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It's good to have you on. 
That's great to be here. 

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Thanks for having me, quit. 
So, Danny Ryan is with us for 

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00:00:22,400 --> 00:00:26,400
the theorem and Asian and we all
talk about etherium to in a bit.

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And we also have a special guest
co-host today. 

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00:00:30,200 --> 00:00:33,400
Martin compliment from gnosis. 
Yeah, good to be here. 

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00:00:33,400 --> 00:00:35,000
I'm looking forward to learn 
more. 

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Quit before we Dive Right In, 
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swap dot IO / epicenter. 
Cool. 

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Daddy. 
It's so good to have you on. 

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We've been meaning to do this 
episode for a super long time. 

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It's been way over you and just 
before the podcast we kind of 

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talked about the outline and it 
was definitely enough stuff to 

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actually fill at least two 
episodes then before we fall we 

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dive into the protocol. 
Can you tell us a little bit 

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about yourself? 
What brought you to the theorem 

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Foundation? 
What did you do before? 

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What piqued your interest in 
blockchain? 

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I honestly it's an honor to be 
here. 

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I early on in my blockchain 
journey. 

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I remember listening to 
epicenter and kind of gobbling 

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up all of the content. 
So it's cool to be on the other 

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side of that right. 
Now. 

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How did I get here? 
It's a similar story to most. 

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I think, honestly, I used to be 
a freelance software developer 

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for many years. 
I graduated college and was 

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like, I really didn't want to 
work a normal job. 

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I didn't want to work in an 
office. 

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I didn't want to live in San 
Francisco all that. 

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So I moved to New Orleans. 
And was just kind of like 

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helping small businesses with 
weird software, software 

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solutions. 
That was fun. 

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Did that for many years? 
And then I think I started 

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paying attention to etherium 
around the Dow pre Dow hack, 

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someone sent me an article. 
I think it was the New York 

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Times. 
It was like, all this money is 

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being raised for this weird 
thing and that, that piqued, my 

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interest. 
I had heard about a theorem 

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before and I hadn't realized 
that it actually launched, and I

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started paying attention and the
Dow in particular. 

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I know it was a The Fantastic 
disaster, but the fact that that

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could exist and was happening. 
Really? 

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I think allow me to see and 
start to process what these Tech

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this technology could do. 
So, I guess that was about 2016.

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I became more and more obsessed 
at the beginning of 2017. 

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I realized that it's all I 
wanted to think about and all I 

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wanted to do. 
So I got rid of all of my 

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freelance clients and I said, 
I'm going to figure out and make

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this my job. 
On the Journey of, how do I 

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actually make this my 
livelihood? 

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I heard this proof of stake 
thing and I thought to myself. 

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Okay. 
Well this doesn't make any 

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sense. 
This is ever gonna work a couple

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weeks later, my okay. 
This makes sense. 

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This is interesting. 
But how can I, how can I make 

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this a business? 
And I do something with this to 

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make this my livelihood and 
like, okay, I could probably 

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make like a staking pool. 
So I started reading all about 

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steak and all about how it was 
going to work and all that kind 

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of stuff in 2017. 
Thinking that I could, I can 

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make a staking pool. 
Then I realized there was still 

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work to do. 
So I started helping out with 

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some of the work here and there 
like contributing to research 

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where I could and like, helping 
out with testing and various 

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things online. 
So come come and of 2017. 

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I had been collaborating on the 
internet, with various 

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contributors. 
I had been working on some like 

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testing infrastructure for 
Casper FFG different things. 

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And the EF was like, hey, do you
want to join? 

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We have plenty of work to do. 
So I joined the EF at the 

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beginning of 2018 and at that 
point I thought we'd probably 

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launch Rufus take and about, 
like, six, seven months. 

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Little did. 
I know that? 

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I would still be working on that
very problem today. 

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And as we will discuss, we proof
of stake for theorem is live, 

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but it's certainly not 
completed. 

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And so, today I am still working
on that very problem. 

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Super quick. 
Yeah, it's been a long time 

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coming. 
So what, what exactly do you do 

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at the theorem Foundation? 
So I work on the research team 

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and I do a mix of research 
specification writing and then a

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lot of like communication and 
coordination around those two 

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things. 
So the E2 project is consists of

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people, many teams at the EF, 
many external teams to clients, 

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whatever. 
That may mean eith one clients, 

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and the intersect is no ball 
bat. 

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So I spent a lot of time 
communicating with engineers and

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helping People understand things
and helping kind of coordinate 

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and make sure the project keeps 
moving forward. 

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Yeah, super quiet. 
How many people are are? 

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They're working on East, Who 
currently do you have any idea? 

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Definitely over a hundred but it
there's there's five active E2 

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client, teams of varying size. 
There are probably 20 people at 

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the F that work on the stuff 
full-time. 

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There's people plenty of people 
that work on it, part-time 

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increasingly. 
So as we approach the merge, 

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we'll talk about later. 
What we call it with one clients

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are increasingly working on. 
Merge, and working on E2. 

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And so it's quite quite a number
of people. 

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It must be difficult to 
coordinate because I mean it's 

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kind of there's so much of 
research anger. 

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So to it and I think research is
something that is not infinitely

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parallelizable. 
Right? 

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Right. 
And you know, I'm one of 

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probably many people that 
coordinate various things and 

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it's it's a very organic 
open-source effort. 

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And so the amount of 
coordination isn't incredibly 

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High, although as a certain at 
the end of the day, we all need 

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to talk to each other and I need
to like coalesce on on single 

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path and decisions. 
And so I try to help facilitate 

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that then maybe let's talk about
the things that have been 

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decided and cannot visit our 
life and kind of. 

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Yeah, basically tell us about 
the state of your fascia or what

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is life. 
And what is already working? 

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So first I'm going to answer 
what is what is easy to very 

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broadly and E2 is definitely a 
bit of a misnomer, but we can go

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along with that term. 
It is a series of major 

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consensus upgrades for theorem 
aimed to make the protocol more 

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secure, more sustainable, and 
more scalable. 

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And at the core of that is the 
move from a proof-of-work 

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consensus to a proof of stake 
consensus. 

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So instead of securing the 
network with mining, We're 

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energy consumption securing the 
network with tokens itself The 

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Ether. 
And so at the core of that is 

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the bootstrapping in the 
creation of this new consensus 

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mechanism. 
And what as you mentioned is 

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live today is what we call phase
zero and that went live in 

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December of 2020 and that was 
really the bootstrapping of this

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new proof of stake consensus 
mechanism. 

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That is called the beacon chain.
So in December tons of Theorem 

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community members and different 
institutions, put a bunch of 

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ether as capital and collateral.
And to what we call the deposit 

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contract and kick-started this 
new consensus mechanism called 

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The Beacon shame. 
The beacon chain exists in 

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parallel to the current, a 
theorem Network. 

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So in parallel to the proof of 
work Network, which is still 

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securing, all of the assets and 
applications and contracts 

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accounts today. 
So we have on the one hand, the 

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proof of work Network chugging 
along. 

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And the other hand, this new 
consensus mechanism called The 

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Beacon chain existing in 
parallel to this building and 

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securing itself. 
I think today there's something 

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like 4.5 million ether locked 
and secured in this chain. 

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I don't know what that's worth 
today. 

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Depends on the the minute and 
the hour, but this thing exists,

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this thing finalizes itself, 
this thing builds itself. 

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But ultimately what it does, is 
it just builds and secures it 

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Self and this is by Design. 
This is an iterative path to get

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rid of the proof of work and to 
move, if they remain net to this

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new consensus mechanism. 
Obviously if there are many net 

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is used by tons of people, 
secures tons of value and 

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there's a lot at stake in this, 
in this operation. 

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And so what we've done is built 
it in parallel, kind of vetted 

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it in production, tons, tons of 
tests live, and now, Working on 

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is actually the deprecation of 
the proof-of-work, consensus 

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mechanism in favor for this live
proof of stake consensus 

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mechanism. 
So that's where we're at today. 

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There is a proof of stake in 
this is mechanism, bootstrapped 

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live, securing, tons of value, 
but really just kind of securing

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itself in isolation. 
Then let's Deep dive into what 

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it exactly does. 
So right now it comes to 

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consensus on what? 
It comes to consensus on itself.

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And it's by itself. 
What I mean is is the purpose 

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statement says is mechanism and 
all of the the little gadgets 

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and things in it. 
So it has a validator set each 

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validators worth approximately 
32 eith. 

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So there's something like a 
hundred and forty thousand 

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validator entities in this 
consensus. 

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Each. 
One of them has like its own 

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little state. 
It has its balance. 

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It has duties. 
It has like a job at any given 

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time. 
It has randomness. 

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00:10:49,500 --> 00:10:52,500
Action, it has information about
finality. 

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00:10:52,500 --> 00:10:55,200
So which portions of the chain 
are finalized and whenever be 

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00:10:55,200 --> 00:10:59,500
reverted and it has a lot of 
just various accounting between 

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finality and kind of the head of
the chain. 

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00:11:02,700 --> 00:11:06,400
So there's a number of 
operations related to the 

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functionality of this chain and 
those operations are kind of 

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what we call validator level 
transactions. 

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00:11:13,400 --> 00:11:17,500
So system-level transactions and
really what it does is there's a

200
00:11:17,508 --> 00:11:19,300
core operation called at two 
stations. 

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00:11:19,400 --> 00:11:23,700
We're validators are constantly 
signaling what they see as the 

202
00:11:23,700 --> 00:11:25,900
head of the chain and what they 
see as their local state of the 

203
00:11:25,900 --> 00:11:28,600
world, and they use these 
messages to come to consensus 

204
00:11:28,600 --> 00:11:32,300
with each other. 
And ultimately drive this, this 

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00:11:32,300 --> 00:11:34,300
core like system layer of the 
chain. 

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00:11:34,400 --> 00:11:37,800
There's some other operations 
related to validate or activity,

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00:11:37,800 --> 00:11:42,000
like deposits onboarding, new 
validators exits leaving the 

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00:11:42,000 --> 00:11:44,200
validator set and a couple of 
things. 

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00:11:44,800 --> 00:11:47,100
So really, really it's like 
this. 

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00:11:47,300 --> 00:11:49,300
This it's a proof of stake 
system and there's a lot. 

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00:11:49,500 --> 00:11:51,100
Of different accounting, 
different little operations 

212
00:11:51,100 --> 00:11:53,900
going on and it builds and comes
to consensus on itself. 

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00:11:55,700 --> 00:11:58,100
Let's get to our sponsor Solana.
Now. 

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00:11:58,100 --> 00:12:01,200
This is a special, and for me to
read, because I've been in deep 

215
00:12:01,200 --> 00:12:04,300
supporter of this project since 
meeting the Solana, team back in

216
00:12:04,300 --> 00:12:06,800
2018. 
I invest personally in the 

217
00:12:06,800 --> 00:12:09,600
project and my company course, 
one is super deeply involved in 

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00:12:09,600 --> 00:12:12,900
the Solana ecosystem, including 
running the biggest validator. 

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00:12:13,200 --> 00:12:16,500
So, what's so cool about Solana.
Well, we all know that 

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scalability is the single most 
important issue facing the 

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00:12:19,800 --> 00:12:23,000
blockchain industry today. 
And to Solana, blockchain is an 

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00:12:23,000 --> 00:12:25,300
amazing solution for it. 
The networks. 

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00:12:25,500 --> 00:12:29,200
It's thousands of transactions 
per second with 400 milliseconds

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00:12:29,200 --> 00:12:32,400
block times and over 500 
validators. 

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00:12:32,600 --> 00:12:35,500
The special thing about Solana 
is also that it's not a 

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00:12:35,500 --> 00:12:38,900
Charlotte Block Chain. 
It's a single Block Chain, hyper

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00:12:38,900 --> 00:12:42,600
optimized for performance. 
So that makes it really easy to 

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00:12:42,600 --> 00:12:46,300
maintain composability between 
all of the apps on Solana. 

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00:12:46,300 --> 00:12:49,900
So that they work together 
seamlessly now and forever. 

230
00:12:50,400 --> 00:12:53,200
Just wanna ecosystem is growing 
at a rapid pace and it's a great

231
00:12:53,200 --> 00:12:55,900
place to build your project or 
just getting by Walt with the 

232
00:12:55,900 --> 00:12:58,900
community. 
So go to salon.com epicenter to 

233
00:12:58,900 --> 00:13:03,200
learn more in principle. 
I can become a validator, right?

234
00:13:03,200 --> 00:13:06,800
So I need 32 eith and what, what
do I need to do then to, to 

235
00:13:06,800 --> 00:13:10,700
become a Stager? 
Yes, anyone can become validator

236
00:13:10,700 --> 00:13:17,500
if they have or accumulate 32 
either, and what you do is 

237
00:13:17,800 --> 00:13:19,600
there's a number of different 
tools, the different tabs. 

238
00:13:19,600 --> 00:13:22,000
There's this nice real tool 
called launch pad, which has a 

239
00:13:22,008 --> 00:13:25,100
nice like user interface. 
You can do this in a number of 

240
00:13:25,100 --> 00:13:27,800
ways, but you can go to launch 
pad. 

241
00:13:28,200 --> 00:13:32,400
You do a key generation step, 
where you generate an active 

242
00:13:32,400 --> 00:13:33,900
key. 
So, the key that's going to sign

243
00:13:33,900 --> 00:13:36,200
out to stations and build blocks
and different things. 

244
00:13:36,800 --> 00:13:39,600
And then what we call withdraw, 
All credential which is can be a

245
00:13:39,600 --> 00:13:41,300
cold key. 
It doesn't have to be on on the 

246
00:13:41,300 --> 00:13:45,500
machine that ultimately owns the
funds when the validators done 

247
00:13:46,000 --> 00:13:49,600
with with validation. 
And so what that validator to 

248
00:13:49,600 --> 00:13:52,600
become a validator, what you do 
is you take that 32 eith 

249
00:13:52,800 --> 00:13:57,300
generate some keys sign a 
deposit message and send that 

250
00:13:57,300 --> 00:14:02,400
ether to the deposit contract, 
which is a special contract on 

251
00:14:02,600 --> 00:14:04,700
the current. 
If they remain etan eith one, 

252
00:14:05,300 --> 00:14:07,900
you send it with this data and 
then the beacon chain. 

253
00:14:08,100 --> 00:14:11,500
Which operates in parallel to 
that proof-of-work, network is 

254
00:14:11,500 --> 00:14:12,800
listening to the deposit 
contract. 

255
00:14:12,800 --> 00:14:15,100
Coming to consensus on the state
of the deposit contract, and 

256
00:14:15,100 --> 00:14:18,100
inducting new deposits. 
So, right now, it's kind of like

257
00:14:18,100 --> 00:14:21,600
a one-way Bridge from the 
proof-of-work, etherium into 

258
00:14:21,700 --> 00:14:25,600
this new Beacon Chang. 
Once you have your validated 

259
00:14:25,600 --> 00:14:28,600
deposit inducted into the beacon
chain, there's a little bit of 

260
00:14:28,600 --> 00:14:31,400
like process overhead a little 
bit of time that it takes in 

261
00:14:31,400 --> 00:14:33,900
terms of come to consensus on 
this, then you get a new 

262
00:14:33,900 --> 00:14:36,500
validator record in the state of
the beacon chain. 

263
00:14:36,800 --> 00:14:39,600
The beacon state is like This 
kind of system layer state of 

264
00:14:39,600 --> 00:14:43,300
this thing. 
And after a number of epochs 

265
00:14:44,100 --> 00:14:48,800
something like for epochs each 
Epoch see, 6.4 minutes you then 

266
00:14:48,800 --> 00:14:52,000
become activated and at that 
point your validator. 

267
00:14:52,000 --> 00:14:55,500
Now, each Epoch will have at 
least one. 

268
00:14:55,500 --> 00:14:58,600
If not a number of Duties, with 
respect to the the beacon chain 

269
00:14:59,200 --> 00:15:01,800
and they get little assignments 
and they listen to the network 

270
00:15:01,800 --> 00:15:05,100
and signed messages and talk to 
each other and come to consensus

271
00:15:05,100 --> 00:15:08,900
on things. 
I went to directly ask about 

272
00:15:08,900 --> 00:15:12,400
the, the deposit contract 
because the premise of our was 

273
00:15:12,400 --> 00:15:17,100
that the two things are living 
in parallel, but that is already

274
00:15:17,100 --> 00:15:21,300
obviously a connection. 
So, apparently you need, or the,

275
00:15:21,300 --> 00:15:25,000
he's to chain needs to read from
the East one chain, and kind of 

276
00:15:25,000 --> 00:15:27,200
needs to understand these one 
chain. 

277
00:15:27,200 --> 00:15:31,300
So does it mean that to run a 
each to validator? 

278
00:15:31,300 --> 00:15:35,300
You also need to run east one 
client or otherwise, how would 

279
00:15:35,300 --> 00:15:38,000
you know? 
That this deposit happened. 

280
00:15:39,900 --> 00:15:46,900
So yes, there is a one-way and 
very restricted Bridge from the 

281
00:15:46,900 --> 00:15:49,200
eighth one chain into the beacon
chain. 

282
00:15:49,200 --> 00:15:52,900
And as a validator, you are 
running the beacon chain, which 

283
00:15:52,900 --> 00:15:56,400
is actually relatively 
lightweight and running the 

284
00:15:56,400 --> 00:15:58,300
etherium. 
One proof of work Network. 

285
00:15:58,600 --> 00:16:01,600
This is to be able to listen, 
primarily to that deposit 

286
00:16:01,600 --> 00:16:07,100
contract, and be able to build 
and connect that bridge to 

287
00:16:07,100 --> 00:16:09,300
bootstrap this consensus. 
Mechanism, which is a crypto 

288
00:16:09,300 --> 00:16:11,300
economic. 
This is mechanism based off of 

289
00:16:11,300 --> 00:16:17,400
ether, you do need Aether and so
that link is critical for the 

290
00:16:17,400 --> 00:16:20,900
bootstrapping and functioning of
the system as a validator. 

291
00:16:20,900 --> 00:16:23,100
You do have these two pieces of 
software that you're running in 

292
00:16:23,100 --> 00:16:24,800
parallel and communicate with 
each other. 

293
00:16:25,400 --> 00:16:29,600
And this actually is kind of 
Representative of what the 

294
00:16:29,600 --> 00:16:31,700
system would look like after the
merge. 

295
00:16:31,700 --> 00:16:34,800
So once these systems are 
unified you, similarly would 

296
00:16:34,800 --> 00:16:37,400
have to run the beacon chain, 
which is kind of the system 

297
00:16:37,400 --> 00:16:40,000
lovable statement. 
As well as a piece of software 

298
00:16:40,000 --> 00:16:42,900
that will give you access into 
the execution layer into the 

299
00:16:42,900 --> 00:16:45,700
things that we know and love 
essentially like death - 

300
00:16:45,700 --> 00:16:51,600
proof-of-work plus Beacon chain.
I assume it's incentivized to be

301
00:16:51,600 --> 00:16:53,400
a validator. 
So what do I get? 

302
00:16:53,400 --> 00:16:58,400
If I get to build a block and 
how is it determine if and when 

303
00:16:58,400 --> 00:17:03,700
I get to build one? 
So there's two primary actions 

304
00:17:03,700 --> 00:17:08,200
that are rewarded for the 
validator and one is this action

305
00:17:08,200 --> 00:17:13,300
called testing, which you are 
assigned to a test exactly once 

306
00:17:13,300 --> 00:17:15,800
per Epoch. 
So exactly once per six point, 

307
00:17:15,800 --> 00:17:19,400
four minutes and this accounts 
for actually 7/8 of your 

308
00:17:20,000 --> 00:17:23,000
validation reward. 
So it's the majority of the 

309
00:17:23,000 --> 00:17:26,800
issuance goes to this rarey 
regular intervals activity, 

310
00:17:27,099 --> 00:17:29,700
which is nice. 
There's a reason for this 

311
00:17:29,700 --> 00:17:33,500
because it helps with Kind of 
hardening the for choice and 

312
00:17:33,500 --> 00:17:35,200
keeping things. 
Very stable because many 

313
00:17:35,200 --> 00:17:38,400
validators get to even though 
only one validator at any, given

314
00:17:38,400 --> 00:17:40,900
slot is producing a block, many 
validators, get to throw in 

315
00:17:40,900 --> 00:17:42,600
their weight and say what the 
head is. 

316
00:17:42,600 --> 00:17:44,900
So it makes it very difficult 
for these like this, 

317
00:17:44,900 --> 00:17:47,800
monopolistic activity of 
producing a block to be able to 

318
00:17:48,300 --> 00:17:50,400
reorganize and and do different 
attacks. 

319
00:17:50,800 --> 00:17:54,700
And it's also nice because it 
really Smooths out rewards where

320
00:17:54,700 --> 00:17:58,800
is in, in proof-of-work. 
You're rolling the dice over and

321
00:17:58,800 --> 00:18:01,100
over and over again and every 
once in awhile, you randomly 

322
00:18:01,100 --> 00:18:02,800
generated. 
A chance to produce a block and 

323
00:18:02,800 --> 00:18:04,900
get a big payout. 
Whereas in this proof of stake 

324
00:18:04,900 --> 00:18:08,400
system, the rewards and payouts 
are very much more regular eyes.

325
00:18:08,400 --> 00:18:12,700
Even if you have just say one 
validator, so at the stations 

326
00:18:13,200 --> 00:18:17,600
are this like, very critical 
message type for securing the 

327
00:18:17,600 --> 00:18:19,700
head of the chain and finalizing
things. 

328
00:18:20,500 --> 00:18:25,100
But then, as you said this other
very critical role is actually 

329
00:18:25,100 --> 00:18:28,600
producing a block. 
And So based off your validator 

330
00:18:28,600 --> 00:18:30,900
assignments, which is based off 
of Randomness General. 

331
00:18:31,300 --> 00:18:34,200
Generation on chain which we can
talk a little bit about every 

332
00:18:34,200 --> 00:18:37,200
single slot. 
There is exactly one validator 

333
00:18:37,500 --> 00:18:40,200
assigned to produce a block. 
A slot is every 12 seconds. 

334
00:18:40,200 --> 00:18:42,200
It's kind of like the heartbeat 
of the system. 

335
00:18:42,400 --> 00:18:45,800
So instead of this stochastic 
process of mining, which 

336
00:18:45,800 --> 00:18:51,500
randomly there's a target for 
Block time and randomly blocks, 

337
00:18:51,500 --> 00:18:54,100
get produced kind of around that
Target. 

338
00:18:54,300 --> 00:18:56,800
Instead. 
There's this click of every 12 

339
00:18:56,800 --> 00:19:00,500
seconds blocks can be produced 
if the proposer shows up and 

340
00:19:00,500 --> 00:19:03,600
every single 12 Seconds, a 
producer, a validator is 

341
00:19:03,600 --> 00:19:06,400
assigned. 
And so, if it's your say it's 

342
00:19:06,400 --> 00:19:12,600
slot 10001, you had a little bit
of look ahead, say you had 32 

343
00:19:12,600 --> 00:19:15,000
slots in advance. 
You knew that you were going to 

344
00:19:15,000 --> 00:19:17,000
produce a block. 
So you're listening to the chain

345
00:19:17,200 --> 00:19:21,900
and you listen for valuable 
things to include in your block 

346
00:19:21,900 --> 00:19:24,300
and you build off of the parent 
and produce a block and 

347
00:19:24,300 --> 00:19:26,600
broadcast the network valuable 
things. 

348
00:19:26,600 --> 00:19:30,100
Today are primarily just these 
validator operations. 

349
00:19:30,100 --> 00:19:33,800
So at two stations Posits and 
things like that, but post-merge

350
00:19:33,800 --> 00:19:36,300
you would also be including user
land. 

351
00:19:36,300 --> 00:19:40,400
Application layer transactions 
and seeking to maximize 

352
00:19:40,900 --> 00:19:43,300
transaction Revenue, like, like,
miners do today. 

353
00:19:45,200 --> 00:19:48,700
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370
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We want to thank Exodus for 
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371
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epicenter. 
So what happens if for some 

372
00:20:51,200 --> 00:20:55,500
reason the the validators are 
designed to this block or slot 

373
00:20:55,700 --> 00:20:59,100
doesn't show up? 
A slag can be skipped. 

374
00:20:59,400 --> 00:21:03,000
So in the, in the normal case, 
this looks just kind of like a 

375
00:21:03,100 --> 00:21:05,900
longer block time. 
For example, sometimes we have 

376
00:21:05,900 --> 00:21:08,700
like just based on the 
stochastic process and proof of 

377
00:21:08,700 --> 00:21:10,800
work. 
Like, sometimes you have blocks 

378
00:21:10,800 --> 00:21:12,800
that happen in 10 seconds. 
Sometimes you have blocks that 

379
00:21:12,800 --> 00:21:15,500
happened in 30 seconds. 
So in the event that a slot was 

380
00:21:15,500 --> 00:21:19,900
skipped, you would have 24 
seconds in between the slot 

381
00:21:19,900 --> 00:21:22,000
time. 
And that would look like a 

382
00:21:22,000 --> 00:21:25,100
slight reduction in capacity of 
the chain for that given time. 

383
00:21:25,600 --> 00:21:29,300
Interestingly with like 1559. 
The mechanics and variable block

384
00:21:29,300 --> 00:21:32,900
sizes that can kind of like be 
self-balancing and the average. 

385
00:21:33,300 --> 00:21:37,900
But what we've seen in the live 
system is something like a 99.5 

386
00:21:37,900 --> 00:21:41,400
percent participation rate with 
respect to blocks and out to 

387
00:21:41,400 --> 00:21:44,700
stations. 
So in the normal operation of 

388
00:21:44,700 --> 00:21:49,800
the chain, so not crazy, Global 
Layton sees or not some attack 

389
00:21:49,800 --> 00:21:52,600
scenario or major failure in a 
client. 

390
00:21:53,400 --> 00:21:57,400
We expect to see almost all the 
time a block. 

391
00:21:57,500 --> 00:22:03,700
WE 12 seconds. 
So you said 99.5% for both the 

392
00:22:04,400 --> 00:22:06,900
stations and the Box? 
Yeah. 

393
00:22:07,100 --> 00:22:09,400
Alright. 
Okay, and do I get slashed, if I

394
00:22:09,408 --> 00:22:11,400
don't show up, or if I don't 
detest. 

395
00:22:11,800 --> 00:22:18,200
So we reserve the word slashing 
for very explicitly malicious 

396
00:22:18,200 --> 00:22:21,500
activities and what can be more,
severe penalties. 

397
00:22:21,700 --> 00:22:24,900
So, in normal operation, we have
rewards and we have penalties 

398
00:22:24,900 --> 00:22:26,600
penalties. 
And so you have this dirty to 

399
00:22:26,600 --> 00:22:31,600
eat steak and if you do Job, 
well, you can be rewarded and if

400
00:22:31,608 --> 00:22:35,500
you don't do your job or you 
like our fail, you're trying to 

401
00:22:35,500 --> 00:22:38,000
do your job and you can't quite 
find the head of the chain, you 

402
00:22:38,000 --> 00:22:40,600
might, instead lose a small 
amount of either. 

403
00:22:40,900 --> 00:22:46,000
And so in normal operation, if 
you and this is variable 

404
00:22:46,000 --> 00:22:50,000
depending on the validators, the
size of a later set, but in 

405
00:22:50,000 --> 00:22:53,100
normal operation, in a year, you
might make anywhere from like 

406
00:22:53,100 --> 00:22:58,000
six to twelve percent return on 
that third to eighth deposit. 

407
00:22:58,100 --> 00:23:01,700
Whereas, if you were off, Line 
the entire time you your 

408
00:23:01,700 --> 00:23:04,100
penalties would equal 
approximately what you could 

409
00:23:04,100 --> 00:23:05,600
have made. 
So you actually instead of 

410
00:23:06,100 --> 00:23:09,200
making six percent that year you
would have lost six percent that

411
00:23:09,200 --> 00:23:10,300
year and it's not just 
opportunity cost. 

412
00:23:10,300 --> 00:23:12,500
You would actually being 
penalized a little bit and seen 

413
00:23:12,800 --> 00:23:16,600
a linear decrease in your state.
And so that's rewards and 

414
00:23:16,600 --> 00:23:18,700
penalties for all the basic 
activities. 

415
00:23:18,800 --> 00:23:22,700
You can either receive Rewards 
or you can be slightly penalized

416
00:23:22,900 --> 00:23:25,800
if you aren't able to perform 
your job, there's individual 

417
00:23:25,800 --> 00:23:29,600
ones and there's also group. 
So like if the amount of You're 

418
00:23:29,600 --> 00:23:32,400
at the station reward would 
actually scale with this like 

419
00:23:32,400 --> 00:23:34,500
group mechanic. 
So if like a hundred percent of 

420
00:23:34,500 --> 00:23:37,900
the validators online, you can 
receive maximal validate a 

421
00:23:37,900 --> 00:23:41,800
reward but if only 80% of 
validators were online, you 

422
00:23:41,800 --> 00:23:44,700
would actually only get point 
eight of your total a sensation 

423
00:23:44,700 --> 00:23:47,500
reward. 
And this is so that there's this

424
00:23:47,500 --> 00:23:52,000
like incentive one to not like -
your neighbors and take them 

425
00:23:52,000 --> 00:23:53,900
down so you can get their reward
instead. 

426
00:23:54,300 --> 00:23:59,300
And also in the event of Crisis,
there's this group this group. 

427
00:23:59,400 --> 00:24:02,100
XO that you want to figure out 
what the hell is going on and 

428
00:24:02,100 --> 00:24:04,600
try to fix the network? 
So those are rewards and 

429
00:24:04,600 --> 00:24:06,500
penalties. 
You did bring up slashing. 

430
00:24:07,300 --> 00:24:11,000
Slashing is actually, it is a 
penalty, but it's a much more 

431
00:24:11,000 --> 00:24:14,300
severe penalty and it's in 
relation to these explicitly, 

432
00:24:14,700 --> 00:24:18,200
cryptographically provable, 
nefarious activities. 

433
00:24:18,700 --> 00:24:22,500
So for example, you're assigned 
to a test. 

434
00:24:22,500 --> 00:24:25,200
Every Epoch. 
This is very important for the 

435
00:24:25,200 --> 00:24:28,200
operation of the chain. 
This helps finalize things. 

436
00:24:28,300 --> 00:24:30,400
This helps secure. 
Head of the chain in the fork 

437
00:24:30,400 --> 00:24:32,300
choice and you're only supposed 
to do it. 

438
00:24:32,300 --> 00:24:36,000
Once for Epoch. 
If instead, you do it twice for 

439
00:24:36,000 --> 00:24:38,300
Epoch. 
You can be slashed because this 

440
00:24:39,100 --> 00:24:41,800
is an activity that could lead 
to lead to a network fault. 

441
00:24:42,300 --> 00:24:45,100
Essentially. 
The idea is in proof-of-work. 

442
00:24:46,200 --> 00:24:50,800
You have a physical real-world 
piece of Hardware that you can 

443
00:24:50,800 --> 00:24:53,800
only point to one chain or 
another. 

444
00:24:53,800 --> 00:24:58,100
So one fork or another and or 
you could split it, you can do 

445
00:24:58,100 --> 00:25:00,900
50% on that for of in Energy on 
that for fifty percent on the on

446
00:25:00,900 --> 00:25:04,300
the other Fork, but you cannot 
put a hundred percent on to 4K 

447
00:25:04,300 --> 00:25:07,600
and a hundred percent on a fork 
be whereas in, in proof of 

448
00:25:07,600 --> 00:25:10,900
stake, that economic asset is 
actually just related to you 

449
00:25:10,900 --> 00:25:13,000
signing messages. 
Signing messages is really 

450
00:25:13,000 --> 00:25:15,600
cheap. 
And so the idea here is that 

451
00:25:15,600 --> 00:25:19,300
messages that can lead to you 
attempting to apply your stake 

452
00:25:19,300 --> 00:25:22,500
in multiple places and could 
lead to network faults and 

453
00:25:22,500 --> 00:25:24,000
confusion. 
As to what the head of the chain

454
00:25:24,000 --> 00:25:26,300
is where to make those messages 
expensive. 

455
00:25:27,100 --> 00:25:29,300
Similarly, to how allocating 
your physical. 

456
00:25:29,400 --> 00:25:32,000
Sources, the mining Hardware was
expensive. 

457
00:25:32,200 --> 00:25:36,700
And so thus, if you do some of 
these activities where you're 

458
00:25:36,700 --> 00:25:40,000
essentially signaling two 
different versions of a history,

459
00:25:40,700 --> 00:25:45,100
you can be penalized severely 
because they're provably 

460
00:25:45,100 --> 00:25:49,200
nefarious messages and that's 
what is called slashing by 

461
00:25:49,200 --> 00:25:55,200
severe. 
I mean that if enough validators

462
00:25:55,200 --> 00:26:00,300
were doing that type of like 
double signaling Within A recent

463
00:26:00,300 --> 00:26:04,000
window of time to create a 
network fault and that minimum 

464
00:26:04,000 --> 00:26:05,700
threshold is 1/3 of the 
validators. 

465
00:26:06,200 --> 00:26:07,600
Then you'll be punished 
maximally. 

466
00:26:07,600 --> 00:26:10,400
So if one third of the validator
said is doing / Abel, things 

467
00:26:10,400 --> 00:26:15,000
within a recent time window, 
then those Alders actually lose 

468
00:26:15,200 --> 00:26:16,400
a hundred percent of their 
state. 

469
00:26:16,700 --> 00:26:20,300
And that's because we want to 
have, like provable security 

470
00:26:20,300 --> 00:26:24,400
bounds based off of, you know, 
if and when attacks happen, 

471
00:26:25,200 --> 00:26:28,600
whereas if you're, if this is 
just like an isolated event say 

472
00:26:28,600 --> 00:26:33,400
I'm just running a The validator
I do something ill-advised with 

473
00:26:33,400 --> 00:26:37,700
my staking setup and I'm signing
double messages by accident then

474
00:26:38,000 --> 00:26:40,100
and but no one else has really 
been doing in recent time. 

475
00:26:40,100 --> 00:26:41,500
When do I get a slap on the 
wrist? 

476
00:26:41,500 --> 00:26:43,200
I get kicked out of valid your 
set. 

477
00:26:43,200 --> 00:26:45,600
But since the fraction of 
alligators that have been 

478
00:26:45,600 --> 00:26:48,900
slashed recently is very low, my
penalties like still relatively.

479
00:26:48,900 --> 00:26:52,200
Well, I might lose like 1/8 and 
get kicked out of valladares up.

480
00:26:52,600 --> 00:26:55,800
So that's so we have rewards, we
have penalties for normal 

481
00:26:55,800 --> 00:26:58,500
operation and we have slashing 
which is for these like very 

482
00:26:58,500 --> 00:27:01,000
explicit. 
At nefarious activities like 

483
00:27:01,000 --> 00:27:03,500
double signing out to stations 
or producing two blocks in the 

484
00:27:03,500 --> 00:27:07,200
same slot, that kind of stuff. 
You're talking about slashing. 

485
00:27:07,300 --> 00:27:09,900
Is there a chance to do to do 
something? 

486
00:27:09,900 --> 00:27:13,700
That's so fundamental to the 
level that you get slashed by 

487
00:27:13,700 --> 00:27:16,200
accident? 
So concretely, well, we have 

488
00:27:16,200 --> 00:27:18,900
multiple client implementations.
So. 

489
00:27:19,100 --> 00:27:22,600
Well, there might be the 
situation that one client says, 

490
00:27:22,600 --> 00:27:26,000
well, that is a valid block and 
another client says that's not a

491
00:27:26,000 --> 00:27:27,900
valid block. 
And therefore is kind of 

492
00:27:27,900 --> 00:27:30,000
ignoring that and proposing. 
Another one. 

493
00:27:31,700 --> 00:27:34,900
We have seen some number of 
slashings on may not since 

494
00:27:34,900 --> 00:27:40,500
December and almost all of these
have been due to individuals and

495
00:27:40,500 --> 00:27:44,900
institutions creating 
sophisticated and attempted to 

496
00:27:44,908 --> 00:27:46,800
be sophisticated redundancy 
setups. 

497
00:27:47,200 --> 00:27:51,600
So essentially it's very if you 
have your keys in one place and 

498
00:27:51,600 --> 00:27:53,600
you're tracking the messages 
that you've signed. 

499
00:27:54,300 --> 00:27:57,400
It's very simple. 
It's very the logic is, can be, 

500
00:27:58,100 --> 00:28:02,100
you know, in six lines of code. 
It's very simple to like Not 

501
00:28:02,400 --> 00:28:08,000
double sign, essentially, a 
couple of conditionals and a 

502
00:28:08,008 --> 00:28:10,800
very, very small database and I 
can prevent myself from doing 

503
00:28:10,800 --> 00:28:13,300
this. 
But if I have my keys in two 

504
00:28:13,300 --> 00:28:16,800
locations, say, I'm trying to 
run client a and client B, and 

505
00:28:16,800 --> 00:28:19,500
I'm trying to run them on two 
machines to make sure that I 

506
00:28:19,500 --> 00:28:21,700
don't have any downtime. 
Then I'm going to be signing, 

507
00:28:21,700 --> 00:28:25,600
double messages, almost every 
Epoch, and I'm going to almost 

508
00:28:25,600 --> 00:28:28,300
certainly be slashed. 
And so this is actually what 

509
00:28:28,300 --> 00:28:31,300
we've seen is. 
We've seen some hobbyists that 

510
00:28:31,400 --> 00:28:34,100
That didn't didn't get the memo 
and are trying to make sure they

511
00:28:34,108 --> 00:28:36,500
don't have any down time. 
They've been a couple of them 

512
00:28:36,500 --> 00:28:39,200
have been slashed but actually 
what we've seen more so is these

513
00:28:39,200 --> 00:28:42,800
institutions who want to 
advertise, you know, the best up

514
00:28:42,800 --> 00:28:46,600
time ever and what they do is 
they have like way too 

515
00:28:46,600 --> 00:28:51,400
sophisticated of deploys and and
don't manage the keys properly 

516
00:28:51,400 --> 00:28:53,400
and have the keys in two 
different locations. 

517
00:28:53,500 --> 00:28:56,100
That's the key is you have your 
keys in two different locations 

518
00:28:56,100 --> 00:28:58,200
and they both think they're in 
charge and there, you know, 

519
00:28:58,200 --> 00:29:00,900
there's no communication there. 
You're going to be / because 

520
00:29:00,900 --> 00:29:03,300
you're going to Like eventually 
have a slightly different 

521
00:29:03,300 --> 00:29:06,200
worldview. 
Like one block, one client might

522
00:29:06,200 --> 00:29:08,300
see the block the other client, 
might not say the block, and 

523
00:29:08,300 --> 00:29:10,000
they both will sign something 
different. 

524
00:29:10,100 --> 00:29:13,000
So, basically, your advice is 
not, don't do it too, 

525
00:29:13,000 --> 00:29:15,100
complicated setup. 
Will give a simple example, 

526
00:29:15,200 --> 00:29:18,800
because if you're offline, even 
for a day, like you're gonna 

527
00:29:18,800 --> 00:29:22,100
lose very, very little money. 
Because again, we have rewards 

528
00:29:22,100 --> 00:29:23,900
and penalties for normal 
operation. 

529
00:29:23,900 --> 00:29:26,000
You if you're offline for a 
whole year you might lose like 

530
00:29:26,000 --> 00:29:29,400
eight percent. 
Whereas if you if you like due 

531
00:29:29,400 --> 00:29:33,400
to complex of a setup, you're 
going to You will lose much, you

532
00:29:33,400 --> 00:29:37,000
can lose much more than that. 
So there's many client teams and

533
00:29:37,000 --> 00:29:38,000
a number of them have 
implemented. 

534
00:29:38,000 --> 00:29:40,900
This new feature called 
doppelganger detection. 

535
00:29:40,900 --> 00:29:43,800
Super Fizz came up with it and 
super foods from the East, a 

536
00:29:43,808 --> 00:29:48,900
community. 
And he the idea is right when 

537
00:29:48,900 --> 00:29:52,100
you turn on your client and it 
knows that there's some 

538
00:29:52,100 --> 00:29:53,900
balladeer keys associated with 
it. 

539
00:29:54,200 --> 00:29:57,000
It actually won't start its job 
immediately. 

540
00:29:57,200 --> 00:30:00,600
It'll wait like an Epoch or two 
and just listen to the network 

541
00:30:01,000 --> 00:30:03,000
and it Those that it's not 
signing anything in stop 

542
00:30:03,000 --> 00:30:05,900
broadcasting anything. 
So, if it sees any messages come

543
00:30:05,900 --> 00:30:10,000
in from itself, it's detected a 
doppelganger. 

544
00:30:10,100 --> 00:30:13,300
And it says, Oh No, abort, abort
don't sign any messages. 

545
00:30:13,800 --> 00:30:15,900
And this is actually a new 
feature that's rolled out a 

546
00:30:15,908 --> 00:30:17,500
number of clients. 
And I think it's protecting 

547
00:30:17,500 --> 00:30:20,200
especially especially the 
hobbyist with the simple setups.

548
00:30:20,600 --> 00:30:24,000
Obviously, then you have like an
Epoch or two of extra downtime. 

549
00:30:24,000 --> 00:30:26,200
But like I said, downtimes not 
the issue. 

550
00:30:26,300 --> 00:30:29,700
It's really like double signing 
is like the severely worse 

551
00:30:29,700 --> 00:30:31,900
activity. 
And so I think You can like 

552
00:30:31,900 --> 00:30:33,600
manually override you can do 
like a flag. 

553
00:30:33,600 --> 00:30:37,800
That's like - - capital letters.
Unsafe disabled, doppelganger 

554
00:30:37,800 --> 00:30:40,200
detection. 
But for most users this, you 

555
00:30:40,200 --> 00:30:43,200
just run with the round with the
default and and have those 

556
00:30:43,200 --> 00:30:46,600
protections. 
So when you're looking for a 

557
00:30:46,608 --> 00:30:50,900
flight, you go to a flight 
aggregator to see all the 

558
00:30:50,900 --> 00:30:53,600
different places where you can 
buy the fly to get all the 

559
00:30:53,600 --> 00:30:57,700
options and make sure you get 
the best price for your travel 

560
00:30:57,700 --> 00:31:00,400
plans. 
And when you're making a defy 

561
00:31:00,400 --> 00:31:03,400
swap, just do the same and use 
para swap. 

562
00:31:03,400 --> 00:31:06,600
It beats the market prices 
across all the major indexes, 

563
00:31:06,600 --> 00:31:09,700
because it Aggregates them and 
thanks to their network of 

564
00:31:09,700 --> 00:31:13,900
professional market makers. 
You get zero slippage on your 

565
00:31:14,100 --> 00:31:16,800
Raids, so they just push the 
huge update. 

566
00:31:16,800 --> 00:31:18,500
That's even faster. 
More liquid. 

567
00:31:18,500 --> 00:31:21,700
Thanks to a brand new. 
Algorithm / swap is now multi 

568
00:31:21,700 --> 00:31:24,900
chain and has expanded polygon 
and bind and smart chain. 

569
00:31:25,400 --> 00:31:28,300
So go and check it out. 
Give para swap a try at 

570
00:31:28,300 --> 00:31:34,000
Periscope dot IO / epicenter. 
If you prefer to epochs 

571
00:31:34,000 --> 00:31:36,600
repeatedly now, so maybe let's 
talk about that because that's 

572
00:31:36,600 --> 00:31:38,200
something we don't have on each 
one. 

573
00:31:38,400 --> 00:31:42,400
So what is an Epoch and how does
it relate to finality? 

574
00:31:43,000 --> 00:31:46,300
So an Epoch is a collection of 
32 slots. 

575
00:31:46,400 --> 00:31:48,400
Like I said, slots are every 12 
seconds. 

576
00:31:48,800 --> 00:31:52,500
So an Epoch is every six point, 
four minutes, slots are this 

577
00:31:52,500 --> 00:31:55,000
unit of time at which blocks and
very granular. 

578
00:31:55,000 --> 00:31:57,700
Actions can happen. 
Whereas epochs is like a 

579
00:31:57,700 --> 00:32:01,000
collection of slots and there's 
like a, an aggregate of Duty. 

580
00:32:01,100 --> 00:32:03,400
He's and different accounting 
that happen at each Epoch. 

581
00:32:03,700 --> 00:32:05,900
And so every pocket search you 
slots. 

582
00:32:06,400 --> 00:32:10,700
Every validator is assigned to a
test to exactly one slot per 

583
00:32:10,700 --> 00:32:13,400
Epoch. 
And so an Epoch in advance. 

584
00:32:13,700 --> 00:32:17,100
My validator client gets 
notified that, okay. 

585
00:32:17,100 --> 00:32:20,200
At the six slot into the next 
Epoch, you're going to have to 

586
00:32:20,200 --> 00:32:22,600
attest to the head. 
So at that point, you'll brought

587
00:32:22,600 --> 00:32:25,800
you'll sign a message and 
broadcasts and out to station 

588
00:32:26,100 --> 00:32:29,000
and similarly like with an 
Epoch, you'll be, you can 

589
00:32:29,000 --> 00:32:30,400
potentially be assigned to a 
Blog. 

590
00:32:30,800 --> 00:32:34,800
And All the valid, the entire 
validator set, has this one out 

591
00:32:34,800 --> 00:32:40,500
to station / Epoch and thus, at 
the end of an Epoch is kind of 

592
00:32:40,500 --> 00:32:45,000
the when accounting is done. 
So, in the previous Epoch, we 

593
00:32:45,000 --> 00:32:45,900
go. 
And look. 

594
00:32:46,000 --> 00:32:47,600
Okay. 
How many at the stations were 

595
00:32:47,600 --> 00:32:49,500
there? 
Was their agreement was their 

596
00:32:49,500 --> 00:32:51,400
disagreement. 
What are the rewards and 

597
00:32:51,400 --> 00:32:53,800
penalties based off of, like the
individual and the aggregate 

598
00:32:53,800 --> 00:32:59,000
activity? 
And is there enough consensus on

599
00:32:59,000 --> 00:33:02,700
the state of things to update? 
The finality calculations and 

600
00:33:02,700 --> 00:33:06,800
Epoch can first be justified. 
And then be finalized 

601
00:33:06,800 --> 00:33:09,400
justification is kind of like 
this first round of signaling 

602
00:33:09,700 --> 00:33:13,000
for validators to the say. 
I think that this block will 

603
00:33:13,000 --> 00:33:15,500
remain in the chain forever. 
And then once something is 

604
00:33:15,500 --> 00:33:19,800
Justified, they can signal a 
deeper thought which is. 

605
00:33:19,800 --> 00:33:22,500
Okay. 
Let's now say this, this block 

606
00:33:22,500 --> 00:33:24,800
will remain in the chain 
forever. 

607
00:33:25,200 --> 00:33:28,800
And so what we have is this like
to Epoch finality cycle where 

608
00:33:28,800 --> 00:33:32,600
the end of epoch at the end of 
Puck and you might justify it. 

609
00:33:32,600 --> 00:33:34,900
And at the end of epoch n, plus 
1, you might finalized 

610
00:33:34,900 --> 00:33:39,200
optimally, finalizing POC. 
And, and, and in Maine, that I 

611
00:33:39,200 --> 00:33:42,900
think we see like pretty much 
every single Epoch just kind of 

612
00:33:42,908 --> 00:33:44,800
goes through that cycle of 
justification, that Valley 

613
00:33:44,800 --> 00:33:48,500
justification of finality. 
And that's also at these Epoch 

614
00:33:48,500 --> 00:33:51,900
boundaries is where a lot of 
like rewards accounting happens 

615
00:33:51,900 --> 00:33:54,900
and various other things. 
Like you might also at that 

616
00:33:54,900 --> 00:33:58,200
point update what the view of 
the the eith one chain is so 

617
00:33:58,200 --> 00:34:00,700
that you can induct do deposits 
and different things. 

618
00:34:00,700 --> 00:34:03,900
So it's really Really like it's 
these accounting boundaries. 

619
00:34:03,900 --> 00:34:08,500
It's really these larger than 
block groupings of logical 

620
00:34:08,500 --> 00:34:11,800
activity and and from from a 
finality standpoint. 

621
00:34:12,100 --> 00:34:14,900
You can really think about you 
have all these little blocks. 

622
00:34:14,900 --> 00:34:17,600
You can think about easy, foxes 
more of like larger packages. 

623
00:34:17,600 --> 00:34:20,500
It's kind of like the meta chain
on top of the little, the little

624
00:34:20,500 --> 00:34:25,300
mini chain. 
Does it mean the maximum kind of

625
00:34:25,800 --> 00:34:30,400
reorganize that could happen is 
like one Epoch, or to epochs or 

626
00:34:30,800 --> 00:34:32,400
is that the one way to think 
about it? 

627
00:34:32,900 --> 00:34:36,699
So there's like, increasing 
depth and probability of re Orcs

628
00:34:36,699 --> 00:34:41,300
in the East to begin chain, and 
at every slot, a validator, 

629
00:34:41,300 --> 00:34:45,400
first creates a block. 
And then 1/32 of the validator 

630
00:34:45,400 --> 00:34:49,800
set is during that slot, because
they're assigned to that slot, 

631
00:34:49,800 --> 00:34:52,300
will then send it out to 
station, bad station 

632
00:34:52,300 --> 00:34:54,100
immediately. 
Gives weight to people's for 

633
00:34:54,100 --> 00:34:57,600
choice and recursively gives 
weight to the the chain prior. 

634
00:34:57,900 --> 00:35:02,000
And so actually, because of the 
way that the validator set much 

635
00:35:02,000 --> 00:35:05,500
of the validator set, 
participates each slot, you end 

636
00:35:05,500 --> 00:35:10,600
up with probabilistic guarantees
at the depth of slots that the 

637
00:35:10,600 --> 00:35:12,700
chain will be reordered. 
So, it's something if feels a 

638
00:35:12,700 --> 00:35:16,100
little bit like proof of work at
the chain tip, where there's, 

639
00:35:16,300 --> 00:35:19,100
you can make probabilistic 
claims, that there won't be a 

640
00:35:19,100 --> 00:35:23,900
reorg and less XYZ happens. 
And Under normal operation. 

641
00:35:23,900 --> 00:35:26,200
Those probabilistic claims are 
actually very, very strong 

642
00:35:26,400 --> 00:35:28,700
because most of the validator 
says participating and sending 

643
00:35:28,700 --> 00:35:32,500
signal at each slot. 
Then at the depth of one, Epoch 

644
00:35:33,000 --> 00:35:37,500
you can have Justified. 
So something 32 slots ago can be

645
00:35:37,500 --> 00:35:39,900
justified. 
And this is really this is like 

646
00:35:39,900 --> 00:35:42,900
the cassette of the first step 
in finality justification. 

647
00:35:42,900 --> 00:35:45,400
You can make a much stronger 
claim that something just fiber.

648
00:35:45,400 --> 00:35:50,500
Never be reworked because it 
would require a very large 

649
00:35:50,500 --> 00:35:54,300
amount of validators. 
Call it Least one-third likely 

650
00:35:54,400 --> 00:35:58,500
more in the 1/2. 
Even two-thirds realm to not run

651
00:35:58,500 --> 00:36:01,000
the protocol. 
So it essentially to run an 

652
00:36:01,000 --> 00:36:03,100
altered version of the protocol 
where they stop listening to 

653
00:36:03,100 --> 00:36:05,300
justifications. 
Because once something is 

654
00:36:05,300 --> 00:36:07,700
Justified locally, you say, 
that's what I want to build on 

655
00:36:08,200 --> 00:36:11,300
and something won't be elsewise 
justified. 

656
00:36:11,400 --> 00:36:15,300
Unless people like change their 
local protocol, granted that 

657
00:36:15,300 --> 00:36:19,300
wouldn't necessarily do a 
slashing but it's the becomes 

658
00:36:19,300 --> 00:36:24,200
very, very unlikely then. 
The depth of to epochs. 

659
00:36:24,400 --> 00:36:29,100
So there are 64 slots or twelve 
point eight minutes, then you 

660
00:36:29,100 --> 00:36:32,800
can finalize. 
And this is, this means that 

661
00:36:32,800 --> 00:36:37,300
locally in my software, you ever
seen that show, that, that is 

662
00:36:37,308 --> 00:36:43,100
finalized would never revert, 
and you can make claims that no 

663
00:36:43,100 --> 00:36:47,200
one will see a different version
of finality and less a minimum 

664
00:36:47,200 --> 00:36:51,900
threshold, validators for / that
minimum thresholds. 1/3 1/3 is 

665
00:36:51,900 --> 00:36:56,000
actually Theoretical attack 
could happen at one-third. 

666
00:36:56,200 --> 00:36:59,200
It's extremely improbable that 
you could even conducted at one 

667
00:36:59,200 --> 00:37:01,500
third and probably be much much 
higher. 

668
00:37:02,200 --> 00:37:05,700
And so you can make crypto 
economic claims that this is 

669
00:37:05,700 --> 00:37:07,400
finalized. 
This will remain finalized and 

670
00:37:07,400 --> 00:37:10,300
nobody else will see a different
version of finality unless a 

671
00:37:10,300 --> 00:37:13,200
large amount of capital is Bern.
And so we have, again, we have 

672
00:37:13,200 --> 00:37:16,000
like the head of the chain we 
get to make probabilistic claims

673
00:37:16,200 --> 00:37:18,200
based off of all these 
applications, that things won't 

674
00:37:18,200 --> 00:37:21,400
be reordered. 
Then 32 slots to get 

675
00:37:21,400 --> 00:37:26,900
justification, which You know, 
for almost any operation is much

676
00:37:27,000 --> 00:37:29,400
is enough depth and enough 
confirmation. 

677
00:37:29,400 --> 00:37:33,800
And then at 64 slots, we get 
that that finality, which is 

678
00:37:33,800 --> 00:37:37,000
like that ultimate claim of 
crypto economic, like it's not 

679
00:37:37,000 --> 00:37:40,600
going to revert. 
Yeah, thatthat sounds to me like

680
00:37:40,600 --> 00:37:42,600
just very high level on 
proof-of-work. 

681
00:37:42,600 --> 00:37:45,800
It's kind of totally normal and 
totally expected that happens 

682
00:37:45,800 --> 00:37:49,200
multiple times a day that the 
single block or even two blocks,

683
00:37:49,200 --> 00:37:52,600
get to get reverted here. 
It sounds like even a single 

684
00:37:53,300 --> 00:37:57,800
block or slot revert. 
Would be highly unlikely in 

685
00:37:57,800 --> 00:38:01,100
normal operations. 
Yeah, in normal operation. 

686
00:38:01,100 --> 00:38:04,500
Absolutely. 
So if I saw like 99% of the slot

687
00:38:04,500 --> 00:38:09,300
at the station's, come in, I can
make like I can be pretty well 

688
00:38:09,300 --> 00:38:11,800
assured that this is not going 
to revert, unless there's 

689
00:38:11,800 --> 00:38:13,100
actually something malicious 
going on. 

690
00:38:13,400 --> 00:38:17,400
If instead, I saw ten percent of
those that slots at decisions. 

691
00:38:17,400 --> 00:38:19,600
Come in, then I wouldn't, I 
wouldn't start locally making 

692
00:38:19,600 --> 00:38:22,500
decisions necessarily because 
the I don't have like a high 

693
00:38:22,500 --> 00:38:25,800
probability guarantee, but in 
normal operation, we do see 

694
00:38:26,200 --> 00:38:30,500
almost all validators assign to 
each thought a testing each 

695
00:38:30,500 --> 00:38:32,200
slot. 
And thus, we do get that like, 

696
00:38:32,200 --> 00:38:35,000
probabilistic increase in 
probabilistic guarantee that 

697
00:38:35,000 --> 00:38:39,000
things won't be reverted. 
Yeah, so, it's In normal 

698
00:38:39,000 --> 00:38:42,400
operation as good as proof of 
work, confirmations, and then 

699
00:38:42,400 --> 00:38:44,900
increasing depth. 
Increasing kind of crypto 

700
00:38:44,900 --> 00:38:46,700
economic guarantees of non 
reversion. 

701
00:38:48,700 --> 00:38:52,200
But on a very fundamental level,
this is still very different 

702
00:38:52,200 --> 00:38:55,300
from Earth one, right? 
Because on each one, one of the 

703
00:38:55,500 --> 00:38:59,400
general design decisions is of 
availability over consistency. 

704
00:38:59,400 --> 00:39:03,500
So, basically, the the chain can
never hard, but this comes at 

705
00:39:03,500 --> 00:39:05,500
the cost that there might be re 
aux, right? 

706
00:39:05,500 --> 00:39:09,600
So and then you have like the 
the converse with a with B. 

707
00:39:09,600 --> 00:39:13,500
Ft side consensus algorithms 
that we try a bit. 

708
00:39:13,500 --> 00:39:18,000
Basically, they have finality, 
but in principle, The Chain can 

709
00:39:18,000 --> 00:39:20,200
heart. 
Very much like on tender moment.

710
00:39:20,400 --> 00:39:23,500
It seems like he's to does 
something weird hybrid. 

711
00:39:23,600 --> 00:39:27,100
Yeah, this has this weird hybrid
or this this middle ground that 

712
00:39:27,100 --> 00:39:28,800
I didn't even know existed 
before. 

713
00:39:28,800 --> 00:39:32,700
And so what are the trade-offs 
of having like this, this hybrid

714
00:39:32,700 --> 00:39:37,500
model? 
Right, so like proof-of-work, 

715
00:39:37,500 --> 00:39:40,000
consensus. 
The E2 protocol is fundamentally

716
00:39:40,000 --> 00:39:44,500
aliveness favoring, meaning that
the chain can be built. 

717
00:39:44,600 --> 00:39:47,300
Even if you don't have these 
like, B of T thresholds of 

718
00:39:47,300 --> 00:39:52,700
validators and this is to 
provide kind of the uptime and 

719
00:39:52,700 --> 00:39:56,100
availability of the network that
blockchain users and what I 

720
00:39:56,100 --> 00:40:00,900
think Global decentralized 
Network expects at that point. 

721
00:40:01,500 --> 00:40:04,000
It's ultimately up to local 
node. 

722
00:40:04,200 --> 00:40:07,500
Raiders to make decisions about 
what is accepted. 

723
00:40:07,500 --> 00:40:11,200
Like if if I'm an exchange. 
I might always only operate 

724
00:40:11,200 --> 00:40:13,500
under finality. 
But if I'm like sending an ft's 

725
00:40:13,500 --> 00:40:16,700
to my buddy and like we don't 
have finality, I know that this 

726
00:40:16,700 --> 00:40:20,000
this operation will clear and 
it's not a big deal. 

727
00:40:20,400 --> 00:40:26,200
So what we get here is really 
like we get a live chain and we 

728
00:40:26,200 --> 00:40:28,800
get a bft consensus kind of like
following. 

729
00:40:28,800 --> 00:40:34,000
And so from the perspective of 
the designers to be to, that's 

730
00:40:34,200 --> 00:40:37,600
It's kind of, at least for the 
expectations of guarantees of 

731
00:40:37,600 --> 00:40:42,100
blockchain systems, a really 
nice compromise and the idea 

732
00:40:42,300 --> 00:40:48,700
ultimately is a safety favoring 
chain cannot simulate aliveness.

733
00:40:48,700 --> 00:40:52,100
Favoring chain, whereas 
aliveness from favoring chain 

734
00:40:52,100 --> 00:40:57,800
can simulate a safety favoring 
chain, and thus, the latter is 

735
00:40:57,800 --> 00:41:00,600
ultimately like a more powerful 
construction because it gives 

736
00:41:00,600 --> 00:41:03,900
more optionality to users on how
to interpret the world view at 

737
00:41:03,900 --> 00:41:09,100
any In time there's much debate 
on this point and as to like 

738
00:41:09,100 --> 00:41:13,300
what the quality of service can 
or should be and whether it's 

739
00:41:13,300 --> 00:41:17,100
really worth having these like 
live chains without finality. 

740
00:41:17,300 --> 00:41:22,100
But again that point ultimately 
is like the the clicking point 

741
00:41:22,100 --> 00:41:24,800
for me is really like sure, if 
there's not finality. 

742
00:41:24,800 --> 00:41:28,000
I don't have to finalize 
anything but I do provide 

743
00:41:28,000 --> 00:41:30,600
optionality. 
So users and systems based off 

744
00:41:30,600 --> 00:41:33,200
of like probabilistic guarantees
and different things and 

745
00:41:33,200 --> 00:41:34,600
aliveness favoring. 
System. 

746
00:41:35,900 --> 00:41:38,600
Super interesting. 
So maybe let's talk about the 

747
00:41:38,600 --> 00:41:41,700
merge for a little bit. 
There would be the merge and the

748
00:41:41,700 --> 00:41:45,000
merge with merge with one into 
the beacon chain. 

749
00:41:45,500 --> 00:41:48,800
So how exactly does that happen.
When is it going to happen? 

750
00:41:48,900 --> 00:41:51,700
I imagine he's won and East to 
have separate states. 

751
00:41:51,700 --> 00:41:54,000
How is that handled? 
How do you, how do you kind of 

752
00:41:54,000 --> 00:41:58,700
make them congruent? 
So let's think about what each 

753
00:41:58,700 --> 00:42:02,600
one is. 
Each one is, and this is a 

754
00:42:02,600 --> 00:42:04,800
construction for each one's a 
lot of things. 

755
00:42:04,800 --> 00:42:07,200
And there's a lot of Is think 
about it, but for the purposes 

756
00:42:07,200 --> 00:42:09,400
of marriage, we can think about 
it in two layers. 

757
00:42:09,800 --> 00:42:14,200
We have this application layer 
or this execution layer, where 

758
00:42:14,500 --> 00:42:17,200
all of the users hang out. 
It's where all the applications 

759
00:42:17,200 --> 00:42:19,200
are. 
It's where the user layer state 

760
00:42:19,200 --> 00:42:22,400
is its where transactions are 
being processed and all that. 

761
00:42:22,500 --> 00:42:26,000
It's really like what eyes and 
end-user care about. 

762
00:42:26,100 --> 00:42:28,900
I care about you know, my you 
know swap trades and that kind 

763
00:42:28,900 --> 00:42:30,800
of stuff. 
And then you have this thin 

764
00:42:31,200 --> 00:42:33,900
purple work consensus module. 
That's driving it. 

765
00:42:33,900 --> 00:42:35,900
It's really like providing the 
Services. 

766
00:42:35,900 --> 00:42:39,400
Providing the quality of the 
writing, the service of this 

767
00:42:39,400 --> 00:42:42,700
execution layer. 
It's the Cradle four blocks. 

768
00:42:42,700 --> 00:42:45,800
It's providing. 
Guarantees about re orgs and 

769
00:42:45,800 --> 00:42:50,500
different things like that. 
And what we have is really these

770
00:42:50,500 --> 00:42:52,900
two layers. 
We have the proof or consensus 

771
00:42:52,900 --> 00:42:58,700
layer, providing the application
layer to services and to users. 

772
00:42:59,000 --> 00:43:03,600
And then what we've bootstrapped
in production today is the 

773
00:43:03,600 --> 00:43:05,900
speaking chain, which is a proof
of State can Us. 

774
00:43:06,300 --> 00:43:11,100
And the idea really here is for 
at one point in time, the 

775
00:43:11,100 --> 00:43:15,000
proof-of-work module, to be 
driving that application layer 

776
00:43:15,200 --> 00:43:18,700
and at the next point in time 
post-merge that proof of stake 

777
00:43:18,700 --> 00:43:22,600
module, that Beacon chain to be 
driving the same execution layer

778
00:43:22,600 --> 00:43:27,100
the same application layer. 
And so the the transactions that

779
00:43:27,300 --> 00:43:30,700
essentially the Cradle of 
ethereum right now is these like

780
00:43:30,700 --> 00:43:33,400
proof-of-work blocks and that 
proof-of-work consensus and 

781
00:43:33,400 --> 00:43:35,400
post-merge the Cradle of 
ethereum. 

782
00:43:35,500 --> 00:43:37,000
Um, the thing holding it all 
together. 

783
00:43:37,000 --> 00:43:39,300
So ultimately, the beacon chain 
and the proof State consensus, 

784
00:43:39,900 --> 00:43:44,900
and you can imagine the 
essentially that payload for the

785
00:43:44,900 --> 00:43:49,200
execution layer is essentially, 
moving locations, upon some 

786
00:43:49,200 --> 00:43:50,600
condition. 
And so, people are running 

787
00:43:50,600 --> 00:43:54,300
software that knows prior to 
this time or prior to this block

788
00:43:54,300 --> 00:43:56,300
height. 
I'm listening to the miners. 

789
00:43:56,500 --> 00:43:59,300
And after this time I'm 
listening to the proof State 

790
00:43:59,300 --> 00:44:01,900
validators. 
And there's there's like a 

791
00:44:01,900 --> 00:44:05,400
number of little details to work
through on the actual point of 

792
00:44:05,600 --> 00:44:09,800
Merge and how you may be handle 
attacks in this boundary and 

793
00:44:09,800 --> 00:44:12,800
reorg Zone this boundary, but 
the simple case is essentially 

794
00:44:12,800 --> 00:44:15,800
of a chain being built by proof 
of work at one point in time. 

795
00:44:15,800 --> 00:44:18,700
And that same chain that same 
like payload of execution layer 

796
00:44:18,700 --> 00:44:22,600
that validated that end users 
care about is then being built 

797
00:44:22,600 --> 00:44:26,400
by these by these validators. 
And the nice thing is 

798
00:44:26,600 --> 00:44:31,500
conceptually these layers are 
important from like a mechanism 

799
00:44:31,500 --> 00:44:35,700
design standpoint, but they 
actually translate into Really 

800
00:44:35,700 --> 00:44:39,800
nice like software reuse and so,
we have what we call E2 clients,

801
00:44:40,100 --> 00:44:42,100
which are these Beacon chain 
clients. 

802
00:44:42,100 --> 00:44:45,100
They've built a highly 
sophisticated proof of stake 

803
00:44:45,100 --> 00:44:48,500
consensus mechanism. 
And then we have like, what is a

804
00:44:48,500 --> 00:44:51,000
nice one client? 
And he's one client, really is a

805
00:44:51,000 --> 00:44:52,500
highly sophisticated execution 
layer. 

806
00:44:52,800 --> 00:44:57,300
It's highly, sophisticated evm, 
transaction processing mempool 

807
00:44:57,300 --> 00:44:58,800
management, and all that kind of
stuff. 

808
00:44:58,800 --> 00:45:02,800
Plus, this thin, proof-of-work 
module that like, literally 

809
00:45:02,800 --> 00:45:07,100
hasn't been touched since day 0.
It's a relatively simple 

810
00:45:07,100 --> 00:45:09,800
mechanism from a software 
perspective and it hasn't been, 

811
00:45:09,800 --> 00:45:13,100
it hasn't been touched. 
And so, what the software after 

812
00:45:13,100 --> 00:45:17,000
the merge looks like, it's 
really taking a nice one client,

813
00:45:17,200 --> 00:45:20,000
which is primarily a highly 
sophisticated XU Xin layer 

814
00:45:20,400 --> 00:45:23,900
cutting out that proof-of-work 
module, which is was the driver 

815
00:45:23,900 --> 00:45:26,400
of that execution layer and 
instead of listening to that 

816
00:45:26,400 --> 00:45:29,200
proof-of-work, module listening 
to Annie to client. 

817
00:45:29,300 --> 00:45:33,500
And so the the the software 
post-merge actually looks like 

818
00:45:33,500 --> 00:45:36,400
you take these two clients which
are highly Lisa skated proof of 

819
00:45:36,400 --> 00:45:38,800
stake consensus mechanisms, you 
take an eighth one client, which

820
00:45:38,800 --> 00:45:41,200
is a highly sophisticated 
execution layer and you smash 

821
00:45:41,200 --> 00:45:44,300
them together and you have the 
perfect steak client driving 

822
00:45:44,300 --> 00:45:47,000
that execution layer asking 
questions about the extinction 

823
00:45:47,000 --> 00:45:48,600
layer. 
So for example, instead of the 

824
00:45:48,600 --> 00:45:50,300
proof-of-work module saying hey,
give me a. 

825
00:45:50,600 --> 00:45:53,400
Give me a valuable transaction 
bundle to include this block. 

826
00:45:53,600 --> 00:45:57,500
The beacon chain client is 
instead saying, hey, guess. 

827
00:45:57,500 --> 00:45:59,500
Hey, never mind. 
Hey opened a theory. 

828
00:45:59,500 --> 00:46:03,200
Mm. 
My local adjunct execution 

829
00:46:03,200 --> 00:46:05,100
engine. 
Give me the give me the valuable

830
00:46:05,100 --> 00:46:06,400
pale. 
Hey process. 

831
00:46:06,400 --> 00:46:07,700
This payload in that kind of 
stuff. 

832
00:46:08,900 --> 00:46:11,200
You mentioned. 
So there's a state before in the

833
00:46:11,200 --> 00:46:15,700
state after really that state. 
There's there's a beacon state 

834
00:46:15,700 --> 00:46:18,300
which is like the system layer 
state of this proof, estate 

835
00:46:18,300 --> 00:46:21,700
consensus mechanism. 
And then there's the application

836
00:46:21,700 --> 00:46:25,000
layer state that exists in these
in these like proof-of-work 

837
00:46:25,000 --> 00:46:28,700
blocks today. 
And really this consensus 

838
00:46:28,700 --> 00:46:31,300
mechanism is really good at 
doing that. 

839
00:46:31,300 --> 00:46:33,100
It's really good at company 
consensus on things. 

840
00:46:33,300 --> 00:46:37,000
And so it's really just like 
slotting in its state transition

841
00:46:37,000 --> 00:46:40,800
and in its in, It stayed. 
It's embedding the execution 

842
00:46:40,800 --> 00:46:42,500
layer state of ethereum into 
that. 

843
00:46:42,700 --> 00:46:46,000
And so, if you think about it, 
as like a tree of all the things

844
00:46:46,000 --> 00:46:48,700
embedded in, the The Beacon 
chain, outer, layer, state that 

845
00:46:48,700 --> 00:46:52,300
is built and finalized, you're 
essentially having, like, the 

846
00:46:52,500 --> 00:46:55,400
application layer of a theorem 
is embedded into it as like a 

847
00:46:55,408 --> 00:46:59,300
subcomponent of its state. 
And so, that application layer 

848
00:46:59,300 --> 00:47:03,500
state right now, exist in like, 
the proof of work land, and it's

849
00:47:03,500 --> 00:47:05,600
really just taking that 
application layer say and 

850
00:47:05,600 --> 00:47:09,300
subsuming it into the beacon 
state, which Which when you 

851
00:47:09,300 --> 00:47:12,800
finalize the outer state route 
of the beacon State, you 

852
00:47:12,800 --> 00:47:17,200
finalize everything within it. 
And so you, then just, if within

853
00:47:17,200 --> 00:47:20,200
it is the application layer 
State that's been consensus on, 

854
00:47:20,200 --> 00:47:22,300
then you get, you know, these 
finality properties and those 

855
00:47:22,300 --> 00:47:25,200
are properties that proof of 
stake is giving to itself. 

856
00:47:26,700 --> 00:47:29,700
So you're kind of spooning over 
the state, but I mean in 

857
00:47:29,700 --> 00:47:34,100
principle, the miners can 
continue with the original 

858
00:47:34,100 --> 00:47:35,600
chain, right? 
So, basically, this is kind of a

859
00:47:35,607 --> 00:47:41,400
natural break point for fork. 
Yeah, I mean it's if anybody 

860
00:47:41,400 --> 00:47:44,800
wants to run proof-of-work, 
theorem, I think blockchain 

861
00:47:44,800 --> 00:47:47,900
governments governance 
ultimately works, is that anyone

862
00:47:47,900 --> 00:47:51,200
can continue to run it. 
There's a couple of things that 

863
00:47:51,200 --> 00:47:55,200
I think might make it not super 
viable. 

864
00:47:55,700 --> 00:48:00,300
The theorem Community has 
consistently since Genesis put 

865
00:48:00,300 --> 00:48:02,100
this thing in called the 
difficulty bomb. 

866
00:48:02,500 --> 00:48:07,100
The difficulty bomb was intended
to ultimately at the beginning 

867
00:48:07,100 --> 00:48:11,300
to, to allow for The inner shift
to proof of stake, ultimately 

868
00:48:11,300 --> 00:48:14,600
like the mining difficulty at 
these points of the difficulty 

869
00:48:14,600 --> 00:48:18,400
bomb increases exponentially so 
that it becomes non-viable to 

870
00:48:18,400 --> 00:48:21,700
mind that prefer work chain, 
unless you actually hard for. 

871
00:48:22,300 --> 00:48:27,000
So that might dissuade a 
proof-of-work fork here, but 

872
00:48:27,000 --> 00:48:30,700
another, another interesting 
point is that when in the last 

873
00:48:30,700 --> 00:48:33,700
contentious, theorem hard Fork, 
so which created a theorem 

874
00:48:33,700 --> 00:48:37,500
classic? 
There wasn't a lot going on in 

875
00:48:37,500 --> 00:48:40,100
the application layer. 
There really was this dowel 

876
00:48:40,100 --> 00:48:41,900
thing and then a bunch of like 
little experiments. 

877
00:48:42,100 --> 00:48:46,300
And so the application layers 
could kind of for can exist in 

878
00:48:46,300 --> 00:48:48,400
parallel and it wouldn't, it 
didn't really. 

879
00:48:49,100 --> 00:48:51,500
There wasn't really any of these
like, big dependencies and 

880
00:48:51,500 --> 00:48:54,800
stuff. 
Whereas I would posit that if 

881
00:48:54,800 --> 00:49:00,600
theorem forked today and you had
a majority Community stake in 

882
00:49:00,600 --> 00:49:02,600
one and then a minority 
communities taking the other 

883
00:49:02,800 --> 00:49:06,700
that the application layer on 
the minority one is likely going

884
00:49:06,700 --> 00:49:08,800
to. 
Implode, there's a lot of 

885
00:49:09,000 --> 00:49:11,600
Interdependencies and a lot of 
value and stuff here. 

886
00:49:12,100 --> 00:49:16,500
For example, oracle's may or may
not be run on the minority fork.

887
00:49:17,100 --> 00:49:21,000
And even if they are you have 
systems like maker. 

888
00:49:21,200 --> 00:49:25,500
Which if they're, if the value 
of the eith on one side of the 

889
00:49:25,500 --> 00:49:29,800
other drops significantly, you 
have like Masa quotations, then 

890
00:49:29,800 --> 00:49:34,800
dies integrated all into D Phi 
and you have Rippling all the 

891
00:49:34,800 --> 00:49:37,900
all the effect assets that you 
see tether and so on. 

892
00:49:37,900 --> 00:49:41,000
So yeah, I am. 
Also think like the the the 

893
00:49:41,000 --> 00:49:43,500
support for proof of stake in 
the your theorem Community is so

894
00:49:43,500 --> 00:49:45,500
overwhelming. 
That I really don't think there 

895
00:49:45,500 --> 00:49:48,800
will be any debate or any 
question kind of what direction 

896
00:49:48,800 --> 00:49:50,500
are. 
Definitely from a community 

897
00:49:50,500 --> 00:49:54,500
perspective. 
I'm like 99.99% are just like 

898
00:49:54,500 --> 00:49:56,100
let's do this. 
We've been wanting to do this 

899
00:49:56,100 --> 00:49:57,800
for years. 
Can we just do this? 

900
00:49:57,800 --> 00:50:01,300
Come on, whereas you could 
theoretically run a 

901
00:50:01,300 --> 00:50:04,800
proof-of-work fork, but I think 
that it will quickly become a 

902
00:50:04,800 --> 00:50:09,100
wasteland. 
You said earlier that proof of 

903
00:50:09,100 --> 00:50:12,500
stake has two main reasons 
behind it. 

904
00:50:12,500 --> 00:50:14,900
So one is the Environmental 
sustainability and I think 

905
00:50:14,900 --> 00:50:17,000
that's pretty straightforward 
why? 

906
00:50:17,000 --> 00:50:19,900
That is the case and the other 
one is the security. 

907
00:50:20,000 --> 00:50:22,200
So let's talk about the security
aspect. 

908
00:50:22,200 --> 00:50:25,000
Why is proof of stake good for 
security purposes. 

909
00:50:26,000 --> 00:50:28,600
So perf working for the sacred, 
fundamentally crypto, economic 

910
00:50:28,600 --> 00:50:31,900
consensus mechanisms, meaning 
that they have certain 

911
00:50:31,900 --> 00:50:37,000
properties if no entity has 
certain. 

912
00:50:37,100 --> 00:50:41,600
The value, securing the network.
And so they're pretty similar in

913
00:50:41,600 --> 00:50:46,000
that sense and have some similar
properties because of it, but I 

914
00:50:46,000 --> 00:50:52,700
think the the Crux of the proof 
of stake having higher security 

915
00:50:52,700 --> 00:50:56,200
is really because that asset 
securing, the network is 

916
00:50:56,200 --> 00:51:01,100
actually in the protocol and so 
you can not only reward that 

917
00:51:01,100 --> 00:51:05,100
asset, you can penalize that 
asset and this especially in the

918
00:51:05,100 --> 00:51:09,500
failure modes, leads. 
Too much more secure system. 

919
00:51:10,000 --> 00:51:12,000
So let's think about what 
happens. 

920
00:51:12,000 --> 00:51:15,900
If a proof-of-work chain is 51% 
attacked if proof work chain is 

921
00:51:15,900 --> 00:51:17,900
set to 1 percent attacked. 
That's kind of it. 

922
00:51:18,100 --> 00:51:21,000
Like you have a you have a party
that has 51 percent of the 

923
00:51:21,000 --> 00:51:23,900
assets and they can reorg and do
whatever they want. 

924
00:51:24,100 --> 00:51:29,600
They're the only recourse here 
is forking the protocol so that 

925
00:51:29,800 --> 00:51:32,600
you have a new mining algorithm 
at which point you bricked, all 

926
00:51:32,600 --> 00:51:36,300
the good guys Hardware as well. 
You can think about it as 

927
00:51:36,600 --> 00:51:39,900
there's a budget for the attack.
The budget for the attack was 

928
00:51:39,900 --> 00:51:42,300
securing, 51 percent of the 
assets, but then they're 

929
00:51:42,300 --> 00:51:45,600
ultimately really wasn't a cost.
And so once I secured the 

930
00:51:45,600 --> 00:51:50,600
budget, I'm now just God whereas
in proof of stake because those 

931
00:51:50,600 --> 00:51:54,900
assets are in the protocol. 
There's a budget, so secure 51 

932
00:51:54,900 --> 00:51:58,200
percent of its assets, but then 
there's also only a cost as well

933
00:51:58,200 --> 00:52:03,700
because if if you do connect a 
network fault, then those assets

934
00:52:03,700 --> 00:52:07,000
are slashed. 
So I can do the attack once and 

935
00:52:07,000 --> 00:52:09,500
I lost all my money and I have 
to accumulate all his assets 

936
00:52:09,500 --> 00:52:12,300
again and do they attack again, 
you know, where is in 

937
00:52:12,300 --> 00:52:15,200
proof-of-work? 
I just entered god mode and 

938
00:52:15,200 --> 00:52:20,400
could reorg over and over again.
And in the extreme where your 

939
00:52:20,400 --> 00:52:23,600
some say, maybe hit like 
two-thirds threshold and you're 

940
00:52:23,600 --> 00:52:26,200
some sort of like censoring 
majority or cartel. 

941
00:52:26,600 --> 00:52:30,400
This can also be detected 
socially, so I can, I can 

942
00:52:30,600 --> 00:52:33,700
identify this cartel. 
This censoring majority and the 

943
00:52:33,700 --> 00:52:35,400
extreme there. 
I can be social recovery. 

944
00:52:35,700 --> 00:52:39,200
So these assets could be forked 
out of the protocol and burned, 

945
00:52:39,600 --> 00:52:42,700
whereas, in proof of work. 
You don't have this nuance and 

946
00:52:42,700 --> 00:52:46,300
you the only, the only recourse 
was ultimately forking. 

947
00:52:46,300 --> 00:52:47,800
The good guys, and the bad guys 
out. 

948
00:52:48,000 --> 00:52:51,800
That's definitely like something
a failure mode. 

949
00:52:51,800 --> 00:52:55,000
You don't want to run into but 
the fact that that recovery does

950
00:52:55,000 --> 00:52:56,600
exist. 
I think ultimately would 

951
00:52:56,600 --> 00:52:59,300
dissuade even those extremes the
types of attacks. 

952
00:53:01,300 --> 00:53:03,700
Yeah, I mean, this is a question
about what is more secure. 

953
00:53:03,700 --> 00:53:07,200
I think the debate. 
Well, was going on for years and

954
00:53:07,200 --> 00:53:09,400
I think I really think it's 
settled now. 

955
00:53:09,400 --> 00:53:13,700
I really think through steak is,
it's absolutely clear. 

956
00:53:14,200 --> 00:53:18,400
One thing where it's way less 
clear to me, how it will play 

957
00:53:18,400 --> 00:53:22,500
out, is the question of 
centralization because 

958
00:53:22,700 --> 00:53:27,000
originally I used to bring up 
the argument that proves take 

959
00:53:27,000 --> 00:53:29,900
would lead to less 
centralization than proof of 

960
00:53:29,900 --> 00:53:32,700
work because improve Work. 
You have the economy of scale. 

961
00:53:32,900 --> 00:53:36,700
So you have if you spend, I 
don't know, 10 million on 

962
00:53:36,700 --> 00:53:39,600
mining. 
You will get at the end better 

963
00:53:39,900 --> 00:53:42,600
return for your last dollar, 
then someone who just spends, 

964
00:53:42,600 --> 00:53:46,200
$1,000 and Mining. 
While was proof of stake 

965
00:53:46,200 --> 00:53:51,200
arguably or well, maybe that 
that is less case and kind of 

966
00:53:51,500 --> 00:53:53,500
each validator. 
Even if you just have like, one 

967
00:53:53,500 --> 00:53:58,300
validator you kind of probably 
will have the same rewards that 

968
00:53:58,300 --> 00:54:03,700
being said there are Second 
arguments, I would say, also for

969
00:54:04,500 --> 00:54:09,100
centralization in proof of stake
and that is likely the idea of 

970
00:54:09,300 --> 00:54:13,200
taking derivatives and I mean it
to some extent that's already 

971
00:54:13,200 --> 00:54:16,300
what we are seeing is that, of 
course. 

972
00:54:17,400 --> 00:54:22,400
Yeah, there are specifically now
where you cannot get your 

973
00:54:22,400 --> 00:54:24,600
easier. 
Well, immediately out. 

974
00:54:24,600 --> 00:54:27,600
So it's quite quite a commitment
to do it. 

975
00:54:27,800 --> 00:54:29,800
Manually or do-it-yourself kind 
of steak. 

976
00:54:29,800 --> 00:54:32,800
You're 32. 
Sir, you could just go to an 

977
00:54:32,800 --> 00:54:35,000
exchange and they will offer you
a nice service. 

978
00:54:35,000 --> 00:54:38,000
They will say, okay. 
Well if you want to go out while

979
00:54:38,000 --> 00:54:41,700
we find a seller for you, we we 
create a taking derivative or 

980
00:54:41,700 --> 00:54:43,100
whatever. 
We call our Market. 

981
00:54:43,100 --> 00:54:45,100
Yeah. 
Yeah, and we have a market for 

982
00:54:45,100 --> 00:54:48,900
that and of course to someone to
to an individual. 

983
00:54:49,000 --> 00:54:51,100
I mean that's that's a big big 
plus. 

984
00:54:51,700 --> 00:54:57,800
But that comes at the cost of. 
Yeah, well or threatens the 

985
00:54:57,800 --> 00:55:00,800
decentralization and I maybe, 
you know better than me. 

986
00:55:00,900 --> 00:55:04,600
The current statistics. 
But exchanges play already a big

987
00:55:04,600 --> 00:55:05,300
role. 
Right? 

988
00:55:06,000 --> 00:55:08,200
Right. 
I mean, between exchanges and 

989
00:55:08,200 --> 00:55:11,000
staking pools. 
It's probably something like 50.

990
00:55:11,000 --> 00:55:15,100
55 percent of staked assets that
we can tell today. 

991
00:55:15,700 --> 00:55:19,300
There is a definitely a strong 
hobbyist community, and, but 

992
00:55:19,300 --> 00:55:22,000
you're right like this, there's 
this like, before the merge, 

993
00:55:22,000 --> 00:55:26,000
those, this, this unknown lockup
and so liquidity is certainly a 

994
00:55:26,008 --> 00:55:29,400
question and certainly a driving
factor for people to move to 

995
00:55:29,400 --> 00:55:32,600
these these other types. 
Institutions it there. 

996
00:55:32,600 --> 00:55:34,000
Anything we can do about it, 
huh? 

997
00:55:34,400 --> 00:55:37,600
So there are some things that 
are done today. 

998
00:55:37,700 --> 00:55:40,800
So one thing I mentioned 
earlier, this is, this is kind 

999
00:55:40,800 --> 00:55:43,500
of a minor point, but the fact 
that you can participate with a 

1000
00:55:43,500 --> 00:55:46,200
very small percentage of the 
network and still have regular 

1001
00:55:46,200 --> 00:55:48,900
rewards and payouts, that's like
a nice little thing and that 

1002
00:55:48,900 --> 00:55:52,700
helps the hobbyist community. 
One thing that is designed into 

1003
00:55:52,700 --> 00:55:56,600
proof of stake systems, which is
not in proof of work systems is 

1004
00:55:56,600 --> 00:56:01,100
there's these like dis 
correlation incentives and so If

1005
00:56:01,100 --> 00:56:05,400
you are with a majority, if 
you're with a very large staking

1006
00:56:05,400 --> 00:56:09,900
institution and they go offline,
the amount that you lose is much

1007
00:56:09,900 --> 00:56:13,500
higher than if you were going 
offline and isolation or in even

1008
00:56:13,500 --> 00:56:16,700
a smaller pool. 
Even worse is if you're with one

1009
00:56:16,700 --> 00:56:20,600
of these large institutions and 
they have some sort of security 

1010
00:56:20,600 --> 00:56:22,700
breach or some sort of bug or 
issue. 

1011
00:56:23,300 --> 00:56:25,700
Then that causes them to be 
slashed. 

1012
00:56:25,700 --> 00:56:28,600
Then again, the amount that with
the truth / scales with the 

1013
00:56:28,600 --> 00:56:31,300
percentage of the network that 
was recently / and If you're 

1014
00:56:31,300 --> 00:56:36,100
with like a 30% stake and pool 
or 30%, staking provider 

1015
00:56:36,100 --> 00:56:39,100
exchange that has major slashing
event. 

1016
00:56:39,100 --> 00:56:42,500
Say somebody internal just wants
to watch the world burn or 

1017
00:56:42,500 --> 00:56:44,500
somebody hacks the system or 
they're running just buggy 

1018
00:56:44,500 --> 00:56:47,800
software or someone trying to be
clever with their redundancy, 

1019
00:56:47,800 --> 00:56:53,300
you know, you would lose quite a
bit of capital and so there are 

1020
00:56:53,308 --> 00:56:56,500
these disincentives to being 
with the large institutions. 

1021
00:56:56,500 --> 00:57:00,200
This might drive you to be a 
hobbyist and steak at home. 

1022
00:57:00,200 --> 00:57:03,300
But this also, I might drive you
to be, you know, with a smaller 

1023
00:57:03,300 --> 00:57:05,200
pool. 
And so I think, even if we end 

1024
00:57:05,200 --> 00:57:08,100
up with a highly pulled 
landscape, which we certainly 

1025
00:57:08,100 --> 00:57:10,900
are beginning to see, at least 
in the 50% range. 

1026
00:57:11,100 --> 00:57:14,200
There's still these incentives 
to not be with with the mega 

1027
00:57:14,200 --> 00:57:16,400
players. 
And so whereas in mining, I 

1028
00:57:16,400 --> 00:57:20,400
think we have like two or three 
pools that you have them 

1029
00:57:20,400 --> 00:57:23,500
together in Europe. 51%, The 
only thing that keeps those 

1030
00:57:23,500 --> 00:57:26,400
pools from being larger than 
that is is because it's not 

1031
00:57:26,400 --> 00:57:30,300
socially tenable ultimately like
it wouldn't, you know, people 

1032
00:57:30,300 --> 00:57:32,200
don't want to. 
The pool, that's too big. 

1033
00:57:32,300 --> 00:57:34,900
Whereas there's actually a 
disincentive of joining pools 

1034
00:57:34,900 --> 00:57:37,600
that are that, are that large 
and staking landscape. 

1035
00:57:37,800 --> 00:57:40,900
It is unfortunate that those 
disincentives are in the tail 

1036
00:57:40,900 --> 00:57:43,700
risk scenarios, which I think 
that humans are pretty bad at. 

1037
00:57:43,900 --> 00:57:48,200
Really, assessing tail risk. 
And so I think we might we might

1038
00:57:48,200 --> 00:57:52,300
see waves of centralization and 
decentralization as some of 

1039
00:57:52,300 --> 00:57:56,100
these events happen. 
So if something major happened 

1040
00:57:56,100 --> 00:57:58,000
to a major exchange, all of a 
sudden, we might see everyone 

1041
00:57:58,000 --> 00:58:00,700
like scatter their steak and and
and read. 

1042
00:58:00,900 --> 00:58:04,000
Distribute, but we shall see. 
Second derivatives are 

1043
00:58:04,000 --> 00:58:06,800
certainly. 
Another interesting thing. 

1044
00:58:06,800 --> 00:58:09,900
I think we've seen, there's a, 
there's an entity that has 

1045
00:58:09,900 --> 00:58:13,500
something like seven percent of 
State assets right now. 

1046
00:58:13,500 --> 00:58:15,600
And I think that number has 
increased quite a bit in the 

1047
00:58:15,600 --> 00:58:18,000
past few months. 
And that's primarily, because 

1048
00:58:18,000 --> 00:58:21,600
they offer, I won't use the word
decentralized. 

1049
00:58:21,600 --> 00:58:24,200
They offer, they offer an on 
chains, taking derivative. 

1050
00:58:24,800 --> 00:58:27,500
And this, you know, they have 
interesting mechanism where 

1051
00:58:27,500 --> 00:58:29,900
they're kind of Distributing 
their kind of like this 

1052
00:58:29,900 --> 00:58:32,200
tokenized, middleware. 
Then like distributes to various

1053
00:58:32,200 --> 00:58:34,400
pools. 
And so, all the represents 7% of

1054
00:58:34,400 --> 00:58:35,800
the steak. 
It's actually distribute to like

1055
00:58:35,800 --> 00:58:38,500
10 pools underneath the hood. 
And then you have these taking 

1056
00:58:38,500 --> 00:58:41,500
derivatives that represent like 
kind of the the shared risk 

1057
00:58:41,500 --> 00:58:46,800
across these these pools. 
This is I see as a competitor to

1058
00:58:46,800 --> 00:58:50,500
exchanges rather than a 
competitor to hobbyist. 

1059
00:58:50,500 --> 00:58:52,600
Like if I'm a hobbyist. 
I'll probably be a hobbyist. 

1060
00:58:52,600 --> 00:58:55,000
Whereas if you know, I was going
to go to coinbase. 

1061
00:58:55,000 --> 00:58:57,300
I might instead go with this, 
like decentralised option. 

1062
00:58:57,800 --> 00:59:01,300
I hope that we see a number of 
these, so we see a lot of Titian

1063
00:59:01,500 --> 00:59:04,500
and I hope that we see a number 
of likes taking institutions, so

1064
00:59:04,500 --> 00:59:08,200
see a lot of competition. 
I am more optimistic probably 

1065
00:59:08,200 --> 00:59:12,900
than you led in terms of the 
although we might see like a 

1066
00:59:12,900 --> 00:59:15,100
highly pulled and highly 
institutionalized space. 

1067
00:59:15,800 --> 00:59:18,100
I think we're going to see much 
better properties than we've 

1068
00:59:18,100 --> 00:59:22,500
seen with mining pools. 
I mean, one one, is that every 

1069
00:59:22,500 --> 00:59:24,000
exchange wants to get in on the 
action. 

1070
00:59:24,000 --> 00:59:25,900
So, every exchange is probably 
going to create a product, 

1071
00:59:25,900 --> 00:59:27,600
whereas, mining pools. 
We saw. 

1072
00:59:28,000 --> 00:59:31,100
So very few entities that 
ultimately are these like Large 

1073
00:59:31,100 --> 00:59:34,600
pools. 
Yeah, one when I commend you 

1074
00:59:34,600 --> 00:59:36,700
brought the disease, definitely 
very strong is just this 

1075
00:59:36,700 --> 00:59:38,800
continuous payout. 
I mean, that was definitely a 

1076
00:59:38,808 --> 00:59:43,500
driving factor for mining pools 
in well, in proof of work. 

1077
00:59:44,000 --> 00:59:46,500
How is that affected after the 
merge? 

1078
00:59:46,500 --> 00:59:49,800
Because then well, I guess we 
are talking about transaction 

1079
00:59:49,800 --> 00:59:53,000
fees. 
Do they go then to the block to 

1080
00:59:53,000 --> 00:59:56,400
the block producer or at least 
probably Mev will go to the 

1081
00:59:56,400 --> 00:59:58,900
block producer. 
So so, you know, that will 

1082
00:59:58,900 --> 01:00:02,600
affect the value of the payload 
of the application, their 

1083
01:00:02,600 --> 01:00:05,800
payload, so, Transactions. 
That we know and love goes to 

1084
01:00:05,800 --> 01:00:08,400
the lock producer. 
They're the sole entity 

1085
01:00:08,400 --> 01:00:11,800
responsible for bundling and 
finding that value. 

1086
01:00:11,800 --> 01:00:13,700
And so they're the ones that are
paid out. 

1087
01:00:13,700 --> 01:00:18,300
This actually is definitely like
a especially in the like ever 

1088
01:00:18,300 --> 01:00:21,900
evolving landscape of Mev. 
This is definitely a huge point 

1089
01:00:21,900 --> 01:00:23,600
of research and huge point of 
discussion. 

1090
01:00:23,600 --> 01:00:27,900
And ultimately, I think it comes
down to the democratization of 

1091
01:00:27,900 --> 01:00:33,800
Mev meaning who has access to To
it. 

1092
01:00:34,500 --> 01:00:37,200
How much of an edge do 
institutional players have over 

1093
01:00:37,200 --> 01:00:39,700
hobbyists? 
And I ultimately, I think it's 

1094
01:00:39,700 --> 01:00:44,400
very important for one for 
application layer contracts to 

1095
01:00:44,400 --> 01:00:46,900
design their systems. 
They don't have highly 

1096
01:00:46,900 --> 01:00:52,600
exploitable Mev, and to, for 
Tool, open tools and open access

1097
01:00:52,600 --> 01:00:55,900
to Mu V to be created. 
So that hobbyists have don't 

1098
01:00:55,900 --> 01:01:00,600
have like a huge discount on 
institutions and 3 even 

1099
01:01:00,600 --> 01:01:05,600
investigation of layer 1. 
Call techniques to, for Meb 

1100
01:01:06,100 --> 01:01:08,600
minimization. 
For example, 1559 ultimately 

1101
01:01:08,600 --> 01:01:13,600
does put a bound or does reduce 
the amount of Mev available 

1102
01:01:13,600 --> 01:01:16,600
essentially, like the because of
that in protocol burn. 

1103
01:01:17,200 --> 01:01:22,900
So, there's potentially is very 
like, exciting area of research,

1104
01:01:22,900 --> 01:01:25,500
but potentially, there are other
types of techniques that may 

1105
01:01:25,500 --> 01:01:27,500
make its way into the protocol 
over time. 

1106
01:01:27,800 --> 01:01:31,500
There's also there's, there's a 
security component here the 

1107
01:01:31,700 --> 01:01:35,600
classic bit. 
Coin issuance model is not 

1108
01:01:35,600 --> 01:01:39,200
sustainable hinges. 
Upon the fact that as the 

1109
01:01:39,200 --> 01:01:42,400
issuance goes towards zero and 
transaction fees become the 

1110
01:01:42,400 --> 01:01:48,200
dominant component of the block 
that it becomes the mine on the 

1111
01:01:48,200 --> 01:01:50,600
head, it component of the 
protocol becomes game, 

1112
01:01:50,600 --> 01:01:53,300
theoretically on stable, whereas
I might, you know, 520 person 

1113
01:01:53,300 --> 01:01:55,300
the network. 
And I see these like huge 

1114
01:01:55,300 --> 01:01:57,700
transaction fees. 
It might actually behoove me to 

1115
01:01:57,700 --> 01:02:01,100
reorg. 
Try to re attempt to reorg the 

1116
01:02:01,100 --> 01:02:03,900
Head even though I only have a 
small probability of doing To 

1117
01:02:03,900 --> 01:02:08,300
try to get those fees. 
And what we're seeing with with 

1118
01:02:08,300 --> 01:02:12,500
the rise of it, my TV and that 
ratio of like block value to 

1119
01:02:12,500 --> 01:02:15,800
block issuance go up. 
We definitely see some of those 

1120
01:02:15,800 --> 01:02:19,800
like similar weird incentives. 
Pop up on the layer 1 security. 

1121
01:02:19,800 --> 01:02:24,100
And so that's like definitely a 
huge component of research and I

1122
01:02:24,100 --> 01:02:26,400
wouldn't say quite a huge worry,
but there's a lot of people 

1123
01:02:26,400 --> 01:02:28,900
think about this. 
Yeah, you interesting Insight at

1124
01:02:28,900 --> 01:02:31,400
least for me that reducing Mev 
might be a factor for 

1125
01:02:31,400 --> 01:02:34,100
decentralization. 
Yeah, absolutely. 

1126
01:02:34,700 --> 01:02:38,800
And so it is certainly a 
concern, I think in a world in 

1127
01:02:38,800 --> 01:02:42,300
which you had, you know, 
hobbyist couldn't access Mev. 

1128
01:02:42,500 --> 01:02:48,600
And you had major institutions 
with pouring hundreds of 

1129
01:02:48,607 --> 01:02:50,400
millions of dollars into 
optimizing. 

1130
01:02:50,400 --> 01:02:52,900
Mev. 
That's definitely like not a 

1131
01:02:52,908 --> 01:02:54,400
good outcome for 
decentralization. 

1132
01:02:54,600 --> 01:02:57,900
And so there's a kind of a huge 
parallel track of research right

1133
01:02:57,900 --> 01:03:02,700
now on democratization and and 
maybe minimization. 

1134
01:03:02,800 --> 01:03:05,300
I think is going to be critical 
to the security of the system in

1135
01:03:05,308 --> 01:03:07,800
the future. 
Yeah, I mean even if it's 

1136
01:03:07,800 --> 01:03:10,300
completely democratized and 
everyone would get the same, you

1137
01:03:10,300 --> 01:03:11,700
would still have the variance 
issue. 

1138
01:03:11,700 --> 01:03:16,800
So you would still them. 
So you would have you would have

1139
01:03:16,800 --> 01:03:19,600
certain you do have those 
consistent payouts, which maybe 

1140
01:03:19,600 --> 01:03:21,400
keep your machines, keep your 
lights on. 

1141
01:03:21,800 --> 01:03:25,400
But you would see these like 
larger payouts. 

1142
01:03:25,900 --> 01:03:29,600
But so it's definitely a 
definitely like the the optimal 

1143
01:03:29,600 --> 01:03:32,300
of like having these like very 
clean consistent. 

1144
01:03:32,800 --> 01:03:34,700
Revenue streams changes, it 
changes. 

1145
01:03:34,700 --> 01:03:39,500
The the calculation certainly. 
So the other thing that if 

1146
01:03:39,500 --> 01:03:43,600
you're into is going to bring 
I'll be it not immediately is 

1147
01:03:43,600 --> 01:03:47,900
scalability with with sharding. 
So for some reason this is 

1148
01:03:47,900 --> 01:03:51,600
lumped together with the proof 
of stake transition, but it 

1149
01:03:51,600 --> 01:03:55,700
won't come live until next year.
I'm guessing at the very 

1150
01:03:55,700 --> 01:03:57,300
earliest. 
Is that correct? 

1151
01:03:57,900 --> 01:04:02,300
Later, for sure. 
So, yeah, the the East to I 

1152
01:04:02,300 --> 01:04:04,300
think I often say is to 
increase, security, 

1153
01:04:04,300 --> 01:04:07,700
sustainability, and scalability 
while retaining decentralization

1154
01:04:07,700 --> 01:04:13,000
and this is so that we can 
theorem can can provide a secure

1155
01:04:13,000 --> 01:04:17,100
and sustainable environment for 
the world's decentralized 

1156
01:04:17,100 --> 01:04:21,800
applications at the Crux of 
sharding, at the Crux of this 

1157
01:04:21,800 --> 01:04:25,800
consensus mechanism. 
Being able to provide more scale

1158
01:04:25,800 --> 01:04:29,500
is really like sophisticated. 
There's some design and it turns

1159
01:04:29,500 --> 01:04:34,000
out that it's much simpler to 
design these mechanisms when you

1160
01:04:34,000 --> 01:04:38,200
have a valid, when you have a 
participant set when you have a 

1161
01:04:38,200 --> 01:04:41,900
validator set when you have like
the consensus entities at hand, 

1162
01:04:41,900 --> 01:04:44,600
to essentially, like orchestrate
and dictate through mechanism 

1163
01:04:44,600 --> 01:04:48,500
design with proof of work. 
There's this notion of there's 

1164
01:04:48,500 --> 01:04:51,100
no notion of validator set at 
any given time. 

1165
01:04:51,100 --> 01:04:52,500
There's no notion of consensus 
set. 

1166
01:04:52,500 --> 01:04:56,600
And so a sharding, which relies 
heavily on randomly sampling and

1167
01:04:56,600 --> 01:05:01,200
validators and Since entities 
validating subsections of the 

1168
01:05:01,200 --> 01:05:05,900
system at any given time, really
needs to know this the set, you 

1169
01:05:05,900 --> 01:05:08,600
can imagine. 
There are like, some proof of 

1170
01:05:08,600 --> 01:05:12,000
work charting designs, but they 
ultimately end up trying to 

1171
01:05:12,000 --> 01:05:15,100
mimic a proof of stake, sharding
design and that there might be 

1172
01:05:15,100 --> 01:05:16,900
some sort of, like, election 
into a set. 

1173
01:05:16,900 --> 01:05:19,500
Like, you have to mind or 
certain amount of time and do 

1174
01:05:19,500 --> 01:05:21,600
certain out of blocks and all of
a sudden you're in the set and 

1175
01:05:21,600 --> 01:05:26,300
you can be sampled and it's much
cleaner and much simpler to just

1176
01:05:26,300 --> 01:05:30,200
have a validator set know. 
And with proof of stake, we get 

1177
01:05:30,200 --> 01:05:34,400
that out of a box and so really 
the foundation is get a proof of

1178
01:05:34,408 --> 01:05:36,500
stake in. 
This is mechanism out there and 

1179
01:05:36,500 --> 01:05:39,100
then to come to consensus on 
valuable things valuable. 

1180
01:05:39,100 --> 01:05:42,300
Things are the execution layer 
of a theorem today, the 

1181
01:05:42,300 --> 01:05:46,000
application layer and also more 
things. 

1182
01:05:46,100 --> 01:05:49,700
So so sharding Russo, take this 
consensus mechanism and utilize 

1183
01:05:49,700 --> 01:05:53,400
it for the value of there. 
And there's really the 

1184
01:05:53,400 --> 01:05:57,400
prioritization here between 
these two major upgrades, the 

1185
01:05:57,400 --> 01:05:58,500
merge. 
And sharding. 

1186
01:05:58,900 --> 01:06:04,100
The question was which to come 
first and the really nice thing 

1187
01:06:04,200 --> 01:06:07,800
is that there are tons of 
scaling efforts layer to scaling

1188
01:06:07,800 --> 01:06:10,900
efforts going on in parallel to 
all this layer. 

1189
01:06:10,900 --> 01:06:15,900
One development, and so coming 
online today and increasingly. 

1190
01:06:15,900 --> 01:06:18,600
So are these these Roll-Ups 
which scale with the amount of 

1191
01:06:18,600 --> 01:06:22,000
layer, 1 data and and aim to 
provide like ten to a hundred X 

1192
01:06:22,000 --> 01:06:26,300
scaling for theorem without 
changing, which I'm moving to 

1193
01:06:26,300 --> 01:06:31,000
the sharding designs. 
And so what we get to do is do 

1194
01:06:31,000 --> 01:06:33,200
the merge which gets rid of 
proof of work which makes the 

1195
01:06:33,200 --> 01:06:36,100
system more secure and more 
sustainable simultaneously. 

1196
01:06:36,100 --> 01:06:38,300
We get all these layer to 
scaling Solutions, which makes 

1197
01:06:38,300 --> 01:06:41,100
the system more scalable. 
And then further down the line, 

1198
01:06:41,600 --> 01:06:44,100
bring on sharding which would 
complement these layer to 

1199
01:06:44,500 --> 01:06:49,200
scaling solutions by providing 
more more layer 1 data to, to 

1200
01:06:49,200 --> 01:06:51,600
get even more scale. 
So essentially all these all 

1201
01:06:51,600 --> 01:06:53,500
these Roll-Ups are there buying 
it's time. 

1202
01:06:54,300 --> 01:06:57,700
We get to work on the other two 
components through the merge and

1203
01:06:57,700 --> 01:06:59,300
then Then and then prioritize 
sharding. 

1204
01:06:59,300 --> 01:07:02,000
So essentially if we did we did 
starting today instead of the 

1205
01:07:02,000 --> 01:07:05,900
merge we might get, you know, we
get all these layer layer twos 

1206
01:07:05,900 --> 01:07:09,200
and then we get all this all the
scale from sharding and but we 

1207
01:07:09,207 --> 01:07:11,600
didn't get the, the increasing 
centralization, increase the 

1208
01:07:11,600 --> 01:07:13,200
stability. 
So instead we get to tackle them

1209
01:07:13,200 --> 01:07:17,000
all at once at these different 
layers and then enhance it 

1210
01:07:17,000 --> 01:07:21,000
further down the line. 
From your perspective, is it is 

1211
01:07:21,000 --> 01:07:25,500
an option on the table that it 
will stay proof of stake that 

1212
01:07:25,500 --> 01:07:28,400
basically saying kind of, well, 
we do the transition to proof of

1213
01:07:28,408 --> 01:07:31,000
stake. 
But after that L tools will do 

1214
01:07:31,000 --> 01:07:33,900
just drop and that's it. 
I don't think so. 

1215
01:07:34,300 --> 01:07:39,800
But I mean I don't get to decide
you could imagine some movement 

1216
01:07:39,800 --> 01:07:43,300
at the community being like this
is enough, stop stop messing 

1217
01:07:43,300 --> 01:07:46,000
with it. 
And and you know, I think 

1218
01:07:46,000 --> 01:07:50,000
ultimately that would be it with
with ten to a hundred X scaling 

1219
01:07:50,000 --> 01:07:51,500
with Roll-Ups. 
Like that would give us 

1220
01:07:51,500 --> 01:07:53,200
something. 
I think the theorem would be 

1221
01:07:53,300 --> 01:07:57,000
very valuable and Powerful tool 
but I don't think that it would 

1222
01:07:57,008 --> 01:07:59,900
give us the the scale that much 
of the community has imagined 

1223
01:08:00,400 --> 01:08:05,200
throughout the years and so What
we do have going on right now is

1224
01:08:05,200 --> 01:08:07,000
there are shouting specs up in 
the spec repo. 

1225
01:08:07,300 --> 01:08:10,200
There are people working on our 
D and working on prototypes. 

1226
01:08:10,500 --> 01:08:14,000
I think even within the next few
weeks, we might see like a very 

1227
01:08:14,100 --> 01:08:17,600
small, like sharding Dev net 
which builds upon the beacon 

1228
01:08:17,600 --> 01:08:20,600
chain and the merge. 
And But ultimately like from an 

1229
01:08:20,608 --> 01:08:23,100
engineering perspective like one
had to be prioritize the other 

1230
01:08:23,399 --> 01:08:25,399
or we just both with would take 
longer. 

1231
01:08:25,500 --> 01:08:28,300
And so yes, there's a lot of 
unknowns. 

1232
01:08:28,300 --> 01:08:32,300
There's always a lot of unknowns
and and the roadmap and the 

1233
01:08:32,300 --> 01:08:35,899
technical Specifications have 
often been been in flux and so 

1234
01:08:35,899 --> 01:08:40,100
like you could imagine in 12 
months, something radically has 

1235
01:08:40,100 --> 01:08:45,700
changed but I do think that come
the end of the year with the 

1236
01:08:45,800 --> 01:08:48,899
hardening of the sharding specs 
and with increasingly some like 

1237
01:08:48,899 --> 01:08:52,200
test nuts with some of the 
people that are spending on 

1238
01:08:52,200 --> 01:08:55,899
prototyping that will have like 
a good idea as to how the slots 

1239
01:08:55,899 --> 01:08:59,200
in in the next like 12 to 24 
month roadmap. 

1240
01:08:59,300 --> 01:09:02,100
Obviously, there's there's this 
thing we call E2 which is all 

1241
01:09:02,100 --> 01:09:03,300
the stuff we talked about. 
Far. 

1242
01:09:03,399 --> 01:09:05,000
But there's also like tons of 
other shit. 

1243
01:09:05,000 --> 01:09:07,100
People always want to do and 
prioritize. 

1244
01:09:07,100 --> 01:09:11,000
And so like it's a constant kind
of debate and discussion, other 

1245
01:09:11,000 --> 01:09:13,600
other things, you might have 
heard of, or like, State 

1246
01:09:13,600 --> 01:09:15,600
Management and state 
sustainability through, like, 

1247
01:09:15,600 --> 01:09:18,899
statelessness and other 
techniques, which help reducing 

1248
01:09:18,899 --> 01:09:21,399
the load of running a full node.
A child with, like clients, all 

1249
01:09:21,399 --> 01:09:23,600
kind of stuff. 
So there's, there's a lot of 

1250
01:09:23,600 --> 01:09:26,600
different parallel Rd efforts. 
I think I can say very 

1251
01:09:26,600 --> 01:09:28,600
confidently. 
The next major thing to go to 

1252
01:09:28,600 --> 01:09:30,899
Maine. 
Net will be merge the merge. 

1253
01:09:30,899 --> 01:09:35,399
But then post that it's of a 
very active discussion debate. 

1254
01:09:36,800 --> 01:09:39,800
Yeah, I'd love to do another 
episode sometime about charting 

1255
01:09:39,800 --> 01:09:43,200
and the other efforts just 
because, you know, having them 

1256
01:09:43,200 --> 01:09:47,700
like on the sides like this. 
It doesn't do them justice, but 

1257
01:09:47,700 --> 01:09:51,399
I do actually have a couple more
very tangible questions on proof

1258
01:09:51,399 --> 01:09:55,100
of stake. 
So who we got to determine the 

1259
01:09:55,100 --> 01:10:01,900
block gas limit after the merge.
So the execution layer is like, 

1260
01:10:02,600 --> 01:10:04,600
at the beginning, the merge is 
untouched. 

1261
01:10:04,600 --> 01:10:10,900
So the essentially everything 
dictating that realm is ported 

1262
01:10:10,900 --> 01:10:15,000
and instead of the proof of work
miners producing and sending 

1263
01:10:15,000 --> 01:10:17,000
signals on that. 
It's the, the proof of stake 

1264
01:10:17,000 --> 01:10:19,600
validators. 
And so, in the construction of a

1265
01:10:19,600 --> 01:10:21,900
block that has this execution 
layer payload. 

1266
01:10:22,200 --> 01:10:25,600
Similarly, the got the block gas
limit could be dictated by by a 

1267
01:10:25,600 --> 01:10:28,300
validator than by proof-of-work 
minor. 

1268
01:10:28,500 --> 01:10:33,100
So that knob still exists the 
block producer, can still turn 

1269
01:10:33,100 --> 01:10:35,600
that knob? 
The block producer, just happens

1270
01:10:35,600 --> 01:10:37,200
to be a validator now instead of
a minor. 

1271
01:10:38,000 --> 01:10:41,200
Similarly, like the 1559 feet 
mechanics, which are expected to

1272
01:10:41,208 --> 01:10:46,700
go live in the next couple of 
months that mechanic at its core

1273
01:10:46,700 --> 01:10:49,200
is in relation to the block 
producer, right? 

1274
01:10:49,600 --> 01:10:52,200
And the by producer post-merge 
happens to be a validator rather

1275
01:10:52,200 --> 01:10:56,000
than a minor. 
On this topic. 

1276
01:10:56,500 --> 01:11:02,400
I really have a very high-level 
question on how we see where how

1277
01:11:02,400 --> 01:11:06,000
you see etherium and 
specifically with this. 

1278
01:11:07,000 --> 01:11:09,100
Yeah. 
Question of what's the purpose 

1279
01:11:09,100 --> 01:11:13,300
of etherium and is there 
potentially even a conflict of 

1280
01:11:13,300 --> 01:11:17,100
interest? 
So what I'm talking about, one 

1281
01:11:17,100 --> 01:11:21,400
way to look at the theorem, very
critically currently is look at,

1282
01:11:21,400 --> 01:11:23,700
look at the high fees and see 
you. 

1283
01:11:23,900 --> 01:11:27,100
Is and applications paying 
currently enormous fees. 

1284
01:11:27,400 --> 01:11:31,000
So, one way to look at it, very 
negatively, would say well, they

1285
01:11:31,000 --> 01:11:34,100
got lurked into this chain. 
They kind of started their 

1286
01:11:34,800 --> 01:11:36,500
assuming. 
Well, everything would be cheap 

1287
01:11:36,500 --> 01:11:40,500
and it free and currently they 
are getting the maximum idli 

1288
01:11:40,500 --> 01:11:44,200
rent extracted from from, from, 
from those fees. 

1289
01:11:44,700 --> 01:11:48,500
And I mean, that the, The 
Narrative is getting stronger 

1290
01:11:48,500 --> 01:11:52,600
around ultrasound money or kind 
of making a lot of money in a 

1291
01:11:52,600 --> 01:11:55,900
way with it. 
Theorem so to what extent or 

1292
01:11:56,200 --> 01:11:57,900
maybe what's your comment on 
that? 

1293
01:11:57,900 --> 01:12:01,400
Or is there a chance to come to 
lower fees? 

1294
01:12:02,100 --> 01:12:04,200
Or maybe even the question? 
What is one? 

1295
01:12:05,300 --> 01:12:09,800
Yeah, I mean I'm I don't claim 
to be an ultrasound money asked.

1296
01:12:10,400 --> 01:12:15,200
I do think that these systems 
that the foundational asset is 

1297
01:12:15,200 --> 01:12:19,200
systems must be valuable because
these are crypto economic 

1298
01:12:19,200 --> 01:12:22,400
systems and they rely on crude 
economic consensus models, which

1299
01:12:22,700 --> 01:12:25,300
generally are more. 
Secure when that foundational 

1300
01:12:25,300 --> 01:12:29,300
asset, does have value and so I 
get the push their mean, there's

1301
01:12:29,300 --> 01:12:31,500
probably two pushes their some 
people trying to make a lot of 

1302
01:12:31,500 --> 01:12:37,300
money, but ultimately a secure 
ether, highly valuable security.

1303
01:12:37,300 --> 01:12:40,600
Third does provide good 
properties to the system. 

1304
01:12:40,800 --> 01:12:46,600
So but but that aside the Crux 
here is ultimately capacity, 

1305
01:12:47,500 --> 01:12:52,700
which is Supply and there's a 
demand, you know, as outstripped

1306
01:12:52,700 --> 01:12:55,600
Supply. 
Quite a bit and people really 

1307
01:12:55,600 --> 01:12:59,100
want to use the system because 
of the network effects because 

1308
01:12:59,100 --> 01:13:00,900
all the shit is there. 
Like you said, they've been 

1309
01:13:00,900 --> 01:13:03,000
roped into the system. 
That's where all the action is 

1310
01:13:03,000 --> 01:13:06,300
happening. 
And there's also like a an 

1311
01:13:06,300 --> 01:13:09,400
argument that and maybe against 
kind of the tail risk thing. 

1312
01:13:09,400 --> 01:13:12,000
But this is seems much more 
secure than other systems by 

1313
01:13:12,000 --> 01:13:15,000
virtue of everything happening 
there and buy the network 

1314
01:13:15,000 --> 01:13:17,500
effects in the value of the 
foundational asset. 

1315
01:13:18,000 --> 01:13:20,100
Ultimately. 
We need to figure out how to 

1316
01:13:20,100 --> 01:13:27,000
leverage this secure network. 
For more capacity and and 

1317
01:13:27,000 --> 01:13:29,100
there's a couple of techniques 
there and we talked about 

1318
01:13:29,100 --> 01:13:35,200
earlier but Roll-Ups kind of go 
into this realm of can we can we

1319
01:13:35,200 --> 01:13:39,600
use this as like a settlement 
layer to like a parallel system 

1320
01:13:39,900 --> 01:13:42,800
and leverage and get the same 
security out of it. 

1321
01:13:42,800 --> 01:13:47,400
It turns out that you can and it
has been quite a journey to the 

1322
01:13:47,600 --> 01:13:49,900
to construct systems like that. 
I think plasma was like this 

1323
01:13:49,900 --> 01:13:52,300
promising thing and we kept 
running into this issue of like,

1324
01:13:52,600 --> 01:13:55,900
ultimately like There's there's 
a date, availability problem. 

1325
01:13:55,900 --> 01:13:58,500
And there's all these like, kind
of Ransom attacks and different 

1326
01:13:58,500 --> 01:14:02,800
issues, that arise, their 
Roll-Ups solve that, and are 

1327
01:14:02,800 --> 01:14:05,700
extremely promising. 
To use ethereum more as like 

1328
01:14:06,100 --> 01:14:11,500
settlement layer to leverage, 
its security to secure much more

1329
01:14:11,500 --> 01:14:14,100
insecure, much more activity, 
which is great. 

1330
01:14:14,100 --> 01:14:17,400
And then ultimately sharding, 
these techniques of random. 

1331
01:14:17,400 --> 01:14:22,700
Sampling of using consensus 
participants in a way that does 

1332
01:14:22,700 --> 01:14:25,100
not. 
Degrade security, but can come 

1333
01:14:25,100 --> 01:14:27,000
to consensus on more. 
Ultimately. 

1334
01:14:27,000 --> 01:14:30,200
Like what is L1. 
I mean no one's L1 security 

1335
01:14:30,200 --> 01:14:34,100
model on a certain amount of 
capacity and with other with 

1336
01:14:34,100 --> 01:14:36,500
with a spectrum of 
decentralization. 

1337
01:14:36,600 --> 01:14:40,800
I think it's Theory. 
Mm thinks the theorem Community,

1338
01:14:41,300 --> 01:14:44,500
the theorem ethos thinks that 
decentralization is like a very 

1339
01:14:44,500 --> 01:14:47,500
critical component to the value 
of these systems, into the 

1340
01:14:47,500 --> 01:14:52,500
value, to the world, and thus 
all of those design decisions, 

1341
01:14:52,500 --> 01:14:56,400
that sharding, the how It more 
capacity ultimately like is 

1342
01:14:56,400 --> 01:15:01,200
unwilling to really sacrifice on
decentralization and thus it's 

1343
01:15:01,200 --> 01:15:03,900
taking time and it's difficult. 
And I think one of the reasons 

1344
01:15:03,900 --> 01:15:06,900
that a lot of applications and 
things are here is because of 

1345
01:15:06,907 --> 01:15:07,900
that. 
Ethos, because of that 

1346
01:15:07,900 --> 01:15:12,000
philosophy because of the value 
that we think decentralization 

1347
01:15:12,000 --> 01:15:15,000
is going to bring the world. 
But we see a lot of other 

1348
01:15:15,000 --> 01:15:17,100
competing systems that I think 
make different designs 

1349
01:15:17,100 --> 01:15:19,700
decisions, especially on that 
decentralisation Spectrum, 

1350
01:15:20,100 --> 01:15:23,600
provide much more capacity and 
the systems may or may not have 

1351
01:15:23,600 --> 01:15:25,800
there. 
Place in the future, but I think

1352
01:15:25,900 --> 01:15:29,000
if there is attempting to build 
a certain type of future and 

1353
01:15:29,000 --> 01:15:32,700
that's really The Guiding Light 
and I think really ultimately 

1354
01:15:32,700 --> 01:15:35,600
the value proposition. 
Cool. 

1355
01:15:35,600 --> 01:15:39,300
Thank you that that was super 
fascinating and I'm afraid we 

1356
01:15:39,300 --> 01:15:42,900
kind of have to wrap because of 
because of time not because 

1357
01:15:42,900 --> 01:15:45,400
we've run out of things to talk 
about Danny. 

1358
01:15:45,400 --> 01:15:48,900
It's been an absolute pleasure. 
And where can we direct people 

1359
01:15:48,900 --> 01:15:52,700
to learn more about eat or even 
join the effort? 

1360
01:15:54,300 --> 01:15:57,900
So this is fantastic place 
called The eith R&D Discord. 

1361
01:15:58,300 --> 01:16:02,100
It originally was the kind of an
easy to effort and then the all 

1362
01:16:02,100 --> 01:16:05,300
core devs, the theory one effort
at all merged, and it's just 

1363
01:16:05,300 --> 01:16:08,500
this, like fantastic. 
Fantastic place to get involved 

1364
01:16:08,500 --> 01:16:13,700
in anything L1, etherium Rd. 
So check that out. 

1365
01:16:13,700 --> 01:16:16,300
You can find links on, like, the
spec repo you can, I think you 

1366
01:16:16,300 --> 01:16:17,700
can probably find it pretty 
easily. 

1367
01:16:17,800 --> 01:16:22,000
There's III search, which is a 
more asynchronous Forum to 

1368
01:16:22,000 --> 01:16:23,900
discuss. 
Research ideas. 

1369
01:16:24,200 --> 01:16:27,100
There's the E2 specs, repo or a 
lot of the magic happens on 

1370
01:16:27,100 --> 01:16:29,600
getting the specifications for 
this major upgrade in place. 

1371
01:16:30,300 --> 01:16:32,600
And then there's the, you know, 
the dumpster fire of crypto 

1372
01:16:32,600 --> 01:16:36,700
Twitter, which you can at least 
like find access points into 

1373
01:16:36,700 --> 01:16:40,900
into all these different things.
With a link to all of these in 

1374
01:16:40,900 --> 01:16:43,700
the show notes. 
So thank you so much Daddy. 

1375
01:16:44,400 --> 01:16:45,200
Yeah. 
Absolutely. 

1376
01:16:45,200 --> 01:16:48,700
I really appreciate you having 
me as a fun fascinating 

1377
01:16:48,700 --> 01:16:53,000
conversation. 
Thank you for joining us on this

1378
01:16:53,000 --> 01:16:55,400
week's episode. 
We release new episodes every 

1379
01:16:55,400 --> 01:16:57,400
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1380
01:16:57,400 --> 01:17:01,200
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1381
01:17:01,200 --> 01:17:03,600
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1382
01:17:03,600 --> 01:17:06,400
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1383
01:17:06,400 --> 01:17:09,500
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01:17:09,500 --> 01:17:11,800
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1385
01:17:11,808 --> 01:17:14,200
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1386
01:17:14,200 --> 01:17:16,100
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1387
01:17:16,100 --> 01:17:19,900
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01:17:19,900 --> 01:17:22,800
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01:17:22,800 --> 01:17:25,200
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1390
01:17:25,200 --> 01:17:26,900
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1391
01:17:27,600 --> 01:17:30,300
Well, thanks so much and we look
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