Vitalik Buterin’s Response to ETH Supply Gate:
Vitalik Buterin refutes the claim that the Ethereum community does not know the total outstanding supply of ETH. He confirms that the Ethereum community knows the total outstanding supply of ETH, which is around 112.1 million. The ETH supply can be calculated through various methods, including scripts, ETH supply calculators, and protocol analysis. Vitalik believes that the accusations are a form of “modern Bailey fallacy,” where an extreme position is taken publicly, but when challenged, a more moderate position is presented.

Modern Bailey Fallacy:
The modern Bailey fallacy refers to an argumentative technique where a person takes an extreme position publicly but retreats to a more moderate position when challenged. In the context of ETH supply gate, the extreme position is that the Ethereum community does not know the total outstanding supply of ETH, while the moderate position is that there is no convenient function in Ethereum clients to easily access the ETH supply.

Ethereum Supply Calculation Methods:
Scripts and ETH supply calculators: These tools can be used to calculate the ETH supply by analyzing the blockchain data. Protocol analysis: By understanding the Ethereum protocol and the on-chain rates, an estimation of the Ethereum supply can be made.

Vitalik’s Concluding Remarks:
Vitalik emphasizes that if someone were to sneak in an extra 25 million coins, it would be a significant event that would warrant selling and shorting ETH.

Difference Between Ethereum and Bitcoin Supply Auditing:
Vitalik Buterin addresses the dispute regarding the supply of Ether (ETH) and the absence of a built-in auditing function in Ethereum clients compared to Bitcoin.

Ethereum’s Supply Estimation:
Buterin emphasizes that estimating the Gini coefficient (a measure of inequality) in cryptocurrencies is challenging due to pseudonymous accounts and the lack of transparency.

Security Model of Ethereum and Cryptocurrencies:
He argues that verification in Ethereum and most cryptocurrencies is an all-or-nothing process, not a piecemeal fact-by-fact verification.

Importance of Verifying Consensus Rules as a Whole:
Buterin stresses the significance of verifying all consensus rules together, rather than focusing on individual rules in isolation.

Verifying Consensus Rules and Herd Immunity:
The security of Ethereum relies on multiple independent client implementations verifying the consensus rules, creating herd immunity against invalid chains.

Estimating Ethereum Supply:
Estimating the ETH supply requires running scripts and processing the blockchain, with varying levels of accuracy depending on the desired precision.

Bitcoiners’ Criticism and Buterin’s Response:
Bitcoiners raised concerns about the lack of a built-in audit function in Ethereum clients, but Buterin argues that the absence of hard forks indicates that no invalid ETH has been introduced.

The “Gotcha” Moment:
After addressing the supply audit issue, Bitcoiners shifted to a “gotcha” moment, criticizing Ethereum for its lack of a specific auditing function.

Decentralization and Node Running:
Ethereans generally don’t run their own nodes, which isn’t part of our culture. Vitalik Buterin suggests a “herd immunity” approach, where not everyone needs to run a node, but enough individuals should to ensure decentralization. Buterin acknowledges the need for a node-running culture in Ethereum in the future.

Trade-Offs in Accessibility:
Buterin highlights the trade-off between accessibility of reading the chain (node running) and accessibility of writing to the chain (transaction costs). Larger blocks (with more gas) reduce transaction costs but increase the cost of running a node. In the short term, the high gas prices are necessary to maintain network usage and prevent users from leaving Ethereum for other chains.

Scalability Solutions:
Buterin emphasizes the importance of sharding, Bosma, roll-ups, and other scalability solutions to reduce transaction costs and improve accessibility. Layer 2 solutions like Loopring and ZK Sync currently offer very low transaction fees (around $0.006), even with today’s high gas prices. Buterin mentions OMG Network as another promising scaling solution with a beta version running on mainnet.

Future Vision for Ethereum:
Buterin envisions a future where Ethereum achieves both high scalability and a low cost of running a node. Ethereum 2.0 nodes are already less expensive to run compared to Ethereum 1.0 nodes, demonstrating progress toward this goal.

Bitcoin Maximalist Critique:
Bitcoin maximalists have criticized Ethereum for not having an easy-to-use function in its clients to calculate the total ETH supply. This has led to accusations that Ethereum is not as committed to the “sound money” religion as Bitcoin.

Vitalik Buterin’s Response:
Vitalik Buterin acknowledges that Ethereum’s community does not place as much emphasis on sound money as Bitcoin’s community does. He attributes this to Ethereum’s younger age and the fact that it is still in the process of developing its monetary policy. However, Buterin argues that Ethereum’s upcoming transition to proof of stake and other changes could result in a negative supply growth rate, which would make it even more sound than Bitcoin.

Ethereum’s Cultural Difference:
Buterin highlights a cultural difference between Bitcoin and Ethereum communities, with Bitcoin maximalists believing Bitcoin is 80% complete and Ethereum developers believing Ethereum is only 40% complete. This difference in perspective may contribute to the ongoing debate over Ethereum’s monetary policy.

Long-Term Perspective:
ETH2 will bring significant changes, so focusing on long-term economics is more valuable than short-term rules. ETH2 economic model is carefully designed for sustainability.

Issuance Control:
The perception of Vitalik and Ethereum developers as having complete control over issuance is exaggerated. Issuance reduction from 3 ETH to 2 ETH per block was driven by the Ethereum community, not core developers. Vitalik emphasizes the role of the Ethereum community in shaping economic decisions.

Gas Limit Increases:
Gas limit increases follow a pattern similar to changes in historical income tax rates. Both charts show periods of stability followed by sudden jumps, reflecting negotiations by a committee of technocrats.

Decentralized Governance:
Ethereum governance is more decentralized than perceived, with the community playing a significant role in decisions. Vitalik highlights the need for a more decentralized and community-driven approach to governance.

Recent Gas Limit Changes:
The Ethereum gas limit has experienced significant fluctuations in recent years, particularly after January 2019. The last 20% of the chart shows less consistency compared to the earlier 80%.

Gas Limit Governance in the Past:
In the early days of Ethereum, governance was less decentralized, with the Ethereum Foundation and Vitalik Buterin having significant influence over decisions. Gas limit increases were often initiated by Vitalik or the Ethereum Foundation and implemented by miners.

Recent Miner-Driven Gas Limit Increases:
The latest two gas limit increases were initiated and driven by miners, with limited input from other stakeholders. This resulted in disagreements among mining pools, leading to fluctuations in the gas limit.

Vitalik’s Involvement:
Vitalik initially expressed concerns about raising the gas limit due to potential negative consequences, including DOS issues. However, the situation worsened, and miners raised the gas limit without seeking permission from Vitalik or other stakeholders.

Governance Complexity:
The recent gas limit changes highlight the complex and multipolar nature of Ethereum governance. Multiple stakeholders, including miners, core developers, and the community, play roles in shaping governance decisions.

Issuance Increases:
Vitalik believes that issuance increases are unlikely to occur due to strong opposition from various constituencies. This provides confidence that issuance increases will not happen without broad consensus.

Vitalik Buterin’s Comments on Ethereum Governance and Centralization:
Vitalik Buterin emphasizes the importance of avoiding a single person’s responsibility to understand nuance and cater to audience preferences. He commends David for maintaining a sober voice amidst the chaotic and loud conversations on Twitter.

Gas Prices and DeFi Speculation:
David highlights the soaring gas prices and the DeFi craze surrounding tokens like YAM. Ethereum block space is becoming increasingly valuable, driven by speculative value.

Layer 2 Scalability Solutions:
Vitalik discusses the two families of roll-ups: ZK and optimistic roll-ups. ZK roll-ups are already available, while optimistic roll-ups are still in development. Optimistic roll-ups aim to support full EVM execution inside a roll-up, which poses complex challenges.

Optimistic Roll-ups for Non-Financial Applications:
Vitalik believes optimistic roll-ups will initially be suitable for non-financial applications and natively issued assets. DeFi applications require a high level of security, which optimistic roll-ups may not be ready for yet. Lower-value applications like Reddit community points could benefit from optimistic roll-ups sooner.

Layer 2 Roll-ups as a Stopgap Solution:
Vitalik acknowledges that Layer 2 roll-ups are a stopgap solution until Ethereum 2.0 is fully implemented. These roll-ups can alleviate some of the congestion and scalability issues on the Ethereum network.

Challenges and Trade-offs in Layer 2 Scalability:
Vitalik highlights the trade-offs and challenges in designing and implementing Layer 2 solutions. He emphasizes the need for careful consideration of security, decentralization, and scalability factors.

Security Requirements for Roll-Ups:
Roll-ups have lower security requirements compared to other solutions due to their asset-specific nature. In case of smart contract failure, a new contract can be deployed with fixes, allowing users to accept it as the canonical definition of assets.

Examples of Roll-Up Applications:
Applications using native assets, such as a version of Augur that solely relies on wrapped assets, can benefit from lower security requirements. In the event of a platform break, these applications can be easily hard-forked, ensuring continuity and security.

Current Roll-Up Developments:
Zero-knowledge (ZK) roll-ups are already in progress, with projects like Loopering leading the way. Optimistic roll-ups, as discussed in the interview, are also being actively developed and may see test versions soon.

Impact of High Gas Fees:
The current high gas fees on Ethereum have accelerated efforts in roll-up development, making it a critical focus for the Ethereum community.

Conclusion:
Vitalik Buterin’s insights shed light on the potential of roll-ups in addressing Ethereum’s scalability challenges. The lower security requirements and ease of hard-forking make roll-ups attractive for applications using native assets. Ongoing developments in both ZK and optimistic roll-ups promise near-term solutions to Ethereum’s scaling issues.