Technical Priorities in Ethereum’s Enterprise Adoption Arc

Transcript

Why they turn it off? Why, hello everybody. How's it going? Welcome to the best talk in ECC, baby. The one, the most exclusive. Let's go. All right, anyway, how are you doing today? Going to talk about the technical priorities in Ethereum's enterprise adoption arc. Who am I? What am I talking about? I am, of course, Karl, co-founder of Optimism. What is Optimism? OP Stack powers most of the L2s. What am I talking What's Ethereum? ECC, best blockchain out there. Anyway, is this This is ECC 9. Does that mean that we've been doing this for 10 like

almost 10 years? That is insane. Anyway so sometimes, especially when you're on Crypto Twitter browsing around, you might feel a little bit of doom and despair. But the reality is that we are in a new era, and this is honestly an era that I When we did the first ECC, I would not have guessed that this I mean, I guess I I did bet that it would happen eventually, but it's kind of surreal to see it happening, and that is that we are actually getting enterprise adoption. Finally.

And it is sometimes, you know, maybe expectation is the thief of joy because sometimes it feels like, "Oh my gosh, are we growing up? What's happening?" But in fact, this is what it like looks like to bring Ethereum, to bring decentralized technology to the entire world, to upgrade the global financial system. And so, I'm here going to talk about layer 2s, the role that we play, and you know, again, if you're on Crypto Twitter, you might be like, "Layer twos? I thought layer twos are dead. What's happening? If they you know, we did we roll-up centered roadmap, that that's that was misguided." Well, the reality is I actually think that Ethereal Eyes

put this very well, and that is that what Vitalik was really saying about the layer two roadmap is that we are entering, just like we have matured into a phase where we are building out systems for enterprise adoption, we are now entering a new phase for layer two adoption. And that phase is one which will be marked by customization and bespoke solutions to enable products that are currently in Web2 to come to Web3, to bring their products on chain.

Because we are now growing up, and it turns out that in order to build a really successful business, you're going to need to customize it to differentiate your block space so that it can actually serve your particular users. So, I'm actually going to talk about why customization and bringing institutions on chain is what we are doing with the OP Stack, with OB Enterprise, and also a little bit of a history lesson about why we were building generic block space back in the day. So, this is a lot of you know, back when ETHCC1

or 2 was a thing, um we were talking about layer two solutions called plasma and plasma cash, which were totally bespoke, crazy solutions that were not even EVM at all. And then, over time, we progressed Ethereum layer two technology and came out with optimistic rollups. And what was the big innovation with optimistic rollups? Well, it supported, to a limited extent, the EVM. That was like the whole thing that we built, and that was all the way up to like 2020 that we came out with that. Then, we built out the first iteration of optimistic rollups, but still they were just EVM

compatible. They had huge deltas between your standard Ethereum tech stack and your standard layer two tech stack. There was just it was, you know, thousands upon thousands of lines of code, contracts would have to be rewritten, it was barely working. And in fact, back in, you know, 2020, 2021, we literally shipped the first version of the, you know, the OVM is what we called it back then. We shipped account abstraction. This is like, you know, we're still talking about account abstraction. All of these cool features that we thought would be so powerful, etc. But the reality is that the way that we shipped those features was we diverged so massively from the standard

that it ended up reduced resulting in a massive maintenance burden. So, what did we do? What was the kind of, you know, the next phase? Well, we came out with this thing called EVM equivalence, aka we wanted to instead of having bespoke chain software for layer twos, we wanted to fully standardize with Ethereum. And why did we want to do that? Well, it's because when we build on top of open source software, we end up having compounding network effects where every single developer tool that one person builds another person can utilize, and we didn't have that feedback loop between layer one and

layer two yet. And so, we had to standardize, and we removed all of that code. We got the Well, the difference wasn't zero, but the difference was like, you know, less than a thousand lines of code between OP Geth and Geth. And so, what happened? Well, over time, the solutions that we would build for that, you know, for the Ethereum community ended up being far better. It is one thing to build out bespoke software that is feature-rich, but it's another thing to upgrade the entire ecosystem, the entire open-source ecosystem to use that software and actually benefit from it. And so, you know, we came back around, we had removed account abstraction in our, you

know, bedrock release of the OP stack, but we then, a few years later, were able to bring it back with 7702. And even 7702 has adoption challenges, right? It is so hard to get open-source software to be ubiquitous enough that everyone can actually benefit from it. But we are so much further ahead now as a community across L1 and layer two because of it. And so, we are now entering, after this kind of standardization phase, this is what Vitalik was pointing at, we're now entering a new phase, which is a specialization of layer two technology to enable differentiated products for

these chains. And so, what does that end up looking like? Well, that means we're enabling various components to be modularized without breaking compatibility, without breaking EVM equivalence. What does that mean? For example, the proof system, whether it be a fault proof, a ZK proof, a TEE proof, all these proofs compile down to a standard target risk five and therefore can be interoperable, can stay compatible with the EVM. And, you know, builder policies, we can customize the sequencing layer to our heart's content without breaking a vast majority of smart contracts unless you do something super wacky with your sequencer.

And you can also customize data availability or compliance features are favorite and smart contract acceleration. We can make smart we can design chains that will actually execute smart contracts faster for their particular use cases. And this is exactly the kinds of modularity that is not breaking compatibility with the ecosystem, but instead extending it and differentiating it for your use case. So, before we were like, okay, can we put anything on chain? Is it actually even possible to ship this feature? And now, where we at? We are actually trying to design chains so that they meet the requirements of a differentiated

product. And so, what do we actually see in practice when we're talking with various enterprises? Well, one for sure, we're talking about compliance. How do we make sure that chains can actually remain compliant in a complex regulatory infrastructure? Additionally, we need to have guaranteed SLAs. We need to be able to say, "Hey, this chain has this amount of uptime. This is the decentralization properties that guarantee that uptime." And we need to make sure that the chains fees and economics are actually supporting the ecosystem flywheel that you particularly want for your ecosystem. So, all of these things and more why Ethereum is fire and altcoins are still popping off. You know, Ethereum

battle-tested, interoperable. What do you what you know, what do we We're at ECC. We got to be excited for Ethereum. And also, we have this crazy developer ecosystem that we can actually build on and that has created all of these standards that I've been talking about today. So, that's why you've got a ton of great names, great logos, very successful people and companies that are building on the OP stack, building on Ethereum. And, you know, especially these days, it's like, "Oh, but you can customize an L1. You can You can do all of these things." Well, this is the same challenge, to be honest, in a lot of ways that we learned the hard

way rebuilding the entire stack end-to-end in layer two. Where, yes, you can customize every single thing, but you might just end up locking yourself into a technical debt maintenance burden that we have actually seen over and over again. I mean, Celo, shout out to Celo, went from an L1 to an L2 for this very reason. And it's so powerful to be building on top of a larger open-source developer ecosystem. But, you know, sometimes you got to You got to raise money. And back in 2018 or whatever, you know, you can't You can't blame the folks for, uh, you know, saying we're going to rebuild the entire stack. Uh, it does sound cooler that

way, doesn't it? Um, so anyway, five questions to ask when you're picking your chain stack. Put your mind in the sense of a of a enterprise trying to come on chain. Well, one, what are you getting from building on this network? Is it a massive developer ecosystem that you're getting to leverage? Two, who is controlling the chain? Who is controlling the sequencer? What are the policies? Do they actually benefit the users or the use case that you are trying to deploy? Three, is this infrastructure managed for you or are you having to manage it yourselves?

Maybe it works to manage yourself, but maybe you want to outsource it while still retaining control over the core system. Shout out to OP enterprise, fully managed. And, you know, and also what happens when the protocol upgrades? Is the protocol going to upgrade in a way that is actually going to drive resources or, you know, issues to your users? That's That's, you know, we we need to make sure that the chain is aligned with the actual product. And we need to make sure that the pricing model fits as well. So, the ecosystem that is going to win, the enterprises that are going to come on chain, they're going to come on to chains that match their differentiated block space. It's not going to be copy

and paste of Ethereum. We did that, we succeeded, it was a necessary step, but now we are into a new phase of differentiation. And yes, on the OP stack, it's MIT, no lock-in. Shout out to the OP stack, everyone loves it. And guess what? We're entering a new phase of Ethereum. We really have to like, you know, especially at ECC 9, it's hard sometimes being in the crypto space, especially for year after year after year. But we have to remember that the reason why we've been fighting for this decentralized tech, that reason is finally coming true. We're finally actually going to be able to bring the masses, bring the global financial

system on chain, and make the thing happen, build the world computer. So, you know, just trying to bring a little optimism, I guess. One might say uh unplanned pun, but here we are. And excited. Thank you so much. Appreciate it. Thanks for your presentation. Uh anyone have a question, please? Why are layer twos so great? Oh.

No? Okay. Thank you. Thank you very much. >> Woo!