以太坊之外，Solana和Celestia如何打造自己的护城河？
Original title: Three Crypto Pioneers on Cryptos Monolithic vs. Modular Debate
Original source: Unchained Podcast
Original compilation: Kaori, BlockBeats
On January 2, the famous encryption podcast Unchained released a new episode titled Three Cryptocurrency Pioneers Debate on Monolithic Chains and Modularity. In the program, Toly, co-founder of Solana Labs, and COO of Celestia Labs Nick White and others each expressed their views on Solana, Celestia, Bitcoin, Ethereum, the security of the encryption market and future market forecasts. The main highlights include how Solana, one of the fastest blockchains, can do well Ready for large-scale use and scalability? What are the philosophical similarities and execution differences between Solana and Celestia? Why Solana Virtual Machine (SVM) may surpass Ethereum Virtual Machine (EVM) in terms of user adoption, etc. The following is compiled content for readers’ reference only.
Debate topic: Monolithic chain vs modular blockchain
Host: Laura Shin
Guests:
Solana Labs co-founder Anatoly Yakovenko
Nick White, COO of Celestia Labs
Former Ark Invest crypto head and current Placeholder VC partner Chris Burniske
Laura Shin: Chris, youre the one who came up with this special, please describe for the listeners how you define these two blockchain models and if you have an opinion on which approach is going to win or be superior, explain that too.
Chris Burniske：In a modular architecture, different levels of the stack allow a single protocol to perform best at a specific task or very limited functionality. Therefore, modularity often involves key terms such as data availability, settlement, and execution. In this regard, Celestia excels at data availability, truly leading and defining data availability. Additionally, the integration perspective emphasizes the importance of tightly knitting these stack layers together to achieve a more seamless developer and user end experience than with a modular approach.
There is a long-standing debate over which approach is more economical, faster, and more scalable. It can be understood through an analogy. For example, iOS adopts a vertical integration approach, while Android is patched together from various parts. Although many people use Android, iOS has built an extremely valuable ecosystem that has helped Apple become one of the most valuable companies in the world.
As an investor, you should not just favor iOS or Android. Investors with a growth mindset, when faced with a choice, will choose to invest in both. This is also the position of Placeholder, who works with Toly and Nick. In my opinion, Celestia is the most compelling startup of 2023, and every year there is a startup that defines that year, while Solana is the phoenix rising from the so-called trough of 2022. While 2022 may be a huge challenge for Solana, it has rallied around the odds, further solidifying SOLs position and proving many wrong about the direction it was headed.
In terms of integrated stacks, I think Ethereum is currently more integrated than modular. Although it is gradually migrating to modularity, in the current development environment, developers are more inclined to choose Ethereum and EVM, or Solana and SVM.
Laura Shin: Both Solana and Ethereum have emerged stronger from the FTX incident. Anatoly, why dont you talk about why Solana is pursuing this integration approach?
Anatoly Yakovenko：I have an obsession to synchronize all the information in the world into a piece of memory, just like the RAM of a computer. This is the fastest place to store information. No matter how big we make this memory, we will replicate and expand it around the world, like throwing information into a bucket, and it will spread across the globe as quickly as the speed of light will allow everyone to know it instantly . The reason for this is that if we can achieve this, we can discover prices in a much more timely manner than an exchange like the New York Stock Exchange or Nasdaq. Even if these systems use technology such as sub-nanosecond matching engines, information still needs to travel around the world.
For example, some important market news that happens in Singapore needs to be transmitted at the speed of light through fiber optics or satellites to traders in New York so that they can view it on their terminals. This information must hit the NYSE’s internal algorithm before the algorithm can take action in the market. Meanwhile, if someone in Singapore sends a state transition to Solanas localized concurrent block producer, that block producer will quickly propagate the transaction around the world, spreading like news. So when a trader in New York looks at the market, the information is already reflected in Solanas state, just as that news event has had an impact on the market.
So there is no longer room for arbitrage between New York or decentralized systems run by a group of volunteers, and hardware becomes a common commodity. Its really exciting, like science fiction. If we could achieve this, I believe it would make the world a fairer place. I think its a huge engineering achievement and Im proud of it.
Additionally, I think this actually creates value for the world, making finance more transparent, better, cheaper, which is all good for consumers. This is the problem I want to solve. If a modular approach was a better engineering solution, I would have no hesitation in discarding all Solana code, copying Celestias code, and adopting this approach. I have no doubts about implementation, we try our best and we have made significant progress so far.
Laura Shin: Now let me ask Nick to explain what Celestia is.
Nick White：Celestia is the first modular blockchain network that is unique in that it can scale as the number of users and nodes in the network increases. Its core value proposition is to provide developers with the ability to easily deploy custom blockchains. Rather than integrating all the functionality needed to build a decentralized application into one protocol, modular blockchain breaks it down into different component protocols. These protocols can be optimized for specific needs, and developers can select and combine the components to build a complete working product.
This approach gives developers a new level of flexibility and customizability, allowing them to build unique products that are not possible with a one-size-fits-all approach. Modular blockchain emphasizes the concept of permissionless innovation. Unlike the case where there is only one protocol or team, this singleness limits the scope of innovation because all decisions are made by one protocol.
In a modular setup, anyone is free to innovate methods of execution or data availability, which leads to broader innovation in the cryptocurrency space. Rather than a monolithic top-down decision on the infrastructure stack, modularity is a bottom-up approach that lets developers and builders build their own components and let the free market determine the best option.
Celestia focuses on data availability, using a new technology called data availability sampling that allows blockchains to be verified on consumer-grade hardware, such as smartphones. Block sizes are able to grow as the number of people running light nodes increases, marking the first time that there is no fixed capacity or throughput, but instead scales as users and nodes are added.
Solestia: Solana and Celestias different paths to the same destination
Laura Shin: A modular approach does provide more possibilities for customization. I think about the world moving more and more towards a SaaS model, software as a service. In the future, if Celestia has multiple competitors, developers may choose a solution that suits their needs, such as having better options in terms of data availability. As for the choice of phone, Anatoly uses a Saga Phone in addition to the iPhone, while Chris and Nick may use iPhones, which can be seen as a vote for Solanas approach to some extent. Id like to hear everyones thoughts on the future and ideas on how people will build in both areas, rather than focusing on what most people will end up using.
Anatoly Yakovenko：In Nicks defense, I dont think developers can be marketed, you cant sell them stuff, but you can incentivize them to build. Modularity is like operating systems, there is an entire school of thought called modular operating systems that are the complete opposite of how Linux is designed. Coding in Linux has many limitations, and a modular approach, such as QNX, provides developers with more expressiveness and flexibility.
Giving developers choice is the right thing to do because there will always be developers who will be interested in specific optimizations. In this process, you have to choose the goals to optimize, and they are doing so. From our perspective, we care about developers who are attracted because they really care about a specific optimization. Developer pain can be viewed as a Pareto efficiency curve, pick a pain point they are willing to take and code around it.
Laura Shin: I want to ask a question that Im not sure weve touched on in our previous interviews. In November, you may have seen a paper titled The Horrible Inefficiency of Monolithic Chains written by the anonymous author Polynya. They believe that blockchains can scale through validity proofs, and they predict that when these proof methods are used to scale blockchains, we will see increased usage on mobile devices globally. Some people took this as a veiled criticism of Solana. How do you respond to that?
Anatoly Yakovenko：If you want to have 100,000 nodes around the world, you need to synchronize about 1 GB of bandwidth every 400 milliseconds, but 1 GB of bandwidth is not allowed. We have the technology to address the need for multiple boxes to be synchronized with Solana state. So, from an engineering perspective, it is incorrect to say that Solana cannot scale to large numbers of replicas, nodes, or bandwidth. Because current technology, such as the 20-gigabit home fiber provided by Google, this will become commonplace in homes across North America and Europe within the next five to 10 years.
It can be seen that the normal development of networks and computers has been ahead of peoples awareness. Technology is advancing at an exponential rate, which is really hard to understand. At the hardware level, we already support very large throughput networks. The difficulty with software is that, for example, it takes two days to ship twice as many cores from Amazon, but it takes six to 12 months to ship reliable software.
Chris Burniske： I think there is a hidden commonality between Celestia and Solana when it comes to future expansion and experimental unit economics in their respective fields. What we just mentioned are different value sets, Laura, we covered Bitcoin together, and then Ethereum came along, and now there are two leaders that are very relevant in crypto today, and they are Solanas value set and Celestias Value sets, although the value sets of various ecosystems are intertwined, they are still quite unique.
What I find really amazing when talking about the future of scalability and unit economics is that with Solana you can send value to anyone in the world at a very low cost, whereas with Celestia the cost of publishing a transaction to the data availability layer is It’s also very low, about a penny, which is two to three orders of magnitude cheaper than the competition. This means more experiments can be conducted, attracting more developers and users, and paving the way for the future of cryptocurrency.
In 2021, weve fallen into failure in large part because of scalability, everything became too expensive to scale to large numbers of users, demand surged, causing things like transactions and the dollar value of items to skyrocket, forming a bubble. Speculation is part of innovation, but ultimately leads to peak adoption. So looking at Celestia, it really supports all the talk about rollups as a data availability layer, rollups are execution and solves the problem of data availability layer, it could be Ethereum as a data availability layer, it could be Eigenlayer, it could be Celestia. In my opinion, Celestia is poised to be the winner in this category.
One of the issues Celestia faces with data availability sampling is that as more nodes are added to the network, it can handle more throughput. This is a key component that contrasts with many blockchain systems we’ve seen in the past. Likewise, Solana is designed to handle more throughput as hardware performance and connectivity scale. While both systems are still in their infancy at web scale, I think Solana and Celestia are the most forward-thinking in terms of unit economics and scaling.
Nick White: Yeah, I agree with Chris, I think theres a deep common ground and a shared philosophy between Solana and Celestia, which is that we both believe in abundance and low fees to scale the base layer of cryptocurrencies so that we More can be built, new applications enabled, and mass adoption achieved. This is a very noble cause that we should all strive for.
But I think where theres some divergence to some extent is that Celestia cares very much about verifiability, and in addition to scaling block production and network throughput, we also care about scaling verifiability, which means that for us, ultimately Users can actually audit and verify that the chain is following the rules and everything is legal, which is really important because thats what blockchains are built for and thats what we think differentiates them from Web2, which is that theyre computer verifiable.
So I think thats where the different architecture comes in, we take data availability sampling very seriously because thats what allows our users to run these light nodes on their phones and validate Celestia. And I think, at least for now, Solana can accept high node requirements. Our validator nodes and block producer nodes also have high node requirements, but we want to provide end users with a low node requirement option. So I think thats where the overlap is and theres also a slight divergence, which may have to do with the Solestia memes I saw on Twitter, a combination of Solana and Celestia, but in some ways it doesnt exactly overlap.
Will Solana move towards modularity?
Laura Shin: This also leads to the question about Anatoly. Ethereum started out as a monolithic chain and then moved to modularity. Is that possible that might lead you to one day think that Solana also needs to move to a modular structure?
Yakovenko: There is nothing we can do to prevent developers from putting Solana user transactions into Celestia and using Solana state routing and then running fraud prevention mechanisms or validity proofs to guarantee the proof, effectively creating a rollup bridge similar to the data availability bridge from Celestia to Solana, Also from Ethereum to Solana. There is nothing we can do at the protocol level to prevent them from doing this unless there is something wrong with our protocol. I hope Solana is flexible enough to allow this, and thats totally fine.
If there is enough demand for an asset on Celestia to build a bridge with a higher assurance level, it is only natural that someone will build it and make it profitable. So it seems to me that were starting to see a blurring of the lines between data availability, optimization-based chains, and what I would consider execution-level optimization chains. There may actually be a lot of crossover, and things start to look like everyone is collaborating, but everyone is competing.
From my perspective, its not really a question of whether we modularize the code, its more of an implementation detail, and when we start thinking about how a 400 millisecond block time can be reduced to 200 milliseconds, for us, that means actually executing Separate from forked choices. They are still the same binary, just run asynchronously. This starts to look like a chain with embedded rollups. Is this a modular design, you ask? No, its just the same technology we had to borrow in order to achieve what we wanted - to reduce block times and improve performance.
I think these things will happen naturally on any chain that has users because we are all a bunch of smart engineers and all these ideas are open source and we are all working hard to improve the product. Its kind of an iterative process. But I think theres a clear difference, and I think the best example I can show right now is Jupyter, which is a routing application that routes between markets within a single state machine, and it does 20-cent transactions, and Spread it across five different liquidity pools.
Its really hard to do this in Ethereum because if you do a single operation, Ethereum L1 has expensive gas fees, but even between L2, you cant do it in Ethereum because of the jumps and the asynchronous nature of the design Get the same guarantee for that low price, right? You might only be able to do very large transactions, but as things get smaller and faster, the asynchronous nature of those separate state machines starts to show up. So were going to see this separation.
I talked to Don Cradd of Ethereum, one of the best engineers Ive ever met, and I asked him questions all the time. How did you solve this problem? It was very open and collaborative and those people were great. The Celestia team, I think their data availability sampling design is really good. If it works on Solana with the bandwidth we want, well definitely implement it for our users because its just a plus, right? It doesnt take away anything. It just adds extra security. So its great to have a research team like theirs.
Chris Burniske: Solana’s natural modularity is already happening. For example, the Eclipse team is an SVM rollup that settles on Ethereum and uses Celestia for data availability. Therefore, it can be executed in Solana via SVM while using Celestias unit economics in the data availability layer. Something similar could happen with Showtime development in 2024, or with teams like CODE, founded by Ted Livingston, who founded Kik, a hugely successful messaging app before being squeezed by the likes of WhatsApp. The CODE team is building a slick wallet on top of Solana and an L2 inside Solana that scales with some clever tricks. So smart engineers are finding ways to modularize Solana itself to fit their needs, and that doesnt necessarily come from Solana core.
Laura Shin: You mentioned the Eclipse project, and you said it is settled on Ethereum, but it is an SVM project. So do you think we will see more modular Ethereum applications moving to SVM, or more monolithic Solana applications moving to Ethereum?
Chris Burniske: Applications written for SVM cannot be directly ported to EVM because the two have different processes and environments. For projects like Eclipse, since its execution layer uses SVM, applications built on Solana can run on Eclipse while gaining access to Ethereum liquidity and wallets.
This makes it easier for developers within the Solana ecosystem to reach Ethereum users. However, migrating from EVM to SVM was a daunting task for the team and required a complete rebuild. Currently, there are some young local developers building applications for SVM from scratch, creating an independent developer and user community within Solana. This may allow SVM to have more users than EVM within a few years. Therefore, some people may want to run their Ethereum applications on Solana users, which is the counter trend we are seeing with Eclipse. However, to achieve this requires orders of magnitude more users on the online chain.
Laura Shin: Before we go any further. So Chris, can you explain why you think there will be more Solana users than Ethereum users, because thats definitely going to be controversial in some parts of Twitter.
Chris Burniske: Im talking about SVM and EVM, right?
Laura Shin: Oh, okay.
Chris Burniske: What I mean is that the Solana virtual machine is parallel and the performance is significantly higher. Teams such as Monad are completely redesigning EVM to achieve parallelization, but SVM is currently significantly better than EVM in terms of user experience, cost, and performance, which makes it easier for users to participate in on-chain applications. I used to tip ETH, now I tip SOL. Using the Phantom Wallet, I can click a button and send value to anyone’s phone almost instantly for a cost of one hundredth of a cent. This realizes the idea of almost free, instant delivery of value that I’ve always dreamed of in the crypto space. SVM is part of achieving this goal. While EVM is also possible, it requires more work. Until EVM achieves this, I think SVM will continue to gain share in the market.
Currently, from a developers perspective, EVM still occupies a huge share of SVM. This would have been unbelievable a year ago, but now people are starting to think about it more. If SVM can emerge with some groundbreaking applications and attract hundreds of millions of on-chain users, it will arouse widespread attention and curiosity among developers. It only takes a few such applications for one to think that SVM should also be considered in the design scope or on the list of potential choices.
How to view the Bitcoin ecosystem
Laura Shin: For recent startups built on Bitcoin, do you think these founders are at a disadvantage relative to founders building companies on Ethereum and Solana? Or do they have an advantage now that Bitcoin is gaining mainstream acceptance as the leading digital asset?
Yakovenko: It is very difficult to build a project on Bitcoin with low fees unless using sidechains. In contrast, it might be more practical to use Solana or Celestia and bring Bitcoin into it via a bridge. I think people could be successful in this space, but its similar to the high-fee environment faced when building projects on Ethereum Layer 1, and while its possible to make money with high transaction fees, its difficult for successful companies to scale to those looking to join the ecosystem of hundreds of millions of users.
Nick White: Modularity has reshaped the Bitcoin community to a certain extent. People no longer think of Bitcoin just as a layer for transmitting digital gold, but more as a data availability layer that can be used to issue NFTs and even run rollups. There are teams actively exploring running rollups on Bitcoin, including solutions similar to EVM rollups. While this is exciting, Bitcoin has some fundamental limitations and is not well suited as a data availability layer or settlement layer due to its low data availability throughput and lack of true settlement capabilities. There was a paper recently that explained in detail how to verify execution on Bitcoin Layer 1, but I forgot the name.
Chris Burniske: BitVM。
Nick White: BitVM. Yeah, that would be very exciting if that works and actually turns Bitcoin into a settlement layer, which I think is probably the best outcome. Although I don’t know if Bitcoin maximalists would be happy about this.
Chris Burniske: Modularity has reshaped the Bitcoin community to a certain extent. People no longer think of Bitcoin just as a layer for transmitting digital gold, but more as a data availability layer that can be used to issue NFTs and even run rollups. There are teams actively exploring running rollups on Bitcoin, including solutions similar to EVM rollups. While this is exciting, Bitcoin has some fundamental limitations and is not well suited as a data availability layer or settlement layer due to its low data availability throughput and lack of true settlement capabilities. There was a paper recently that explained in detail how to verify execution on Bitcoin Layer 1, but I forgot the name.
I think Bitcoin maximalists should be open-minded because as Bitcoin supply inflation decreases, transaction fees will need to be substituted for miners’ inflationary income. As digital gold, relying solely on transaction fees may not be enough. Over the past year or so, we’ve seen some exciting developments, such as Ordinals, providing miners with substantial fee income, which is crucial for maximalists in the pursuit of Bitcoin becoming digital gold. Many teams are working on Layer 2 and some opcode changes are needed to create a true Layer 2. Currently, true Layer 2 does not have independent security parameters, but actually uses Layer 1 security. Therefore, currently most are sidechains. We are working with Stacks, Muneeb has been working on this, hoping to develop Stacks into a Layer 2, although currently it is more like a side chain.
Making Bitcoin Layer 2 more expressive would be amazing. These Layer 2 will actually provide more value to Bitcoin than Ethereum Layer 2, because Ethereum Layer 2 simply extends the expressiveness of Ethereum. The Bitcoin scripting language is very limited, so having an expressive Layer 2 will improve both scalability and expressivity, which is very important. However, one problem faced by many teams building in the new Bitcoin ecosystem is that they do not get the cooperation from the Bitcoin whales they expected. In contrast, in the Ethereum or Solana space, many whales are on the chain because they are excited about innovation and willing to support new projects. Bitcoin’s OG whales often keep their coins in deep freeze, making it more difficult to obtain these coins to support projects like Bitcoin DeFi. As a result, the Bitcoin ecosystem faces resistance from the OG community, which increases friction. Friction will slow down momentum. These are issues that the Bitcoin ecosystem needs to solve, but Im excited about paying attention to Bitcoin again.
Will Ethereum finally succeed?
Laura Shin: If we consider Ethereum to be Modulithic, do you think there is a world where Ethereum can compete with Celestia on cost or data availability? Or maybe it was never designed for that world, Celestia was built specifically for that world.
Anatoly Yakovenko: Ethereum is like sailing a $300 billion ship, and every change carries huge risks. People may be underestimating consolidation and how far Ethereum has come in the past few years. By design, danksharding can be expanded to accommodate all of Solanas data. However, adding things within Ethereum involves economic and social factors, and whether it is feasible is another question. Although they face huge challenges, I think they are moving in the right direction.
Chris Burniske: So what do you think, Nick?
Nick White:The Ethereum community deserves credit for continuing to iterate and innovate at scale. Compared to Bitcoin’s protocol, which is rigid, Ethereum remains flexible. However, making any changes in a ship of this size is extremely challenging because of the complex dependencies. The shift from modularity to monolith is more ambitious than the change from proof-of-work to proof-of-stake, touching multiple aspects of the protocol. The design and work put into it by danksharding is excellent, but the launch is going to be a very difficult task. The researchers and engineering teams in the Ethereum ecosystem are some of the best, and while the road ahead may be slow, eventually they will succeed.
Crypto Market Forecast
Laura Shin: I wanted to ask you what the next bull market cycle will be. In 2013, Bitcoin attracted attention primarily because it was the first cryptocurrency. However, based on my observation over the past two cryptocurrency market cycles, the speculative mania has been driven more by technology. ICO was the main driver in 2017 and 2018; in 2021, although DeFi is leading, it will be more like NFT. In my opinion, the upcoming spot Bitcoin ETF actually puts Bitcoin at the center of this bull cycle, and this is even before the halving. Im interested in what you think are the main drivers of this bull cycle, or whether it can be seen as the beginning of a super cycle, the era where we leave bull and bear markets.
Chris Burniske: I dont think this will be a super cycle, but it will be a compelling one. It will expand in all aspects, including users, value, integration, and relevance to daily life around the world. The Bitcoin ETF is a major event that will further integrate Bitcoin and cryptocurrencies into the real world. With traditional financial giants such as BlackRock and ARK Invest participating, the launch of the Bitcoin ETF will lead to wealth advisors training and introducing Bitcoin to millions of clients. This may trigger curiosity about Bitcoin, and then possibly other digital assets, such as the ETH ETF, and this process will continue.
From an education, awareness and capital flow perspective, Bitcoin ETFs are critical and highly anticipated for the industry. The development of this cycle will coincide with increased global liquidity and potential lower interest rates. Although inflationary conditions may cause some instability, we are already close to peak rates. Interestingly, some of the cartoons reflected discussion of the Fed raising and lowering interest rates. Additionally, Toly mentions the relationship between value and the federal funds rate, and theres a profound reason for this. As interest rates fall, value itself will expand, an inevitable trend of capitalism.
We are entering a cycle of inflows into Bitcoin ETFs, along with falling interest rates and increased liquidity. If you look back at the ICO in 2017, it was a static fungible that laid the foundation for the subsequent development of DeFi. Now, I would describe it as an Internet financial system, gradually transitioning from static to dynamic, and then to mature dynamics. In the next few years, I believe we will see more mature dynamic finance at the institutional level, whether on platforms such as Solana, Avalanche or Ethereum. Celestia plays a key role here, providing the infrastructure for anyone wishing to issue DA transactions.
Non-fungible products often lag one cycle behind fungible products because they are more complex and sometimes considered worthless, such as the six-figure monkey JPEG. In 2021, non-fungibles went through a static development phase, similar to 2017s fungibles. We will see the emergence of many dynamic irreplaceables in the coming years, with gaming perhaps being the most notable area. For example, experiments like DRiP on Solana demonstrate the potential of non-fungibles in building loyalty or creator audience mechanisms. These low-cost and scalable practices are also starting to become the cornerstone of new forms of social media and human interaction.
Laura Shin: Anatoly, Nick, what about you? What do you think will be the focus of this bull market cycle?
Anatoly Yakovenko: I think Chris has covered all aspects very thoroughly. In this process of expanding the scope of applications, I look forward to seeing some more practical applications, such as payments. I hope crypto payments like Solana Pay start competing with traditional financial services because I think thats one of the keys to driving adoption. If we can launch a decentralized version of WeChat that has payment capabilities and can be seamlessly integrated with the traditional financial system, it will help liberate users from the traditional financial system so that they can use it in a single super application Make payments and perform various tasks. I think a breakthrough in payments use cases will be a critical step.
We are now at a stage where decentralized technology allows us to deconstruct financial services. In DeFi, we have seen that every financial function has multiple competitors. There may be a decentralized version of WeChat emerging in the future with billions of users. I think such an application might actually be more valuable than its underlying base layer. This will create awareness of the application as the key point of customer interaction, where all the money flows, and the underlying layer is more like a medium for information. While Im not sure exactly when, I think this could be the second phase of development.
Nick White: One of the key themes of the next cycle will be modularity vs. monolithic. In the past few years, we have been emphasizing the concept of modularity, but this has remained at a theoretical level until now, we have actually reached the stage of modular stack maturity. As Chris said, this may be the first wave of the modular stack, and it may take multiple waves of development to truly achieve full dynamic maturity. But we have finally reached the stage from theory to practice where we can witness modular stacks in action and people are building and demonstrating the capabilities of modular blockchains and the unlocking they can offer.
Celestia and Solana are leading the way in integration, while Ethereum, its L2 extensions and the broader modular ecosystem are also driving modularity. Where users and developers will ultimately choose to land remains unknown. Overall, I think its going to be an exciting time and well be exploring new use cases. Its similar to when Ethereum first launched, before that, if you wanted to launch an application, you had to build your own blockchain, just like you had to... If you wanted to create Litecoin, you had to issue... Litecoin basically Just a token, right?
When Ethereum launched, it became easier to issue tokens and write DeFi applications. Modular blockchains enable something similar at a deeper level with innovations in the protocol and execution layers. I think this will trigger a whole new explosion of experiments, just like Ethereum led the development of DeFi and NFT. I expect we will discover new and popular applications with market adaptability. Payments is an area Im very excited about, and games and social apps have the potential to be viral and spread quickly to hundreds of millions of users, as long as the right incentives are set up.
Coinbase and Worldcoins exploration of identity is also an important breakthrough, as many applications are still limited by the inability to truly have citizenship, identity or reputation. This is a big unlock, although were still in the early stages. I thought I might be too late to get into crypto in 2017, but over time Ive come to realize that it will take a long time, but it will be an interesting journey.
Chris Burniske: Toly, are you worried that Solana will become a victim of its own success like Ethereum in 2021?
Anatoly Yakovenko: Yes, I experienced something similar with Brew, the operating system built for Qualcomm. Thats a top-notch project, one of the coolest things out there, with a stellar mobile download record. We actually had the first true mobile platform, and the design of the iPhone was in our hands. Verizon, however, is showing some pushback because they think they know what to do. We worry about this middle ground, too big to adjust, too small to be difficult to surpass once Apple ships. Therefore, we are concerned about medium-sized changes. Our singular focus on performance makes it easier for engineers to reach consensus, drive chain acceleration, and ensure high priority and stability.
But what’s the next question? We made this change to unlock the next level of performance. We have a culture that drives things forward with a singular focus, which has been successful. However, as things mature, changes and other aspects must be approached with greater caution. We need to slow down a bit but also have more resources. We hope that the ecosystem can maintain this rhythm, even though it is a scary thought. Yes, Firedancer is rolling out a second implementation, so eliminating single points of failure is the highest priority for all of us.
Laura Shin: On the day we were recording, a widespread vulnerability affected a large number of decentralized applications on multiple blockchains. This is related to a former Ledger employee falling victim to a phishing attack, which allowed hackers to update Ledgers Connect Kit software. This software connects different dApps on multiple blockchains, where hackers uploaded malicious code, causing user wallets to be drained. The incident clearly caused chaos and caused a lot of distress. Id like to know your thoughts on the future of the industry, because in order to bring this technology to the masses, I dont think this kind of thing should keep happening. What do you think about this?
Anatoly Yakovenko: I think technology is improving. I am using the Fuse wallet which was released two months ago. This is an on-chain wallet that allows users to set up different supply chains as signers on multiple hardware devices. These solutions already exist and are online, but it will take time for them to spread widely across the globe to the point where people are no longer vulnerable to these attacks. Scaling these solutions is difficult because it requires users to change their behavior and requires a series of downstream updates. In the long run, I think these issues are surmountable, although it will be a bumpy ride.
Nick White: I think we are currently in the early stages of blockchain development. At this stage, risks are inevitable, especially in terms of the protocol and the entire stack (including wallets). While hacks happen, its actually a process that drives progress because it reveals issues that need to be fixed. Once fixed, we hope similar issues wont reoccur again. Its like were setting up an ongoing bug bounty, and while it may not be intentional, the process is constantly pushing us toward a more robust system. We hope that blockchain can become the cornerstone of the future global financial system, although this is a process that requires continuous effort rather than shortcuts, and the occasional hacker attack is only part of the process.
Laura Shin: From my perspective, given the moment were in now, especially with the impending launch of a Bitcoin spot ETF, I have a hunch theres going to be a lot of money coming into the system that will draw even more attention. People will pay more attention and connect their wealth to what is happening in the crypto ecosystem. I think this will quickly change the climate of the field and lead to more attention. While some believe the problem will resolve itself, I beg to differ. I feel that once the Bitcoin ETF is launched, the media attention will increase significantly, especially if this happens in 2024. So, Im not sure if this explanation is enough to meet the expectations of people who are about to enter this field.
Anatoly Yakovenko: Yes, indeed. My biggest concern is that there could be a massive hack that sets the entire blockchain field back years. Hopefully that wont happen, but its the scariest thing I think. I mean, everyone is trying to be vigilant, including the developers and companies involved. Fortunately, there are many of them, but there is no single point of failure for the entire crypto industry. However, every time such an incident occurs it is a reminder that we need to be more vigilant.
Chris Burniske: I see this as an aspect of financial technology evolving over time. Different types of fraud cases have arisen in different eras and then been fixed, just like bank robberies are now no longer as common as they once were. Part of the reason is that a lot of value has migrated from banks to various ledgers. Now, much value exists on blockchains, where transactions are irreversible, making blockchain fraud more common.
The team we worked with at Agoric enhanced JavaScript in many ways and moved to an object-oriented programming environment. Similarly, Sui performed similar work using Move. Toly and Nick are better suited to explain the benefits, but it is foreseeable that over time the development environments and tools used by developers will become more robust to protect them from potential harms. Toly also mentioned the idea of Fuse and a number of available wallets making it easier to use the super secure wallets that already exist. However, while Fuse is easy to use, it can also make users a target for hackers.
As Carlota Perez said, this is the new default, just like proper hygiene and the correct way to use blockchain have not been widely adopted as the new default. In the crypto space, where almost everyone now uses native 2FA, it becomes the new default, but outside of the crypto space this is not the case. However, as more people face issues such as spam, SMS attacks, and email attacks, this trend will push encryption even more. It is our responsibility to provide the right solutions. While this may pose some challenges, I believe that through innovation we will be able to solve this problem. If the crypto field cannot solve this problem through innovation, then other fields may face the same dilemma, which will force us to have no choice but to innovate to solve this problem.
