouse side um and you know to skim over it quickly obviously we need every single client to implement it right now the three teams that are working on it are us with base u uh the nethermine team and then the get client is being worked on by vulcanize um so this is fine for now eventually open ethereum and turboget will need to implement it but they don't need to implement every single version of the spec right they can just wait till the three of us come up with something final and implement that so that's fine um in terms of just like the client work uh you can see here we've already solved a couple issues in the past few weeks um there's a few more things we need to figure out uh

the biggest one is kind of outside of the scope of 1559 but is the denial of service risk uh on ethereum main net uh so this gets pretty technical pretty quick but there's ways uh that you can exploit how some up codes on ethereum are priced in terms of gas relative to the time it takes for them to run on a computer and so if you just call the up codes that are kind of underpriced relative to their execution times a bunch of times you can you can slow the network down potentially um and uh 1559 because we have blocks that are that can go twice as big as our current blocks any attack like that would be twice as worse uh on on mainnet and that when we brought the eip up on the core devs call twice this is really the number one main

objections and the way it's being fixed is not directly in the e so uh get has been working on snapshot sync which is a similar approach to what turboget is doing and on base u we also have an approach like that which allows you to store the state in a way that's more efficient to query and that deals with a lot of these attacks um and in parallel to that there's another eip called 2929 that raises the gas costs of some of these uh up codes that are underpriced relative to their computation so we definitely need to see those changes go live on main net before 1559 is deployed i don't think it slows us down because you know 1559 is not in the next upgrade that's scheduled

already it'll probably be in the one after that um and i think those things will be deployed by then but this is really i would say at the client level the number one risk like if we don't fix those things we just can't safely deploy 1559 um no matter how well it works on test nets and this is kind of the hard part because a lot of these problems that we see with like potential attacks on mainnet are a function of how big mainnet is relative to the test nets so we can't really you know try this out on a test net and then see um i mean you know there's there's ways we can model that again and whatnot but we'll really get the real test once it's on main net aside from that you know there's a bunch of small issues we need to fix in the

spec this is the work we're doing kind of day in day out uh again in the first section you kind of saw that but just um you know how do we how do we transition from the current types of transactions to the new ones uh how do we you know uh deal with other apes that that want to add more transaction types like eip2718 um all of the you know just simple ux like in metamask when you replace your transaction by fees because we're changing the way the fees work on 1559 how do you do that in a way that doesn't create other attack vectors and so this is really like what kind of the client implementers are working on and it will be probably over the next quarter um and

honestly i think that's kind of the bulk of it obviously we need to do a bunch of testing we need to do documentation we need to change some json rpc formats to return data but the bulk of the work is really about how do we make mainnet stable enough to handle 50 59 and how do we resolve just all of these kind of small issues with a spec and hopefully you know once we get the results of the economic analysis that's been done maybe we'll tweak some parameters in 1559 but we won't need to rework everything we've done it'll really be you know changing some small things and reworking that but the the bulk of the of the work will have been implemented okay so uh the is but the next hard fork is berlin which i believe is slated february-ish i think early 2021

yeah i would say yeah q4q1 okay there's not an exact date but yeah around that thing uh so i think if everything went well we could get 15.59 and the one after uh there's no date yet but i think historically you know i want i wanted to get it in before defcon yeah but then they moved defcon back three months so you know we'll see if that's possible but i think yeah that six to nine months range is is possible um yeah it it it's just hard to predict those things uh you know it assumes burden goes well right uh that there's not you know major attack on the network or whatever and there are dependencies right like things need to get included in berlin first in order to make the eip exactly yeah right yeah okay and i think you just

mentioned on it but if you could expand on it as well uh so this work gets recycled and implemented directly into ethereum 2.0 yeah if with eip1559 or is there additional new work as well so for sure there will be some new work to be done i'm not super i'm familiar with e2 at kind of a design level but not at the you know implementation level so this is going to be kind of hand wavy um but you know if you have the assumption that like an eighth one the first shard on e2 is like an eighth one shard obviously if we get 15 59 done before that uh which which i i strongly believe we will um you'll have 1559 moving over from e1 to e2 okay how the transaction fees get

kind of paid to validators and whatnot once you start having transactions on e2 i'm not super familiar with but i think there is you know strong consensus within the two or at least everyone i've talked to on youtube that they want a 1559 kind of flavored eq where a part of the transaction fee gets burned you can query uh what's the minimum fee for a certain block and whatnot um but for sure there'll need to be some changes just because we go from a proof-of-work to a proof-of-work stake system um yeah but i don't think there's any desire to not have 1559 and eq and at the same time once we transition over if they're things with the actual 1559 mechanisms we want to improve or change we should

be able to do those changes at the same time well so how does that work with ethereum 2.0 right off the bat so you said like when the ethereum one chain gets rolled into the ethereum chain well there's uh the phase zero and theoretically the phase one uh that come before phase 1.5 so i don't think there'd be any impact on e2 from 1559 until then yeah okay okay so there's so there's no the the base fee mechanism that isn't built into phase zero at all no not in the staking no because it's based on sending and receiving transactions and and you don't really have that well you you don't have uh like arbitrary transactions during phase zero okay okay cool so so tim as somebody who's um in the

ethereum community but not attending all of the governance and and all of the technical calls just kind of keeping aware of it right um you know it feels like we've heard about eip 1559 for a long time and the perception has been um oh like it's coming it's coming it's coming but no one can actually tell us like when or an action plan and it's felt like it's somebody observing this process that um you know each one development can get bogged down in stuff like um you know should we sh sh should we do progpal right and like the community's screaming no like let's do eip 1559. everybody wants this thing where is it guys and i

i will say like you are doing yeoman's work to like put together an actual implementation plan and a checklist and when i see this kind of thing i have much more confidence that like there's a team around this it's going to get delivered there's some organization so all of that's fantastic so like you're boosting my confidence and i think probably the bank of this community's collective confidence that this thing will get delivered but i want to ask you because you are in the trenches um what's your confidence level that we are actually going to get eip 1559 in eth1 because i have to tell you some people are still like yeah okay ryan but like it'll never come i think

uh what i see as the biggest risk still is the denial of service risks like just if we can't make it one safe enough to deploy it uh you know everything may work on the test nets and but it's just like not safe to move at the mainnet uh so that's where i see the biggest blocker i don't think in terms of implementing 1559 there's any kind of major outstanding issues there's a ton of like minor issues right like don't get me wrong it's it's a lot of work but like i we've our team has been working on it since roughly march or april um and it kind of took us you know a couple months to get up to speed on it and then you know slowly building momentum over the summer um i think at this point like it's it's uh

yeah it's the eep itself seems pretty well scoped i my biggest concern on it was how we handled legacy transactions um and i think our the solution we've come up with that is pretty good and nobody so far has has has said that it was it was broken in any way um so to me it's really just can we make the network safe enough uh against uh against potential denial of service attacks and i think there i'm confident in the work that get team is doing that our team is doing and turboget also has been doing really good uh i've been having really good progress recently um it's hard to place the number you know on how confident you are uh but i don't know i'd say there's probably a 75 plus percent chance unless and what would

drop that number as if if there was another potential large denial of service vector uh that that came up on mainnet and and that for some reason more block space made worse um yeah so i'm pretty confident in in the teams working on the eep itself and and you know also pretty confident on the the state of like the core improvements of the networks uh but when you multiply two probabilities that are less than one they shrink pretty quick uh yeah that's very good thank you for that tim one question i've always had about eip1559 is the theoretical max block size issue so um just as as a recap with eip1559 it makes

block sizes variable and and tries and stabilizes transaction fees and there are certain parameters for how large it allows the next block to be and it goes is there an actual absolute uh cap on block size what does that count yes the origin the original eep was 3x and then we brought it on all cordev and i think it was the getty that says there's no way uh that'll ever work why why why wouldn't the 3x size blocks work because just the again it was the denial of service risks and just also the you know the uh periodic like having the process going from like you know processing x the 3x spike and whatnot an unpredictable way we a lot of things would have broken

there so 2x i think is is 2x is where the spec is at right now um so right now there's a maximum like the binocular will double uh so if we have you know 20 12.5 million gas right now the network would you would have a max block of 25 million gas um i think if that was the main issue we could probably make it smaller you know like if if we if we had to have 1559 with like 1.5 x sl you know instead of two i think i think we should probably do it i'm again there this is something i'd love to see somebody produce data on my hunch is like at 1.1 x it wouldn't be very helpful like the mechanism just

like could not correct enough um but like you know at 1.25 is it good at 1.3 is it good like there it gets very fuzzy for me um i think if we get you know the denial of service uh like the the the snapshot sings live we get turbo get up and running a bit more um and we reprice the up codes you know two of x should be fine um but we're definitely open to changing that if you know if this is the deciding factor of whether or not 59 makes it in so this kind of seems to me a little bit like ethereum's relationship with uncles where over time client development and iteration and research means that our

clients are more efficient and as a result the uncle rate goes down and for those that aren't familiar the uncle rate is like how often do does ethereum accidentally make a bad chain in like a like it accidentally forks a little bit but then and then we converge back onto the main chain and we don't want uncles because it's relatively inefficient uh and over time client development has been able to reduce the uncle rate right we've gotten more efficient uh at not producing uncles which means we've gotten more efficient at producing in propagating blocks is that something that we could see with the variable block size could like design and research and improve yes increase the total size yeah and that's so uncle rate is not a bottleneck anymore

our biggest bottleneck is stale access and the way for that get has this great shot a great post that explains snapshot uh of again i'll send it to you and you can share it in your show notes uh it's fairly accessible even if you're not like a you know client developer you can definitely read this and understand why uh oh for some reason it's not working now i'll send it to you after um but basically ethereum data is stored in a tree right uh so you the ethereum state is like everybody's account and balances and all the smart contracts codes and their balances and whatnot it's like a whole big big tree um and that means uh every time it grows you're kind of adding uh leaves we call them to the bottom of that tree um

and there's a number there's a max number of kind of rows if you are sorry of columns in your tree so like there's like a we call it a root note and it has a couple childs and at some point those childs have children and whatnot and the number of like branches that you need to hop into to access an account make state accesses in general slower on ethereum um because when there were you know zero accounts for ethereum like just the genesis block you basically can access every account from the root node but then when you start having more and more data stored the tree just goes like deeper and that means every time you add data uh every every time so you access data you need to go all the way down um and this is what causes some issues uh

with just performance on mainnet because our state is so big there's so many accounts so many contracts relative to any other network like uh you know ethereum classic or our test nets that it just takes a lot of time to go down every time and so right now what clients are working on is instead of storing it on a tree that just have like a flat list of everybody's account so that means that you can just access it directly um and that sounds simple but the hard part is tracking all of the multiple changes that happen to accounts accounts on every block um but once we have that i think again we'll be in a spot like a lot of the performance work we did around block propagation to reduce uncle rate we'll be in a spot where like state access has been made much more efficient and therefore we can

do more changes on ethereum and account abstraction is another popular change that's been kind of held back for similar reasons uh just because it's not the way we stored it as inefficient but it's just become inefficient given this the scale that we had and this is not a problem we had three years ago yeah more money more problems is how it goes exactly um okay so so there's some future iteration future development of ethereum that can even improve the efficiency of eip1559 so long as we you know tackle this you know is this what state blow is when people say state blow is that what you're talking about it's exactly what they mean the tree has become too deep and it takes too long every time we want to go to it yeah okay so so with

successful uh research and development and tackling this problem it's possible that we could get up to those three 3x larger block sizes or perhaps even bigger than that so i would start with 2x you know i would pitch it but i think you know if if this stuff all works i think we can very likely get to 2x and uh yeah and then see from there once it's live on mainnet for a while you know are we comfortable pushing it more what would be the benefits and whatnot cool awesome that that is cool i like things that get included in ethereum that improve with other improvements as well that seems to be the right way to go yeah definitely tim it has been such a pleasure to have you on we've wanted to get you on in front of the banquet station for some

time because uh honestly we just wanted to to figure out if eip 1559 is is really going to happen and um you've given you've given us i think some additional confidence that uh maybe 75 confidence or or higher that it is indeed going to happen so thank you once again for your work and for joining us on state of the nation today thanks a lot for having me it's our pleasure all right guys we're going to get back and talk about in just a few minutes and talk about five things that are going actually six things that are driving the crypto markets today david and i have some insights to drop on that but before we do we want to get some of our to some of

our fantastic sponsors that made this state of the nation episode possible zapper is this new tool that i use to check out all of my assets in defy as you guys have known defy has absolutely exploded recently and so managing your assets is getting harder and harder because there's so many different places and so many different assets that it could be so i'm going to put my ethereum address in here and zapper is going to tell me where all of my assets are across ethereum right so here are all of the assets in this wallet uh there's there's a decent amount of them and it's also going to tell me where i've deposited assets into various defy protocols right so there's some yield farming going on there's some liquidity pooling going on we can also look more

granularly at the specific protocols that it's involved with in this explore feature so it's got some assets deposited into uniswap it's got some assets deposited into balancer and also with zapper you can just exchange straight from the zapper interface right so this is just another layer on top of unit swap or other exchanges on ethereum that allow you to swap assets right so check them out at zapper.fi it'll give you a nice clean portal to invest your assets in d5 and you can also connect to multiple wallets if you use multiple wallets all at once and it'll give you an aggregate of every single wallet that you own check them out at zapper.fi also this is definitely not my wallet unstoppable domains is helping the world become a censorship resistant and

permissionless if you are looking for a censorship-resistant website that no one can take down go to unstoppabledomains.com and type in the domain that you think that you want so i'm going to type in the domain that i think that i want trustless date and it's going to tell me some of the options that i can get to get a permissionless domain trustastate.crypto and so what you can do with trustlessdate.crypto or whatever domain that you want is you can you can purchase it and then it can be a url that you direct people to that no nation state can take down that's what unstoppable domains is all about what's also really helpful with unstoppable domains is that wallets can integrate unstoppable domains so that the addresses that you send your crypto assets to can become human readable and this doesn't work for just ethereum you

also can do this for bitcoin or litecoin or any blockchain at all where wallets can resolve to your human readable name so you can tell bitcoiners to send you bitcoin to trustlessdate.crypto or yournamehere.eth check them out at unstoppabledomain.com alright guys welcome back to state of the nation david we've got to talk about some things that are driving these are like drivers maybe maybe um somewhat macro themes that are driving particularly crypto prices right now and i want to bring up this market monday uh opening note that you put together on uh just just yes the bank and use

that as a guide for talking about some of this stuff because i think it's super insightful but you listed six different things that are driving crypto markets right now before we get into those why is it important that like we understand um crypto prices isn't it just like like a random walk through crypto right it's just whatever it's all noise doesn't matter in the short run it's all going to work itself out in in the long run uh why do we need to know about these these themes anyway yeah and and the your reference to the the random walk is a good one for those that don't know the rant the random walk is this kind of theorized model for how crypto prices move and if you can think of a really

drunk individual who's like stumbling down the road they they stumble down the road but they still follow the road right like they go left and right across the road but they still follow the road and so understanding where this walk goes is really important because where it goes is relevant to our goals relevant to our ethos relevant to the bankless nation right and so understanding the things that are impacting the price of ether is something that impacts the bankless nation right fundamentally we all are here because of things that are valuable assets that are valuable right and so as the value changes it's important to integrate that into your understanding all right well let's talk about some of those things that we think are are affecting the random walk and maybe it's

not so random after all and the first is this this has been a a theme of 2020 right you know um people in the crypto community have been talking about um you know like the the rampant inflation and money printing of the dollar ever since 2008 but like we are seeing it in overdrive in 2020 it's it's a part of our lives now like uh bills are being voted on it it's a it's a constant discussion are we going to get another airdrop check at least in the u.s other governments are similar can we talk about this first one which is the new covid relief package so for folks that have been uh outside of of us politics anyway what is that and why is it important to the story here

yeah this is the second uh covert relief package with twelve hundred dollars in it for for all americans uh and this is something that a lot of um people that if they were around now they would have been bitcoiners but you know 10 20 30 years ago were maybe they're gold bugs or libertarians people like ron paul said something like this was coming like forever ago we're like and and ron paul said like you know inflation is eating the middle class and you know what that has now with covid is now we need inflation in order to survive right and so they are pumping dollars into the world in order to sustain uh you know the unemployment and the you know the the lockdowns that we are able to have

so it's trying to balance out uh you know making sure that people don't have to go out to go to work and so they can stay home and be safe away from covid and also allow businesses to be afloat but then it's also doing this through inflation right more or less at the end of the day the the dog the value of the dollar is going to inflate when a bunch of dollars get injected into the world around us yeah so the big question is uh the you know the 1200 check is is coming it seems almost inevitable but the big question is where are people going to put that 1200 i had a friend of mine who wasn't in crypto previous but he got his 1200 check and he just went wild like he just like okay now's my chance

it's it's money you know it this is evidence of the money printer maybe some of the crypto folks are right you just started investing in bitcoin and ether and of course i'm in the space so that's the sort of thing like there's some selection bias here that's the sort of thing i'm going to hear about um however if you look at you know how crypto prices sort of responded uh post the first stimulus check it's pretty it's been pretty uh pretty insightful pretty pretty phenomenal uh way above the s p at least for ether and bitcoin way above the price of gold of course that could be other market cycles so you know this the trend line isn't long enough to yeah there's some noise here but i guess the question to ask yourself is like

what are you gonna do with your 1200 check once it comes if you have enough disposable income to meet your your needs are you going to put it in stocks are you going to put it in real estate all right like what's the store value are you going to put it in crypto right that's that's why i think we're seeing this graph respond in that way and it's keeping on this graph it maybe it kind of doesn't fit in the narrative that gold is underperforming versus the s p but you can even pull apart some of the companies in the s p typically the tech stocks from the rest of the s p and the reason why we would want to separate the tech stocks is a they are absolutely dominating the s p and so they basically are the smp and the reason why tech

stocks have done so well is they typically don't have any debt they actually have the opposite they have a lot of cash on hand and what's really going on is companies that have liabilities aren't doing so hot and companies that have assets are doing hot and so you know i bet you if we were to separate the smp line into companies that don't have liabilities and companies that do gold would be doing better than the companies that do have liabilities and worse than companies that don't have liabilities it's all about having cash all about staying solvent in this market yeah tech companies too i think everyone is seeing this this move to digital i mean like i'm doing more and more on screens and less and less in the real world as a result of covid and i think some of those practices are going to be

sticky so some of the telecommuting software we use some of the remote software we use is going to continue in the future everything is becoming more digital hence tech stocks uh interesting to observe but it looks like the check is going to land we're going to have money printer go burr we're going to have some um helicopter money dropped on us at some point soon so the second thing just to add on a small little tip on to the end of that because it's not something i i knew at the time but uh china is also doing an air drop in their central bank digital currency to their citizens so this is not the only game being played not to be outdone not to be outdone but but you know it china wants to print some money too all right um election uncertainty so this is again a little

u.s centric but i think it has ramifications across the world um i'm sure a lot of folks know what's going on but like what's your what's your hot take on that and how that um how that leads to market uncertainty yeah there there's two things here first off we don't know who's going to win the election and so there's uncertainty around that right and there's also uncertainty as to how one of these parties is posturing about how they are going to accept or not accept the election results and the mere possibility of somebody not accepting the results of election is also very makes the markets very uncertain right like that is a very uh uncharted waters for the whole entire country and so therefore it's going to be uncharted waters for the market to learn how to

deal with that right and in the backdrop of this we just have civil unrest from the polarization between these two parties which kind of just amplifies uncertainty right like you take uncertainty and then you add civil unrest on top of it you just get even worse uncertainty on the flip side of things however both parties seem to be posturing and wanting to like get into the party that is giving out relief right like both parties want to be known as the party that got checks into the hands of americans right and you know the the democrats famously the the more pro-worker uh uh party uh really just wants to give out more money than the the republicans and but interesting the republicans aren't the no party they aren't the no we're not giving any money party they are the party of we're just

going to give a little bit less right and so both parties are being the parties of relief so kind of if you're if you believe the the part number one where as money gets injected assets especially crypto assets go up both parties seem to be posturing for we're gonna print more money uh so that's interesting yeah it does seem like both parties have a modern monetary theory agenda no matter who wins that's going to be the long-term trend but in the short run we've got this election uncertainty that we're dealing with that could cause markets to to dip so if we're looking like short medium turn right you've got money printer gober which is maybe pro crypto possibly but then you have election uncertainty which is like uncertainty everyone goes to

things like dollars right in that case cash money just want to make sure i have enough money to pay my rent and that sort of thing all right let's talk about uh a third thing you list which is this bitmex uh incident we've talked about it with j jake on state of the nation last week but despite bit max uh falling you know one of the the largest crypto derivative banks bitcoin bank primarily bitcoin is still alive it's like you know taking a hit but it's doing okay yeah so on the bitmex news the uh the btc and the rest of crypto price just plummeted right because that's bad a lot of a lot of volume and a lot of exchange activity happens on bitmex but i think over the long term this is going

to be extremely bullish because if we want more and more of the world's capital to have a reasonable chance of getting into crypto then we need to have legitimacy in this space right like the the legitimate the legitimacy of the cryptocurrency industry is much better to of an asset to have than bitmex the exchange and so i'm totally a fan of of you know you know throwing throwing bitmex overboard in in for favor of more legitimacy and what's also interesting is that the market you know it crap it didn't crash it dipped at the news of bit mix but then it just researched and rebounded even harder right and so in in bull markets you know we shed bad news and in good with good news uh we we

moon right and so that's kind of what i see happening i like that use that word legitimacy because obviously the government's way to get legitimacy in the market and trust in the market is through regulation right so i i do think trust in our institutions in general is at all time lows but the cftc solution for that is basically hey we need to regulate we need to be watchdogs on the industry um but legitimacy is a neutral word and so is trust the other way we can gain that trust in the derivatives market is actually through transparent d5 right so if you're using a transparent smart contract driven derivatives platform maybe something more along the lines of dydx or even in the future synthetics

everything's on chain everything is audible you don't have to trust arthur hayes with your funds right that like that's uh another level of legitimacy i think and i do think all of this is uh bullish for for defy so does robert lesner hold on to your butts he says well hold on here i think that's a bart simpson uh quote actually i'm not sure nice all right so the fourth thing is public companies loving bitcoin super interesting so somebody asked me on twitter um you know is this bullish for ethereum so i uh or ether i guess there's maybe two two questions there so

tell us about public companies loving bitcoin and um it seems obviously bullish for for bitcoin is it also bullish for ether yeah sure so this is the second public company to add bitcoin to its balance sheets in the very short time frame like maybe six weeks right and the first one was micro strategy which you know at the end of the day microstrategy is really just this one guy who seems a little bit impulsive and seemed to just market buy a bunch of bitcoin and put it on his company's balance sheet the second is square led by jack dorsey who is you could call you might even call him a bitcoin maximalist definitely pro bitcoin doesn't believe in other tokens doesn't necessarily believe in ethereum uh and so we have two companies that with bitcoin on the balance sheet and this is a big signal

to other companies that the bitcoin scarcity game is being played right like you guys i hope you guys all read the article that we put out on bank list called bitcoin scarcity game talks about how like the uh choice to not buy bitcoin is a choice right and so you know if companies aren't thinking about putting bitcoin on their balance sheet they're going to lose out to companies that are thinking about it right so very fundamental to the value proposition of bitcoin and we see this uh scarcity game playing out on larger and larger scales like first off it is played off by individuals who you know spin up their cpu on their laptop to mine bitcoin in 2009 2010 and they and then they you know mine it more because they want more bitcoins right

and then you know it starts to people start to buy it and then you know companies start to build around it and then it just scales and scales and scales up and now we're at the point of public companies is public companies turn to play uh the music the game of mutual chairs with bitcoin right and that's what that's what i see currently being played and that's just tailwinds for the narrative of bitcoin is this bullish for ether and ethereum you know i see a lot of bitcoiners tease me saying like you know nowhere did michael say or of michael strategy or jack dorsey put ether on their balance sheets and so like no this is super bearish for ether like they don't even understand what ether is but i would remind them that every time that bitcoin moves upwards ether tends to move upwards even more right just

because of the nature of the market caps like bitcoin i don't know what the market cap bitcoin is like 300 billion right now versus ethers like 40 billion uh if bitcoin doubles ethers historically more than doubles right and so it's it tends to be a leveraged play along bitcoin so you know bitcoin success is ethereum success because you know if people see put bitcoin on their balance sheets they're also going to think like okay what else can we put on our balance sheets especially after it it moons right there can ride that train yeah i totally agree i do think probably 80 maybe more of the people who are into the space myself included probably you included like we learned about digital scarcity through bitcoin and bitcoin scarcity game like that was the gateway uh for for me anyway to ethereum and

through to defy and to open finance in general so it um you know bitcoin is 10 years old ethereum is five years old i think bitcoin will uh continue to be the gateway to other interesting crypto projects like like ethereum so probably good for both i agree um all right this thing is unsettling david um bitcoin and eth have this correlation with the s p 500 that it can't seem to like it can't seem to shake right so i guess this is part of the first theme that we were talking about where money printer goes burr and then stock prices go up right as long as people are like they they do an initial flight to safety so they'll go to us dollars for a bit

and then they're like okay the world's not collapsing and the fed will continue to print money so they don't want their money in dollars they want their money in store value assets like stocks um but uh and crypto but ether and bitcoin have both exhibited this strong correlation with the smp it almost feels like we're playing in crypto with a leveraged stock game like an leverage s p game what's your take on that yeah this is like i said this in the article this is my least favorite thing about crypto at this present moment like i signed up for the uncorrelated industry right i signed up for a nation that doesn't exist in the real world like but all of a sudden like we're correlated to the s p stock market right which which you know means that we are therefore correlated to a

covid third wave right we are correlated to another round of shutdowns we are you know correlated to civil unrest right we are correlated anything bad that happens in the world is going to happen also to crypto and this has been more or less been true since you know uh the early march dump black tuesday or whatever so we've been correlated for a while and i i think part of you know why there's so many different market factors right now is kind of creating that um you know we're not correlated to the s p we're all just kind of correlated to the same level of general uncertainty right and so we're also kind of all correlated to the money printer which is also a good thing right because if like a third wave happens you know all the bad stuff in in the world happens well then they're just going to

turn on the money printer and that's going to be bullish for ether and bitcoin again right and so i don't like it because i don't like being correlated to legacy i do like it though because then we have upside exposure to the money printer and like what is a better value proposition than being able to have upside exposure to something that prints money it does seem like it's an artifact of time horizon too right we are in this like you know 9 to 12 month maybe 18-month theme where we're correlated temporarily to the s p but like fundamentals suggest that that should not remain so in the future right so if you if you annualize analyze why buy crypto why buy ether why buy bitcoin um you buy those assets for different reasons than you buy stock

right so i do expect that like that's just the kind of the the the medium term short to medium term cycle that we're in but i don't think it'll remain so um if if we're right about digital nations and if we're right about crypto as an asset class uh things should not stay correlated for the long run but let's get to the fifth thing and this could be a catalyst for that breaking of correlation david and that's eth 2.0 so is it actually going to ship this time because i heard heath 2 was never going to ship dude the funniest thing about the last bull market that we all went through is like it was the over the tone of the bull market was like yeah this bull market is going to lead right into ethereum 2.0 and we're all going to be

speaking and 2017 by 2017 like the not this bull market the last time and that seems to be kind of the narrative that's playing out right now in in this appreciation cycle uh however it seems to be a lot closer i don't know maybe that's what i said last time but i i'm i do think that it is indeed right around the corner and like you said this is exactly the catalyst we would need to break that that correlation right and also first and foremost it is possible to be upwardly correlated with something and so while we are correlated we are still correlated in an up and to the right trajectory and i think that's what's going on with crypto and i think things like ethereum 2.0 where a lot of the value pillars of ether one which we

just talked about with tembieco with eip1559 but then also with staking actually gets priced into ether right and i said in this article i actually don't think that the fact that you can stake ether and receive rewards is going to be a great catalyst for ether price appreciation because i think the people that are going to stake ether are going to be the people that don't really trade or sell ether that much have had ether for a long time and also are not participating in defy and so i really think the ether that's kind of become staking first is going to be dormant ether like this is we're talking about like vitalik's ether or the ef's ether ether that has been slated for proof of stake since like 2015

how about your ether i'll get there eventually right but but not not necessarily off the bat i am not going to be the first of that no sir somebody else i will be following somebody else through the door first yes you don't want to lose your teeth on something like that um all right so if somebody were to ask me in 2017 when is eth2 coming i probably would have said something like 2019 and that would have been totally faith-based would have been like like based on my feeling like we didn't have test nets or i didn't see a project plan that sort of thing i feel like uh we as a community have gotten a little smarter but even if you asked me late 2019 when eth2 would happen i probably would have said late summer 2020. and now here we

are we're past summer 2020. and now what are we saying david we're saying like he looks like q4 or q1 mostly for q1 all right so so if you're if you're saying q4 um why are you right this time because that's what danny said okay so i'm playing i'm playing it on ryan if we're wrong it does feel like we've got test nets we've got implementation plans we've got you know actual developers who have the thing running um it does seem like q4 q1 is a much better bet than some of our previous predictions but there's a lot more evidence to back up the claim that we will begin staking

very shortly exactly and there is a huge eth2 will never ship crowd right that says basically the longer it delays yeah to this day the longer it delays the less likely it is to actually happen and i think they are in for quite a surprise right when that day does come and when eth2 does chip that is the thing that i think will impact the ether price not that there is actually going to be demand for ether for staking but just the the change in the narrative right like the change in what in what is true like all of the eth2 will never ship crew and you know that proof of work is here to stay crew like all the and and mainly the execution risk of ethereum 2.0 right because if we get to phase zero well then phase one

and phase two aren't that far off right like phase two super far off if we never got to phase zero but with phase zero behind us we can start having that compounding progress right and again like one of the reasons why ethereum quote-unquote 2.0 has taken so long is we started building phase zero one and two in parallel with each other right and so with phase one here like it's not like okay now we can begin on phase when phase zero is here it's not like that's when we start work on phase one when phase zero is here we can start to implement phase one right and then once phase one is implemented we can implement phase two like a lot of this work has already happened and so the eth2 crew the the anti e2 crew i think is in for a a big short squeeze if you

will you know because i'm like more confident that eth2 is actually like coming right i'm i'm i'm very confident that that that it's coming swell on sway it's only a matter of time probably probably months um maybe weeks uh when we get vitalik on the podcast next week i think we can broaden the discussion because whenever you get vitalik on a podcast it's kind of like um you want to ask the question of like yeah but so when is it coming like wendy two vitalik right like uh and this time i feel like in our podcast we can go a bit deeper on not like when eth2 but like why eth2 right right because this has been a long vision coming like what are the uh the the principles behind the design of eth2 and what's important right

yeah crypto is absolutely political that's why like you know brian armstrong you know his peace just like you know he was and i get i get the sentiment he put a blog post out that was like hey um you know we're here for a different like a business mission right uh open finance kind of mission and we're not here to talk politics but at the same time right i get it's not left versus right politics right but um crypto is absolutely political right it is like absolutely an anti-authoritarian like movement and that in itself is political what if you get into a government um a state that says like hey it's illegal to to own crypto right well then the act of owning crypto though is is very political in those cases so i don't also

escape that and also therefore some of the design decisions around eth 2.0 become extremely relevant especially a top-down decision where like crypto's illegal well whether we are staking like 32 eth or 3200 each is an important design implementation that impacts how the network can function under an adversarial environment such as that and so that's kind of why we're getting vitalik on to go through some some of the decisions which are there for political decisions i don't know if italic would agree with that framing but i think we'll ask him or whether we can stake it on like a consumer laptop with a cell phone connection or whether we have to stake it in a big data center that's certainly another political consideration that feeds into the design all right david uh this has been state

of the nation man but we've got one more thing to talk about and that's um our new episode our new sort of mini show that we're coming out with on friday uh the rollups round out so so what is that what's going to be the format for that yeah so rollups around is going to be where we go through the news go through the events and kind of go through some of the things that ryan and i have on our mind so it's going to be a very well packaged very quick um you know 30 30 minutes but with lots of topics uh roll-ups of all the things that are relevant and so we have you know the price action market commentary kind of distilled what we just talked about uh as well as product releases from the d5 world you know funding rounds uh you

know who's going to be hiring any legal action that has been taken milestones who's hiring and then we're gonna go through a a series of you know what's on the news what's in your mind what are you looking forward to right so uh we were we are always taking suggestions this is kind of where the bankless nation can ping me and ryan saying hey will you include this in the next roll-ups round that's what the roll-ups round is for so this thursday we're going to be talking a lot about the q3 token report which is coming out tomorrow on bankless we're also going to be talking about the department of justice 83-page crypto framework and what that means for you um i hope jake put together a tweet summary for that yeah he did actually he did okay

we're also going to talk about the blue kirby exit which i think is a fun little sitcom episode of crypto and defy uh and then we're also going to be talking about tornado cash because the tornado cache is picking up speed all right awesome man that's going to be great so what you need to do is hit subscribe to the youtube channel to make sure you catch that that'll be friday mornings we will also be pushing that out on the podcast so if you're on the run and prefer the audio version of that that will be there for you too so this has been episode 18 of state of the nation we're 18 years old now david we can vote um so thanks for joining us risk and disclaimers of course defy eat is risky so is crypto you could lose what you put in

eip15 looks like it's coming it may not come who knows this is not financial advice but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot