Fireside Chat

We are five. You guys are in the middle. Alright, yeah. Hey everyone. Cool.

Let's directly jump into the discussion. So, one of the first... The first EPCON was in 2018. So, well, it's been a few years, seven years. And back then we already had a similar panel and we were asking the question...

Who was on the panel? The two of you. And I'm not sure who the... Someone named person. I need to look it up who the first person was.

But, yeah, so we were already asking back then the question what would success look like and also what could go wrong. So, kind of what are the potential positive outcomes and also how would they be measured. And maybe that's, yeah, my first question into the round is... If all the things we are trying to build go right, what measurement or what societal KPI would change? And in what way?

And then, of course, we can connect this to... Has that already happened? And, yeah. So maybe, yeah, directly starting with that one with Joe. So, metrics that would indicate that we succeeded would be applications being used.

Lots of applications being used by consumers and businesses. Truly decentralized applications. We've got a giant Internet and a giant Web 2 out there. A lot of Web 2 is pretty exploitative. And so Ethereum is now scalable horizontally and vertically.

It's quite usable. It's going to get very usable with AI in the interfaces. It's affordable. And in most of the world, it's now legal to use tokens, to issue tokens, to participate in DeFi and that's going to get increasingly legal. It's going to get legal to build applications and not worry that some regulator is going to come after you.

And so I think the broadband moment is here and we're going to be able to move Web 2 applications to their replacements on Web 3 and it's going to be more economically and politically empowering for people because builders are going to be able to build of, by, and for the community rather than in an adversarial and exploitative relationship with the consumer. So giant population moves from Web 2 to Web 3. So I hear kind of, of course, adoption. The second thing, but I think we do agree that adoption, that's not the only thing we care about. We want to, and then the second part was you say the relationships are less exploitative.

Can we try to boil that down or measure that in some form? Right. I mean, I think like the one sort of metametric that I would use, like critique metrics is basically if what we as Ethereum had done is basically sold the rights to the Ethereum name to Sam Altman for $999 and then the project just shut down, then like by that standard would Ethereum be extremely successful today, right? And, you know, obviously if you define... Could have been.

Right, exactly. We almost won. You know, if you define the metric too naively, then yeah, there would have been totally lots of Ethereum users and we'd be talking about like Ethereum for militaries or like whatever it is the AI people talk about, right? And obviously, of course, you know, we do have like specific outcomes in mind. And so, I mean, I'll propose one.

So let's take averaging over like all of the different pairs of countries. How long would it take for just either any person or potentially we could even say like a politically disfavored person to send a transaction from one country to another country? What delays do they incur? What percent of that transaction do they lose? Like basically, yeah, measure to what extent we've reduced global...

the inequities of global finance. And, I mean, arguably, you could even say there have been some successes, at least if you take a sort of, I mean, like post-hoc or go-prop or hoc bias and you look at like, hey, look at what PayPal fees were like in 2013 and like look at what both crypto and non-crypto is like now. And then, you know, I could do a similar thing across other categories of application. So I don't think that would cover everything, but that's like... Let me give you three metrics.

The internal one is investment relative to customer revenue. For a long time, we've had a lot more investment than customer revenue. That has to change to become a stable industry. So we hope to see customer revenue go way up to match investment. Second is prices.

One of the things you might hope is you're going to reduce the prices, as you just said, on some key services people have in the world, and we will see the effect of crypto as this was the era that made the transition between high prices and low prices for some key financial services in the world. But the third metric I would most hope on is there's some new things that we're going to generate, new products, new features, new things you can do that didn't exist before crypto. And people look back and say that was the era where they started to make things. Crypto is really inventive and innovative compared to many other industries, and that's my biggest hope for crypto is that we will invent stuff that lasts, and this will be the era people remember of invention. We've invented lots of stuff, but do you feel like the roughly 10 years of the speculative phase in our ecosystem were necessary and reasonable, and we're now, all those things that I mentioned, we're approaching our broadband moment where we can have people build things that are actually useful, that will garner revenues.

We'll still have a lot of investments and a lot of speculation, but I think we needed all of that crazy investment and speculation in order to build layers and layers of enabling infrastructure. It's hard to move a society from top-down command and control to bottom-up decentralized trust. I remember, I think 10 years ago in Hong Kong, I took Vitalik to task, and I said, look, you guys are doing way too much tools and platforms. You need to have end-customer revenue, and of course the whole field ignored that, and it spends all this time on platforms and tools, and I sure hope you're right that we needed to do that, and we've finally done enough, and we're finally going to use it all, but I'm worried a bit because this habit of tools and platforms is pretty strong, so somebody needs to get in the habit of end-customer revenue. Yeah, the whole field didn't ignore that, or maybe they did if you don't consider Binance to be part of our industry.

So there were lots of people that went straight to product and revenue, and if that was all that we did, then we wouldn't have a chance of decentralizing the world. Right. I mean, the finance bro take on this is that that was a consequence of, I don't know, the zero interest rate policy era, right, which is that, you know, when basically investments were encouraged to do something that looks on the surface like caring about the long term, but actually that's very hard in practice, and so they cared about proxies, which were basically impressing the next fool who also thinks they care about the long term, and, you know, now we're in a very different environment. So, you know, this is one of the hypotheses that I see people talking about, which might, like, force more near-term focus on its own. I think the discussion is related to, yeah, to some question.

I mean, we were jokingly discussing at some point whether Ethereum is more like a tech startup or more like a religion or ideology. So it seems that, yeah, that kind of the, to some extent, economic rules are different in crypto, I guess. Of course, there's Bitcoin. So I'm an economist, economics professor, and our standard textbooks make these nice distinctions. Well, there's for-profit firms, and then there's non-profit charities or clubs, and crypto just doesn't fit those categories very well, which is striking.

There is this remarkable synergy of capitalism, greed, idealism, and aspirations that has made this work, and if we can finally make it pay off, it'll be a triumph of that sort of thing in the future, I guess. But it throws out the usual categories. People often don't think you can combine greedy, even rapacious capitalism with idealism and producing grand new things that achieve community ideals and not necessarily personal ideals, but, well. So if Ethereum was a tech startup, it would have failed. We talked to VCs early on, and we decided to go in a more decentralized direction.

Ethereum was a vision and values-driven project, and because of its crazy, haphazard, self-selected nature, where anybody could select to be in the community and everybody could select to be an early contributor on the project, it was complicated, but it set a certain kind of ethos. And so I would call Ethereum a new kind of thing. I would call it a tech ecosystem startup, and ecosystems have their own culture, and religions are everywhere, and so it's absolutely a religion as well as a new kind of thing. Keep going. No, no, no.

So what certainly allowed that, whatever it is, it allowed permissionless innovation, and we saw that with all the Layer 2s and kind of lots of, well, again, platform building and tooling being built. And in a way, I think that was a positive, but I would say, and I think it seems to be happening more and more, that there is this innovation, and there's innovation around those and so on, but the question is, will it, I think, not a secret, but there is a question of fragmentation, and will there be or are there forces that bring things together again? And, yeah, and of course, what's the risk of, yeah, failing against ecosystems that are more coordinated? Yes, that's a real risk. Yeah, no, the risk exists.

I think this is definitely one of those situations where I think part of it just is that we have to invent the solution as we go, because Ethereum is a very unique type of structure in the ecosystem and a very unique mix of goals and incentives that are aligned in some cases and not aligned in some cases. I think, in terms of, we can list strategies for trying to solve things, even if we define the problem as being standardization, but that's only one of the ways of thinking about it. Basically, the way that I usually enumerate the strategies are basically, one is, of course, virtue signaling, which is basically, you know, you have a culture where going along with some either standards or principles is valorized, and this is something that gives you better standing in a community. And I think every community everywhere relies on a non-zero extent of that, but it's also very possible to over-index on it. Then two is some organizations, which could be the Ethereum Foundation, or potentially it could be other groups, like you could even have two sectors basically doing this against each other.

What the tech world calls commoditize to complement, basically something like the Ethereum Foundation could write the software that makes the right way of doing things closer to zero cost because the software already exists. Then a third option is just transparency, right? So to the extent that people agree, at least abstractly, that something is the right goal, then make it more transparent in what strategies and what projects are actually doing what things toward that. Right now the Ethereum ecosystem has used some mix of all three. I actually think that the second strategy that I mentioned is probably one of the more undervalued ones.

Within the Foundation, we've been exploring the idea of doing more in that regard, actually building more software packages that could be built that actually touch things at the user layer or are somewhat closer to the user layer that reduce the development effort of following some standards, potentially following along with some shared security goals or other kinds of goals. But I don't think it has a single solution. So every time I buy a new toothbrush, it has a different charging mechanism. So I made a point of... Are you trying to solve that?

Yeah, that was interesting because I did make a point of finding the few toothbrushes that charge with USB-C, and it definitely is tricky. Well, the thing that probably made it easier recently is... I mean, actually... I mean, AI has made it easier because it's basically a more powerful search engine, right? And I could say, like, tell me the USB-C compatible versions of a thing, and, like, you could do this before with search, but the AI-based tools make it one step easier.

So arguably, you could say that this is a form of transparency. Yeah, so... I think there is a chance that Ethereum is replaced as the world computer, the decentralized infrastructure on which nation-states and major corporations and other sub-ecosystems are built. But I think the chances of anything displacing Ethereum at this point are minuscule. There's nothing out there that could replace Ethereum.

Everything out there other than Bitcoin and Ethereum looks kind of like a company. Bitcoin and Ethereum are the only two credibly neutral and decentralized platforms out there. So I would argue that a roll-up-centric roadmap makes a ton of sense. We've been in this divergent phase. We're now in a convergent phase where we are going to figure out how to make everything synchronously composable or near-synchronously composable.

And anyway, people are going to be building applications with SDKs and wallets and with AI agents speaking to different blockchains. And so people are just going to be using applications, and some of the backends will be on different networks. So I would argue that a year from now, it's going to be very clear. So many institutions are coming to us and wanting to build on Ethereum, to build on Layer 2s or build on Layer 1. A lot of that's about stablecoins and real-world assets, but the applications are going to be coming.

So a year from now, I think it's going to be very clear that, well, there are going to be some cool Layer 1s and some cool Layer 2s and some Layer 3s. But really, Ethereum is going to be the major decentralized protocol substrate. It's going to be seen as a trust commodity, and from that, it will get its monetary premium. So one way to frame the question is, what's the consumer demand for the credibly neutral decentralized part of these products? Because other people can offer similar products that lack those features, and plausibly, they're more nimble, they can more organize marketing campaigns, maybe they have cheaper technology.

There's the fear that they could displace, because most customers don't actually care that much about the decentralized, credibly neutral part until there's a big crisis, perhaps, which then makes a big lesson for everyone. So then three different scenarios. One is no big crisis, and then people just drift to the other thing, and they lose the key thing you treasure. Another scenario is there's a crisis of some sort, whereby everybody sees the virtue of decentralized, credibly neutral because of the terrible disaster that happened with the alternative, and a related crisis would be a crash, a market crash, because we've had many of those over the last century, where tech rose and inspired a lot of high prices and then a crash. And then in a crash, some of these for-profit competitors might be swept away, but the community-based ideological group might persist longer and stronger because they have other reasons to go forward.

So I would argue, based on who we talk to in the traditional economy, that high-valued assets and high-valued applications and protocols are going to be attracted to a network like Ethereum Layer 1 because it hasn't gone down in about a decade, and it's pretty clear that the best and the brightest are continuing to build it. We struggle with each other all the time, fighting things out to build the next evolution of the protocol. But in terms of guarantees like credible neutrality and that it's going to be working every day for the next 10 years, those are tough to beat if you're a financial institution, at least. I guess uptime is a metric. So Robin, I know we're here because we all really appreciate you as an Ethereum co-founder, but I want to ask about a totally different tangential topic, which is prediction markets.

So this has been a big part of Ethereum lore basically since the beginning, right? And there was Augur at the beginning, and then even outside of Ethereum, Truthcoin and Paul Stortz's work, and then since then, PolyMarket. Wait, wait. There was another project. What was it called?

Do you remember? What was it called again? Right. Omen. Indeed.

Omen is great. So I guess I'm curious, compared to your expectations of this space back then, how do you feel about the impact that prediction markets have made since, I guess, the idea and our attempts to make it happen has started? So the audience might not know that there was a burst of interest in prediction markets in the aughts, and then many companies explored and tried, and many firms were pursuing it, and then that interest faded, and there was a long period of disinterest and low activity. It faded because of the CFTC or the interest? It faded because of just lack of business interest.

I mean, there were some things CFTC messed with, but basically most executives are shy about implementing prediction markets. So it hadn't been implemented well enough, not enough marketing, whatever, but products failed temporarily. And then crypto people started seeing it as the sort of thing… You're complaining about users not using our technology. Right? No.

It's the issue, right? Then you make something users want, yes. But then crypto people saw this as one of the key applications that they could imagine selling through a decentralized neutral platform, and so that was part of the initial appeal for many early crypto projects and platforms. And then they took a long time to actually get much user revenue attraction, but that's okay for crypto, apparently. It's all right to have a long lead-in, but then in the last few years, we've got this burst with the quality market, and that's great to see, and that will certainly lower costs because the more you pay for an infrastructure, the more you can make lower costs for other things.

And so I'm, of course, most excited that these lowering costs will allow us to expand in other markets. That is, we've had betting markets for a long time at a modest cost, and lowering the cost of betting markets does increase the demand for them, but the elasticity of demand isn't that high. There's a limited demand, I think, for just speculators betting on things. There's, you know, lower price will increase it, but I'm envious for, or eager for this vastly larger market out there that eventually we could tap of people who need to make decisions, who want advice, and there's huge value there, but that's harder to tap. That's what people were trying to tap in the aughts, and that's a harder nut.

To what extent would you say polymarket is on the level of being entertainment or already being used to... For many technologies, you can sell them to different customers for different purposes, even if the technology isn't different. So betting markets are basically the same as insurance. Insurance is one market, then there are just speculative entertainment. People just want to bet for fun and get the action.

That's another market, but there's this third market of people who want to know things, and that's, in principle, a huge market, and hopefully crypto can help us penetrate that, but it will require more than just lowering the cost on, say, polymarket-like tech. It requires a lot of business innovation. That is, you have to try it out in businesses, figure out different ways to do it, different ways to pitch it, collect track records, and then finally get success. So that's what I'm hoping for, but we're definitely not there yet. So prediction markets need users, liquidity, lots of different propositions for different prediction markets.

You've been doing some work on enabling prediction markets to be stood up and monitored by AI. Do you want to talk about that a little? Yeah, I mean, we're always interested in this information, using prediction markets to make decisions, and for that it is important that those who pay for this information get a reasonable cost. And it seems like AI could be a participant that can deliver information at reasonable cost, and a prediction market can be a good mechanism to aggregate all the information that all the different AI systems can produce. Right.

That's focused on the supply. I would say the limiting factor is more on the demand side. You have to convince the customers a form of the product that they can find acceptable, because the usual default forms look like they don't work. Unless they're a bunch of agents. If you can get the agents to buy, sure.

Exactly. They might be demanding it as well. They're not well-funded. Well, one larger other topic complex, last topic complex, is money and future of money. So, obviously, kind of, well, again, Bitcoin maybe raised that question, and I think we are seeing now, yeah, big institutions at least having that form of discussion.

So, yeah, I guess my question is, how will money look different in the next 10 to 20 years? And what's yours? I'd say that crypto has had this sort of fluctuating attitude toward government and regulations. Initially, the pitch was, we can ignore government because we're in the chain and they can't stop us. And then we transitioned to most firms saying, oh, we're following all the rules.

We're completely compliant. Don't worry about us. But, you know, the energy of making new money is somewhat of a government-defying energy. People are somewhat like, the governments have run in money for a long time, right? They've controlled money and their national prestige is tied around their money.

And so to have a non-government money is somewhat of a threat to government prestige. But that energizes a lot of crypto people. Yeah, let's take them down, like, you know, revolution. But then people shy from the revolution when it comes to actually, you know, so. They go from the revolution to the revolving door.

Yeah, true. So Ethereum may have had a few crypto anarchists in its midst, but it was much less crypto anarchists than Bitcoin, because it was people trying to build a platform. I think we have more crypto anarchists than Bitcoin now. Oh, now we are. OK, so that is interesting.

And so I have two answers to your question. One is a near-term answer, which is relevant to what you just said. And then one is a much different, longer-term answer. The near-term answer is that the world is cracking up. We're at the end of a debt and generational super cycle, stress and how super cycle.

We are smashing up against the wall. There's too much debt in the system. It is clear to the world that the United States is going to reformat trade relationships, military relationships. The U.S.

is paying 25% of its budget in interest, more than its military budget. And the U.S. wants to maintain primacy in the world politically, want to maintain the U.S.

dollar as the main reserve currency. And the way it seems to want to do that is because American politicians have made it clear that austerity is un-American. So they're not going to be able to pull back on spending. So Scott Bettson, Treasury Secretary, has pivoted and said, okay, we're going to grow our way out of this mess. And legislators are making rules, stable coin rules, market structure rules, to enable the U.

S. to start using our rails. And so over the next 10 years, there's going to be a race to keep the U.S. dollar strong via stable coins.

So our ecosystem is going to be lending money to the U.S. And what seems to be going on is projects like Michael Saylor's strategy and Cantor Fitzgerald and Tether are doing this 21 project. Our company is doing a project called SFET, or Sharp Link Gaming, where they're accumulating bitcoin, we're accumulating ether. And I think what money looks like in the next 10 years or longer is some sort of thing that looks like a U.

S. dollar is digitized, is sitting on high-powered money like ether and bitcoin and probably gold if you're holding the metal and silver if you're holding the metal. It can be tokenized. And so I think there's a race right now to build giant pools of high-powered money. In the more distant decentralized future, I think the nature of money qualitatively changes where it's going to look more like barter.

When we tokenize all the things, you can just trade tokens back and forth. If I want to buy something from Martin, I will have a list of tokens I want to get rid of. He'll have a list of tokens he wants to accept, and the machines will do the foreign exchange calculations. So I think money kind of goes away and the machines take care of it. One brief question I wanted to ask.

So with SFET, you sometimes recently get compared to wanting to be the Michael Saylor of Ethereum. Now, Michael Saylor has stated this opinion that he believes that self-custody is something that they should not be striving for, and people shouldn't generally hold their bitcoins in banks and self-custody is for criminals. And so, Mr. Saylor of ETH, what is your opinion on self-custody? Well, we publish a wallet called Metamask.

So obviously, I'm a decentralization maximalist, and I think it's embarrassing that I have a lot of respect for Michael Saylor. I think he's doing some impressive things, but I think it's super toxic to suggest that bitcoins should be custodied. I think people are believing that, including people in the upper echelons of governments, are believing that bitcoin should mostly be sitting in centralized custodians, and that way it'll be able to participate in some bastardized form of DeFi. And so I am worried that there will be a barbell emerging, where we've got bitcoin on the one hand, and maybe nation-states get behind something centralized like Solana on the other hand, and then we've got a continued war of decentralization versus centralization on our hands. Good.

I see the time's over. Do we have time for a couple of questions? First of all, let's thank Ben. Thank you. We unfortunately just have time for one short question.

We have quite a bit of overtime, so questions? Questions. One question there. Thank you so much. Based on the last topic that you guys talked about, the money topic, what do you guys think about universal basic income as an idea?

What are your thoughts about Circles that Martin is building? So I think the Circle system is an incredibly cool project, and I think it is an interesting potential future of money. I also like the idea of universal basic opportunity, where you're not giving everybody a bunch of capital to spend, but you're giving everybody opportunity. I think AI is going to make that much easier to implement, and so everybody should be able to put some effort in, get supported in putting that effort in, and create something that they care about. I'd say it's an example of crypto being very innovative and creative.

It's a fount of these interesting ideas that people like to see experiments with. I'm not so sold on that experiment, but I don't need to be sold on each experiment to want them to be tried. I want it to be tried. I'm also excited about Circles for a non-money-related reason, which is that I think some kind of online identity is going to become a very important thing to have, and we have plenty of projects doing wrappers of passports and government ideas, and we have WorldCoin, and those two are both becoming quite successful. WorldCoin has over 10 million users, but there are definitely elements of centralization in at least the consequences of, I think, designs that have singular identities.

To me, Circles can be a powerful way of just experimenting with and even using the money aspect to help battle test a form of identity where the issuance mechanism is more decentralized and more social, grass-driven, and I think this is a third corner of the identity triangle that really deserves to be properly explored on. Good. Thank you.