This Year in Ethereum - Evan Van Ness

i'm i'm evan van ness uh so i'm talking today about urine ethereum this was gonna be i was gonna say i couldn't hear myself so that makes sense there we go yes so i'm evan van ness i'm talking about the year in ethereum so it was supposed to be a panel of me and josh stark and we write this uh post every year but uh he is on his way to the airport so it's just me so me put a lot of work into these slides uh i have an mba but somehow my powerpoint skills never never quite got there uh so i am uh i i do a newsletter i found out a newsletter and published a newsletter called weekend ethereum news that's weekend ethereumnews.com uh i have a little venture fund where we invest in the future of web3 called star bloom ventures and uh do some other stuff as well so every year you know we published this year in ethereum i think it actually got started at another hackathon east singapore back in 2018 in denver where the price of eth had just hit 80 and josh and i were sitting there and we we had this you know weird feeling where we were at a hackathon we were feeling the energy like this one it was obviously much smaller uh you know we were a little jet lagged but there was this weird like you know feeling of you know the popular crypto settlement was that you know like ethereum was sort of stagnant and like we felt the opposite you know as someone that like publishes a newsletter on this every week am i too loud i'm not loud enough oh i felt like i was hearing feedback and it was making me nervous okay uh so i felt like uh we felt like we were really feeling the energy and like the popular sentiment was was different and so we decided to write a blog post uh about you know like how we felt the the year and a theorem had gone and so we have done it every year since it is usually a 25 to 30 minute read or something like that we feel like we could put a lot more in and in fact we probably cut uh two-thirds of the words that we write and two-thirds of the topics that we we put in uh and it still ends up being a massive massive uh you know post every year really like ethereum is growing to the point where you know it's it's hard to just encapsulate it in one post or even for me like in one newsletter um so it's it's it's crazy to see the growth so this basically is going to be a a graphical view of the year in ethereum is what we're going to take a little tour of so the we're going to start with you know total transaction fees so you can only you can fast forward or rewind a couple years ago where bitcoiners were saying you know like bitcoin would always be the you know the number one in in blockchain fees and then last year it i believe it was last year at bitcoin uh e-flip bitcoin and transaction fees and uh since then it's like not even a competition and you know bitcoin in particular depends on its its transaction fees for for security long term and uh you know it's it's not going to offer them uh as you can see on screen um sort of amusingly is you know binance smart chain is just a fork of ethereum clients and uh it's actually almost about to catch uh you know bitcoin for total transaction fees uh for the year and then everything else really doesn't register uh so sort of an interesting slide and in some ways i think if i was going to do one image i could just do it right here um i'm getting told i need to lean in so uh yeah apologize for that if i'm not volume valuable enough uh you know transaction fee is not necessarily the absolute best measurement you know but if you have to pick one i would say it's still the one to pick uh at the moment um so that was just base chains just layer ones uh if you include you know all of the apps then it actually becomes ethereum's dominance is even more clear so all the things in pink here are ethereum applications so uniswap you know sushi swap ave compound um and it's you know it's really crazy and like i said binance even it's really just a centralized fork of ethereum clients so total fees and revenues you know i think one of the themes from this year for urine ethereum was that uh ethereum has sort of grown past the point where bitcoin was really a competitor in terms of usage you know really like we're starting to get to the point where visa is really the competitor in the in the payment rail you know as you can see on the slide like ethereum passed right uh and if you know in revenues uh visa is is in the crosshairs and if we grow like we've been growing in the past years then you know we're probably going to flip it in 2022. and in fact if you look at total transaction volume ethereum has already flipped visa you know there's some you know things you could say about that but i think like it's a general like a directional thing it's it's pretty clear that like now ethereum is a legit worldwide international payment rail that crosses borders in a better way than banking system does it which is you know uh you know if you ever have to send an international bank wire it is a pain in the butt you know it takes hours it you know it takes days for them to confirm that it went through they you know you have to sign a lot of paperwork not with ethereum so another good metric is total value locked invented by scott lewis from d5 pulse who i was just talking to uh the other a little bit ago amusingly one one fun thing about scott is that i remember somebody was uh mansplaining uh tpl to him on twitter a few uh maybe a year ago and he said like you know i'm the one that invented tvl i'm sort of amusing using moment um but as you can see here you know like uh ethereum as d5 has more tvl than bridgewater you know one of the biggest headphones and more than robin hood uh and so one of the big themes of 2021 was the rise of layer two i think it is under underappreciated that the idea of ethereum is that it's supposed to be a global sediment later so users really in the long run should not be using layer one they should be using layer two and so the idea is that a indiv like transaction fees on an individual user layer are should be kept low but transaction fees on a l1 should be high um and so you've we've seen the like the amount of uh of each and stable coins and and whatnot that have trans uh migrated to layer two uh this is actually from layered two beat which i believe is l2beat.com and uh you know it's it's sort of impressive this is actually i took this this morning this screenshot so it's not not perfect but uh whatever so as i said like the idea for ethereum is supposed to be that you have cheap fees on an individual transaction layer and you can see this on on l2 fees uh dot info i believe it is and um it's already the case right like the future is here but it's very unevenly distributed hey hey hey the future is here but it's unevenly distributed all right so nobody could hear me that's great well that feels great um that sort of explains some of the faces i'm getting in the audience for sure uh so uh l2 fees that info i mean you can see like the the this was actually this morning so not in 2021 but whatever uh the you know the the the fees to transact are relatively cheap uh of course they're going to get a lot cheaper in the next couple years uh optimistic roll-ups in particular continue to get better on compressing their data and uh call data as well is on the roadmap for you know one of the next hard forks after we turn off proof of work uh so this is the uh the other slide from l2 fees again it was from this morning but um i think it's sort of an interesting like um view which is pretty similar to you know layer two transaction fees but it's how much they are paying layer one to put their their their data on ethereum and you know as you can see like these things are starting to be um you know a lot of money uh that you know that's just one day of the amount of ethic that was burned uh you know putting the the data from roll-ups on ethereum and again like that's really like with a roll-up-centric road map at least for the short and medium term you know block space is really uh ethereum layer one block space is really for layer twos so another you know obviously big thing was you know the rise of nfts and the creator economy and you know it it's really mind-blowing uh josh did a lot of work uh as well as uh some some of our assistants putting together you know a bunch of like metrics and chasing down exactly like what how ethereum compared and it's really kind of mind-blowing uh you know you can compare it to spotify you can compare it to you know it passed some other things like patreon here um and that leads to the next slide which is uh who makes a living on crypto which um i actually didn't really want to put this graph in the uh in the post but josh insisted and as usual he was right so uh you know it is pretty interesting to see like the evolution over the years and and you know there's a lot of uh truth and you can see it at this hackathon at this i guess this is now more than a hackathon where it's it's certainly like the community has has burgeoned and has really expanded quite a bit to different categories so another big thing was things that happened at the protocol level like eip 1559. so this chart the the blue is the legacy transaction types the green are the eip 1559 types and you can see like you know people are still doing um legacy transaction types and in general they're overpaying by some ridiculous amount and you know it sort of depends on exactly how block space goes and you know um but but in general like if your wallet hasn't changed to eip 1559 then you are overpaying for your transactions almost 100 um and that's sort of what this next slide shows uh somewhat somewhat difficultly but as you can see the orange is what you're paying um if you're using eip1559 and not uh the blue is if you're not using the ip1509 and so that's a little bit hard to see right the difference here so the next slide is actually the difference and you can see that basically you are always better off using eip 1559 and i think really like one thing that got lost on twitter is that eip1559 was always about having more predictable gas prices so that you know you could do a better job of getting into blocks i think a lot of people particularly eric connor of ethub was really tired of explaining uh gas prices to his friends and he wanted something to be more particular and a specific that would make it easier to you know just have people use it and it works and you know the ip1559 works however one interesting thing about the ip1559 which is of course not in any way under discussed but it it is a long-term value accrual mechanism for ethereum uh because the base fee of every transaction is burned so i think there is one thing that is often lost here which is that in proof of stake it is really important that the native asset eth be valuable and perhaps even increasingly valuable like that is one of the things that is is really important and uh eip1559 sort of closes that loop and makes it a a an intrinsic value to the native asset and as you can see here like there are multiple days during 2021 that where the net issuance went below zero and we've had weeks now in this current year in january where the entire issuance was was negative um over a seven day rolling window so one other thing of course is that you know we we continue to have more people staking and um you know it's it's it just continues to go up people continue to stake um and you can see that here so here is a road map which is done by trent van abs which i think is is really good and um you know you can see like what what's going on here um i think that's like i was going to talk about this at the end but apparently i put it in the slide here like what's going on this next year you know i think it's continually going to be that roll-ups are continually adopted and it's taken a long time to get apps to migrate to layer two to deploy their tokens on layer two but it is increasingly happening and of course there are problems there and developers need to change the way they think about some things but uh it is it is inevitable that in the long term everything will be on layer two now the other thing that is is happening this year um i would say with an extremely high um confidence interval is that we're gonna turn off proof of work now i don't know about you but i am always i've always been ready for ethereum to turn off proof of work ever since before the chain launched um i i remember yeah exactly let's all clap for turning off of work the energy waste is is ridiculous um there's there's no intrinsic value to it we can do it much better much more securely with proof of stake you know in 2011 and 2012 i was reading these articles by this uh you know 50 year old russian phd uh named vitalik buterin and it was only until ethereum came out that i realized that you know like he was no he was like 17 living living in a basement in toronto so you know i i think it's great um current progress on that of course is that we're we're spinning up uh test nets um and uh there's going to be one long-standing test net that will get spun up in the next week i'm doing in the current spec which is intended to be the final devnet before we start forking all of the test nets uh that are going to be kept around in proof of stake i think that's really like a really underappreciated thing is that like we are getting like particularly close of course it's it's a complex software and you know we have billions at stake in the system so you can't really you know guarantee that it's going to happen on any time frame but i feel quite confident that it's going to happen in the next few months as i said like we are getting to the point where we're forking test nets and you never know maybe we'll find something in test nuts but it's happening you know like ron paul it's happening dot gif uh what one one thing which you know i tweet about a lot is client diversity and in staking and um you know that's a little bit outside of the scope of this talk but you know i like to talk about it so i'll talk about a little bit here which is that ethereum is intended to be maximally decentralized and when we have uh across all accesses and um for example like you know prism has a super majority of uh the validators and that is is not good um for example i would say that uh you're taking a risk with your eath if you're sticking with a super majority client and it's like one of the most important things for ethereum to do better is to like sort of decentralize we've seen this in the current main net where you know geth like does an amazing job but it's really unfair to them that like they have a super majority and the network like mostly runs on on on geth and it also means that they have to move they have to be very careful about every modification that they make you know like more careful than if that we had a bunch of clients that all had a third of the network and they have to be careful about taking prs from outside people and that that gets a lot of people upset you know people have prs to get all the time and they don't get merged and uh you know that's like unfortunately something that just like slows down the inherent nature of of of the beast here right with with software the client software development so you know run minority clients it's important for ethereum if you can run them at home that's even better a lot of people think that you have to have great uptime that is definitely not the case you can be a very profitable validator uh with you know with like uptime that anyone can do like checking in here and there throughout the week to make sure your validator client is still running like maybe linux crashed or whatever maybe your your client crash it's definitely a thing that you don't really have to worry about you can still be profitable even with bad internet and some bad play in a place with a bad internet connection like the united states perhaps anyway run minority clients it's it's it's extremely important for you know the long-term future of ethereum so one other really interesting thing is that um dallas had become you know it's been a long-term thing that we've talked about you know there was a 2013 blog post by vitalik maybe it's 2014 decentralized autonomous organizations i don't know if like most dolls these days are decentralized autonomous or organizations really but uh the idea that you can collaborate across you know like around the world with uh with you know share resources and vote vote on things and and come up to different ways to reach consensus even at a group level is is really powerful and we've started to see it here i mean you can even see the number of dow voters on snapchat and uh yeah this is how we ended the end of the blog post which is that you know like this is it was a bullish year for a theorem like a lot of things happened we made a lot of a lot of progress on turning off proof of work as a community you know l2s really started to come into their own although they still need more adoption and um you know look the the future isn't isn't going to build itself so you know it's easy to get distracted but let's not do that and i think you know seeing a lot of people here feeling the energy at east denver people are still are still hyped and still want to build the future i still want to make sure it is maximally decentralized and so that's it i wanted to to thank my name all the people that uh that helped us with this it is an insane undertaking believe it or not josh and i spend hundreds of hours on it every year we have a little bit of a panic attack every time it's new year's eve um but you know we had assistance bruno lewinsky miguel ferreira nasim rizvik as well as some other people that like super fizz blacksmith sankar liam horn danny ryan timbeko donkered feist friend fan apps barrett white hat and fabian from slingshot the post is out there if you duck.

go you're in ethereum you will find it as well as all of the other years and they're really actually i mean it takes a long time but reading them all in chronological order is really interesting and josh has done a great job of sort of building on each one and sort of building some themes which might not be evident if you just read the one post every year so of course all the data you can find there so that is the end thank you for listening especially if you couldn't hear me