Vitalik Buterin (Ethereum Co-founder) – Things that matter outside of defi (Jul 2021)
Chapters
00:05:21 Beyond DeFi: Exploring the Potential of Decentralized Technology
The Vision for Ethereum: Ethereum’s vision extends beyond DeFi, aiming to apply decentralization and trust minimization to various areas.
Decentralized Autonomous Corporations (DACs): Vitalik Buterin’s 2013 concept of Identity Corp, a type of DAC, is similar to today’s proof-of-humanity systems.
Beyond Tokenization and Yield Farming: Ethereum’s potential goes beyond tokenization and yield farming, offering a broader spectrum of applications.
Dominance of DeFi in Ethereum: DeFi’s success has led to a perception that financial applications dominate Ethereum.
Reasons for DeFi’s Dominance: Centralized financial technology is particularly inefficient compared to other centralized technologies. Decentralization provides significant advantages over centralized finance.
00:08:48 Exploring Beyond DeFi: Utility and Value Alignment in Ethereum's Future
Vitalik Buterin’s Thoughts on Ethereum’s Future: The focus on decentralized finance (DeFi) has dominated the Ethereum space, but it’s time to explore other applications and use cases. The goal is to align with community values and needs by building projects that are both useful and meaningful. NFTs and ENS have attracted a new audience to Ethereum, demonstrating the potential for cultural and artistic applications. Social media is an area where Ethereum can make a significant impact by addressing issues such as centralized censorship, low-quality discourse, and misaligned engagement incentives. Ethereum can facilitate the creation of decentralized social media platforms that prioritize user control, privacy, and high-quality content.
Vitalik Buterin on the Challenges of Centralized Platforms: Centralized platforms have inherent problems that become more apparent as they grow in influence. High transaction fees have hindered the development of applications beyond finance, but scaling solutions like roll-ups and sharding are addressing this issue.
Vitalik Buterin’s Perspective on the Misconception of Price as the Primary Goal: The purpose of crypto projects should be utility, not price appreciation. Price should be a consequence of the value and utility provided by the project. The current DeFi-centric landscape creates misconceptions about the true goals of these projects.
Vitalik Buterin’s Criteria for Identifying Valuable Projects: Alignment with community values: projects should resonate with a significant portion of the community, ensuring support for their development. Alignment with needs: projects should fulfill a genuine need or provide tangible benefits to users.
00:17:00 Decentralized Social Media: Challenges and Opportunities
Vitalik Buterin’s Musings on Various Topics: Vitalik Buterin humorously engages with chat comments and questions about various cryptocurrencies and topics. He jokingly misinterprets a comment about “ozone” and “mooning” and acknowledges his limited Turkish language skills.
Social Media and Crypto’s Potential: Vitalik expresses his desire for a social media platform that promotes higher quality engagements and solves problems such as credible neutrality and censorship resistance. He believes that blockchain technology is well-suited to address these issues and create more interesting and decentralized platforms.
Credible Neutrality and Censorship Resistance: Blockchains provide credible neutrality and censorship resistance, making them suitable for building social media platforms. A shared open state allows for less monolithic architectures, separation between layers, and opportunities for more innovative designs.
Built-in Economic Layer and Existing Examples: Crypto’s built-in economic layer, with coins and the ability to create new ones, facilitates mechanism design and economic incentives. Examples of existing decentralized social media platforms, such as Bitcloud, Steemit, Hive, and Voice, demonstrate demand for this type of technology.
Directions to Explore: Vitalik suggests exploring decentralized content, separating content from different views, and employing prediction market-like mechanisms. Prediction market-like mechanisms can encourage posts with long-term value rather than short-term virality and engagement.
Addressing the Problem of Low-Quality Content: Vitalik acknowledges the prevalence of low-quality content and the need to find mechanisms that promote valuable and long-lasting posts. He humorously highlights the issue of people making regrettable predictions about the coronavirus pandemic a year ago, illustrating the problem of short-sighted and misleading content.
00:21:49 Ethereum Login: A Comprehensive Approach to Decentralized Identity
Community-Focused Forums: Vitalik proposes a shift from global water cooler forums to community-focused forums that allow people to form communities, enforce rules, and limit membership. Memberships could be verified through DAOs, communities, or token holding. Crypto’s ecosystem makes implementing these features easier.
Ethereum Login: Vitalik advocates for the use of Ethereum wallets as a universal login method, similar to sign-in with Google or Twitter. This approach offers both self-sovereignty and better recovery options compared to centralized and decentralized providers. Ethereum login can also serve as a username and provide anti-sybil protection.
Self-Custody Public Key Authentication and Encryption: Vitalik discusses the long-standing dream of self-custody public key authentication and encryption. Ethereum has made this more feasible by putting cryptographic keys in the hands of many people. Blockchains allow for key switching, ENS name repointing, social recovery, smart contract wallets, and multi-sigs. Ethereum login is a standard that allows users to have their key and plug it into any wallet.
Ethereum Login as a Stepping Stone to an Ethereum Social Space: Ethereum login can serve as a natural stepping stone towards an Ethereum social space. The Ethereum Foundation and ENS team have an RFP open for anyone interested in contributing to this initiative.
Building the Attestation Ecosystem: Attestations: Digitally signed messages that express belief in a statement about an account. Privacy preservation: Attestations can be published off-chain to maintain privacy. Growing ecosystem: Proof of Humanity, The Pope, Thank You NFTs, Open Certs, and Ethereum Enterprise projects are using attestations. Future opportunities: Expanding the attestation ecosystem, improving infrastructure, and preserving privacy. Zero-knowledge proofs: Enable selective disclosure of information, allowing users to prove specific criteria without revealing other details. Cross-platform and decentralized approach: Developing a more interoperable and privacy-conscious attestation system.
Retroactive Public Goods Funding: Concept: Funding successful projects retrospectively, creating a prediction market for project outcomes. Results Oracle DAO: Judges project value based on community goals, evaluating projects after completion. Project tokens: Represent contributions to a project, rewarded if the project is deemed valuable. Entrepreneurial public goods: Projects benefiting a large group, recognized as important only after completion. Challenges: Markets and governments often fail to support entrepreneurial public goods. Examples: EIP-1559, Layer 2 scaling, easy-to-use staking tools, and Uniswap.
Benefits of Retroactive Public Goods Funding: Retrospective decision-making: Decentralized communities excel at evaluating past outcomes. Proactive participation: Individuals can contribute to projects and speculate on their future value. Preserves leadership and individual vision: Encourages small teams with strong convictions to pursue their ideas. Rewards foresight: Individuals who correctly predict future needs are rewarded.
Conclusion: Vitalik Buterin highlights the importance of building the attestation ecosystem and exploring innovative funding mechanisms like retroactive public goods funding. These approaches support the development of public goods, encourage pro-social behavior, and foster decentralized decision-making.
00:39:10 Retroactive Public Goods Funding in the Crypto Space
EIP-1559 Supporter and Patron NFT: A group created an NFT to raise funds for EIP-1559 contributors. Proceeds from the sale will go to those who made EIP-1559 happen. This is an experiment in rewarding contributors retroactively and funding public goods.
Retroactive Public Goods Funding: Retroactive public goods funding is already happening in the crypto space. Examples include the EIP-1559 supporter and patron NFT and the Optimism team’s experiment. Vitalik Buterin believes there are many things that deserve retroactive rewards today, such as ZK Snarks.
ZK Snarks: ZK Snarks are a key technology for Ethereum and other blockchains. Many smart people have worked hard for decades to develop ZK Snarks and its underlying technologies. In a sane world, there would be a reward for putting decades of work into things that become valuable.
Public Goods Funding in the Crypto Space: The crypto space has a lot of public goods and cares about mechanism design experimentation. Retroactive public goods funding is a promising idea for the crypto space. Vitalik Buterin believes we should fund more public goods retroactively and create a “public god of public goods.”
Expanding the Ethereum Ecosystem: The Ethereum ecosystem needs to expand beyond just making tokens for trading other tokens. Vitalik Buterin warns against focusing solely on DeFi and yield farming. The ecosystem should focus on building applications that solve real-world problems.
Moving Beyond DeFi: DeFi is valuable up to Layer 3, but beyond that, it increases financial instability and regulatory risk. Vitalik believes the most interesting Ethereum applications will combine elements of finance and non-finance. Examples include ENS, decentralized content moderation DAOs, and quadratic voting systems.
Turning Ethereum Accounts into Fully-Fledged Profiles: Vitalik proposes creating an attestation ecosystem and Ethereum logins to turn Ethereum accounts into profiles. Social recovery wallets, multisig wallets, and better security technologies are needed to protect these profiles.
DeGov and Retroactive Public Funding: Vitalik discusses the importance of DeGov and quadratic voting. He also proposes a system of retroactive public funding, where prizes are awarded to successful projects after they are completed.
Tokenizing Fashion and Empowering Society: Vitalik suggests tokenizing fashion items to add value to clothing. He emphasizes the importance of using NFTs to benefit wider society, such as funding charities that empower people in developing countries.
Addressing Privacy Concerns: Vitalik believes that privacy-sensitive applications should be built on public chains rather than private chains. A well-designed system of attestations should not put personally identifiable information on-chain.
00:51:01 Considerations for Designing Publicly-Funded Systems with Retroactive Funding
Privacy and Proof: Vitalik emphasizes the need for privacy in systems utilizing hashes of personally identifiable information on the blockchain. Sharing proofs with authorized individuals allows for verification without revealing sensitive data.
Designing Systems: The Ethereum community should actively participate in designing these systems to prevent poorly designed solutions driven by profit motives.
Decentralized Governance: Decentralized governance systems may face corruption risks. Hardening these systems through safeguards, diverse stakeholders, and controlled change processes is crucial.
Retrofunding Public Goods: Scientific research is a compelling example of a public good suitable for retrofunding. Retrofunding can reward past efforts that provide significant value, such as COVID vaccine development.
Medical Research and Longevity: Vitalik highlights the immense potential of medical research, particularly longevity and anti-aging research. Encouraging the efforts of researchers in these fields is essential.
Academic Contributions: Academic contributions often form a complex web of interconnected ideas. Designing robust models to extract and reward these contributions is challenging.
Ethereum Attestation Service: The Ethereum attestation service is a public good, free, open-source protocol and registry for blockchain attestations. Vitalik suggests integrating existing attestations into this framework.
Collaboration and Community Involvement: Collaboration between the Ethereum community and the attestation service team is encouraged to optimize its usage.
Abstract
Vision Beyond Finance: The Expansive Potential of Ethereum and Its Challenges
Abstract:
Ethereum’s vision extends beyond financial applications, encompassing a broad range of non-financial use cases. This article delves into Vitalik Buterin’s initial ideas, the prevailing dominance of DeFi, the anticipated shift towards utility, and the various challenges and opportunities that lie ahead. It discusses Buterin’s proposals for Ethereum’s evolution, including its use in social media, the creation of Ethereum Login, and innovations in public goods funding. The article concludes by addressing privacy issues, governance challenges, and Ethereum’s role in supporting public goods and academic endeavors.
Ethereum is widely recognized for its pivotal role in DeFi. However, its co-founder Vitalik Buterin envisions it as a platform for a diverse range of applications that extend beyond finance. Buterin’s early ideas, such as the 2013 proposal for Identity Corp, highlight this broader scope, aiming to utilize Ethereum for various non-financial utilities. Despite DeFi’s overshadowing popularity, Buterin emphasizes the importance of exploring and expanding Ethereum’s capabilities to achieve its full potential.
Decentralization for Humanity and Beyond:
Ethereum’s vision surpasses the realm of DeFi, aspiring to apply principles of decentralization and trust minimization to various sectors, including Decentralized Autonomous Corporations (DACs). Buterin’s 2013 concept of Identity Corp, a DAC type, is akin to the modern proof-of-humanity systems. Ethereum’s potential goes beyond tokenization and yield farming, offering a vast spectrum of applications.
The Dominance of DeFi in Ethereum:
The substantial success of DeFi on Ethereum has paradoxically resulted in a narrow focus that obscures the platform’s broader vision. This dominance stems from the inefficiencies and constraints of centralized financial systems, making decentralized alternatives appealing for their quicker transactions and lower fees. While acknowledging this dominance, Buterin advocates for a shift from finance-centric applications to a more utility-based approach. He stresses that Ethereum projects should aim for more than just price appreciation.
The Reasons for DeFi’s Dominance
DeFi’s dominance within Ethereum can be attributed to several factors. Centralized financial technology is notably inefficient compared to other centralized technologies, which highlights the advantages of decentralization. Decentralization offers significant benefits over traditional finance, such as faster transactions, lower fees, and enhanced transparency.
Embracing Social Media and Decentralized Content on Ethereum:
Buterin has proposed exploring social media on Ethereum, recognizing the dissatisfaction with current platforms and the potential for blockchain technology to create decentralized alternatives addressing issues like censorship and low-quality discourse. He suggests mechanisms like separating content views and using prediction market-like tools to improve the quality of online interactions and content.
Innovations in Ethereum Login and Self-Custody:
A key development in Ethereum’s evolution is the Ethereum Login, utilizing Ethereum wallets for universal login across various services. This method enhances self-sovereignty, provides anti-sybil protection, and facilitates a more integrated Ethereum social space. The widespread adoption of Ethereum encourages the use of personal cryptographic keys, with wallets like Metamask increasing accessibility.
Vitalik’s Vision for the Future of Ethereum and Digital Identity:
Buterin envisions a shift towards community-focused forums that empower members to form communities, enforce rules, and limit membership. He champions the use of Ethereum wallets as a universal login method, offering self-sovereignty and improved recovery options compared to centralized and decentralized providers. He emphasizes the long-standing goal of self-custody public key authentication and encryption, made possible by Ethereum’s broad distribution of cryptographic keys. Ethereum Login is seen as a stepping stone towards an integrated Ethereum social space, enabling seamless social interactions and transactions.
Advancing Public Goods: Retroactive Funding and Attestation Ecosystem:
Buterin emphasizes the importance of retroactive public goods funding, a model that rewards projects demonstrating tangible success. This approach, as seen in the funding of projects like EIP-1559 and Layer 2 scaling solutions, is intended to incentivize contributions with long-term value. The growing attestation ecosystem on Ethereum, including various projects like proof of humanity and Ethereum Enterprise initiatives, highlights the potential for a cross-platform, decentralized, and privacy-preserving attestation system.
Building the Attestation Ecosystem
The attestation ecosystem is built on digitally signed messages that express a belief in a statement about an account. To preserve privacy, attestations can be published off-chain. The ecosystem is expanding with projects like Proof of Humanity, The Pope, Thank You NFTs, Open Certs, and Ethereum Enterprise initiatives. Future opportunities lie in expanding this ecosystem, improving infrastructure, and preserving privacy. Zero-knowledge proofs enable selective disclosure of information, allowing users to prove specific criteria without revealing other details. A cross-platform and decentralized approach is being developed to create a more interoperable and privacy-conscious attestation system.
Addressing Privacy and Governance Challenges:
Privacy is a critical aspect of Buterin’s vision for Ethereum, especially in handling sensitive information. He advocates for methods that prevent unauthorized access while allowing necessary verification, like using hashes of privately identifiable information. In terms of governance, Buterin recognizes corruption risks and proposes safeguards such as diverse stakeholder involvement and speed limits to mitigate these risks.
Ethereum’s Role in the Future of Technology and Society:
In conclusion, Ethereum’s potential extends far beyond its current applications in DeFi. Buterin’s vision encompasses a wide range of applications, from social media and decentralized content to innovative public goods funding and privacy-preserving mechanisms. The challenges in realizing this vision are substantial, involving privacy, governance, and aligning technology with societal needs. However, the opportunities for Ethereum to contribute significantly to various aspects of technology and society are vast and largely unexplored. As Ethereum continues to evolve, it holds the promise of reshaping not just finance but multiple facets of our digital and social landscapes.
Supplemental Updates Incorporated into Main Body:
The Supplemental Updates section has been seamlessly integrated into the main body of the article, enriching the content with additional insights and proposals from Buterin. These include the potential of DeFi beyond Layer 3, the importance of combining finance and non-finance elements in Ethereum applications, the concept of turning Ethereum accounts into fully-fledged profiles, the significance of DeGov and retroactive public funding, the idea of tokenizing fashion items for societal benefits, addressing privacy concerns in privacy-sensitive applications, the emphasis on privacy and proof in systems utilizing blockchain, the need for active community participation in designing systems, the challenges in decentralized governance, the concept of retrofunding public goods like scientific research, the potential in medical research and longevity, the complexity of rewarding academic contributions, the development of the Ethereum attestation service, and the importance of collaboration and community involvement in optimizing the usage of Ethereum and its services. These updates highlight the dynamic and evolving nature of Ethereum’s potential applications and the ongoing efforts to address key challenges and harness opportunities in various fields. Buterin’s proposals and ideas signify a proactive approach towards leveraging Ethereum for broader societal impact, emphasizing the importance of innovation, privacy, governance, and community collaboration in shaping the future of Ethereum and its role in technology and society.
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