(1/25) @ethereum: The Complete Story
What is Ethereum and why is it important? How does it work today and what's on the roadmap?
In the Ethereum endgame, why is $ETH so valuable?
A comprehensive mega-thread on the inevitability of Ethereum.
(2/25) @ethereum is a distributed computing platform. A network of 1,000s of computers (nodes) coordinating using Proof of Stake (PoS) to keep the Ethereum Virtual Machine (EVM) in sync.
The EVM is the shared computing platform, the blockchain its history and $ETH its lifeblood.
twitter.com/SalomonCrypto/status/1566078593150492675
(3/25) Each node runs a local copy of the @ethereum Virtual Machine (EVM), a Turing-complete environment that computes the state of the World Computer
Although each node's copy is independent, every EVM is sync; the state of any local copy IS the state of the globally shared EVM
twitter.com/SalomonCrypto/status/1574618174879735808
(4/25) The process which keeps all of these EVMs in sync is called Proof of Stake (PoS).
Tl;dr a node operator can escrow (stake) 32 $ETH to become a validator, with the right to operate and secure @ethereum and to earn $ETH. Malicious behavior is punished with "slashing."
twitter.com/SalomonCrypto/status/1579594609855934465
(5/25) Slashing is the process of 1) confiscating some/all of a validator's staked $ETH and 2) ejecting them from the validator set.
This is the economic incentive that secures @ethereum; we don't have to trust operators because the costs of cheating are higher than the rewards.
(6/25) @ethereum deploys $ETH to replace a trust assumption (users need to trust operators) with an economic assumption (users know that node operators want to be profitable).
This is the magic of cryptocurrency: we have a solution for untrusted coordination.
Trustless trust.
(7/25) @ethereum gives us an option that isn’t controlled by a single entity, that can’t exclude or prejudice any party on earth.
Politics, revenge, back-room deals will always matter… but on the World Computer they will NEVER result in censorship, exclusion, or confiscation.
(8/25) Trustless trust is predicated on a decentralized @ethereum. The more nodes that are controlled by a single entity, the easier it becomes to attack the network.
Trustless trust comes from credible neutrality. Credible neutrality comes from decentralization.
twitter.com/SalomonCrypto/status/1559920665477595137
(9/25) The @ethereum we have today is still young and evolving. To be frank, it is not yet ready to assume the mantle of global settlement platform or any of the other prominent roles it will inevitably hold.
It is still too slow, too expensive and too hard to access.
(10/25) At the end of the day, real computers need to be running the software that makes @ethereum possible.
The performance of the World Computer is limited by the minimum requirements we place on the individual nodes.
Better node hardware = better Ethereum performance.
(11/25) But we have an issue. Better node hardware is more expensive and harder to get. Increasing a node's min reqs may increase the speed at which @ethereum can process transactions... at the cost of decentralization.
Are performance and decentralization opposing forces?
(12/25) Because here's the thing... today we have decent decentralization and terrible speeds and our minimum specifications are already very high.
Increasing node requirements will cost MUCH more decentralization than it will gain in performance.
twitter.com/SalomonCrypto/status/1589807499804176384
(13/25) We articulate this dynamic with the blockchain Scalability Trilemma. Put simply, pick (at most) two: scalability, decentralization and security.
The trilemma only makes sense if you think of @ethereum as a typical computer, with a CPU and memory and the like.
(14/25) But @ethereum is very specifically not typical computer... it is THE World Computer.
We don't need to think "how many transactions can Ethereum process." We need to think "how many transaction can Ethereum settle."
twitter.com/SalomonCrypto/status/1564316505650524160
(15/25) This is the idea behind @ethereum transaction scaling. Move execution off-chain while retaining settlement on-chain.
Rollups will offer a spectrum of centralization/trust assumptions and performance trade-offs, but all will post a record back to Ethereum.
twitter.com/SalomonCrypto/status/1591614638138875905
(16/25) Each rollup is an independent blockchain that posts a (compressed) copy of every txn it processes back to @ethereum.
As rollups improve execution, they will need to post an increasing amount txn records. Danksharding will VASTLY increase capacity for these records.
twitter.com/SalomonCrypto/status/1585441288341508096
(17/25) The rollup-centric roadmap provides an answer for the execution side of the equation, but it does not address the decentralization.
We need a different set of upgrades improve network decentralization.
(18/25) Currently, there are 2 ways to access @ethereum: operate your own node or use a Node-as-a-Service provider (like @AlchemyPlatform, @infura_io).
The former is a big (but totally doable!) ask; the later is a great service, but is actively working against decentralization.
twitter.com/SalomonCrypto/status/1590137467524435971
(19/25) Today, you pass a message through centralized service who interacts with @ethereum on your behalf.
Tomorrow’s solution: light clients. Light clients are pieces of software that can directly, trustlessly access Ethereum without running a full Ethereum node.
(20/25) Before we can support light clients, we first need to upgrade @ethereum to be stateless.
Stateless is a nuanced topic worth reading more about, but the idea can be summarized as "using cryptography to trustlessly access the EVM without having to store it locally."
twitter.com/SalomonCrypto/status/1588752629118554112
(21/25) But statelessness is not enough to support light clients - the EVM is not the only component of the World Computer. Light clients also need trustless access to consensus (PoS), the mempool, etc.
And so light clients will turn to the Portal Network for this critical data.
twitter.com/SalomonCrypto/status/1590511259379650561
(22/25) Yes, there is (a lot) of work to do before we are ready for light clients, but once we are there we've reached the @ethereum endgame.
An endgame that is so much more ambitious and all consuming than the Ethereum we have today.
twitter.com/SalomonCrypto/status/1590809909733441536
(23/25) The thread above will bring you to this conclusion, but let's skip to the punchline:
In the @ethereum endgame, $ETH is the global currency of trustless trust.
Using $ETH, any activity, interaction, data point that requires trust can be transformed into a trustless fact.
(24/25) ~500k years ago a few apes climbed down out of the trees and humanity was born.
Everything we have achieved thus far has been a result of collaboration... but collaboration in an environment of concentration, compulsory "trust" in leadership and centralization.
twitter.com/SalomonCrypto/status/1562996947371274241