Layer 2 Sets March 27 Launch Date for Ethereum Scaling Offering
Polygon, the Layer 2 blockchain, plans to deliver an Ethereum-compatible rollup powered by zero-knowledge proofs on March 27, the development team said on Tuesday.
The offering, which is called a zkEVM, is expected to offer enhanced privacy features and validate transactions faster than other Ethereum scaling solutions. Unlike other L2s powered by zero-knowledge proofs, developers will easily be able to deploy code written for Ethereum on Polygon’s offering.
‘Intense and Inspiring’
“After more than a year of intense and inspiring research, development, and testing, we are incredibly proud to launch the first-ever zkEVM mainnet,” Mihailo Bjelic, Polygon’s co-founder, said onTwitter.
The DeFi community is counting on rollups to scale Ethereum, which, despite its ubiquity, has proven ill equipped to handle the workload for decentralized finance. Rollups work by bundling together transactions on a Layer 2 network before submitting the bundle to Ethereum’s mainnet for processing. In other words, this innovation may be crucial in enabling Ethereum to fulfill its promise.
Arbitrum and Optimism, the top Layer 2 networks by total value locked, both use optimistic rollups. Optimistic rollups offer easy compatibility with the Ethereum Virtual Machine (EVM), Ethereum’s core smart contract engine — meaning developers can easily port their from Ethereum’s mainnet to Layer 2.
Rollups powered by zero-knowledge proofs have long been touted as the holy grail for Ethereum scaling due to their improved performance and faster settlement compared to optimistic rollups.
Next Bull Cycle
“[ZkEVMs] will definitely help scale Ethereum to support more transactions in the future and will be a sorely needed addition to support the next bull cycle,” Bobby Ong, co-founder of CoinGecko, told The Defiant.
Ong added that the teams that are earliest to secure zkEVM market share will enjoy a significant first-mover advantage over their competitors.
However, existing solutions are not compatible with the EVM, meaning developers historically have needed to build code from scratch to deploy it on ZK-rollups.
But on July 20, 2022, Scroll, Polygon, and Matter Labs all announced they were developing rollups secured by zero-knowledge proofs, or zkEVMs. Consensys, the blockchain software company chaired by Ethereum co-founder, Joseph Lubin, also revealed it was working on a zkEVM in November.
While Polygon is the first team to publicly reveal a date for the launch of its zkEVM, Scroll has outpaced its rivals in terms of testnet adoption.
Driven by Speculation
More than 900,000 unique wallets have interacted with the testnet for Scroll’s zkEVM, compared to 544,309 for Matter Labs’ zkSync 2.0 testnet, 85,166 for Polygon, and nearly 20,000 for Consensys, according to Messari.
However, the high levels of testnet activity for Scroll and zkSync 2.0 may be driven by speculation that the projects may airdrop native tokens to early adopters in the future.
Zero-knowledge proofs are a privacy-preserving encryption method that was pioneered in the 1980s but struggled to find product-market-fit until Zcoin and Zcash leveraged the technology for privacy coins in 2016.
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In this episode, you’ll learn about the benefits of decentralized identity, including increased privacy and security. Our guests also discuss the practical applications of this technology.
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Recommended for gamers and those who want to learn more about this world! How have video games evolved to web3? What is coming in the future? In this episode, Sebastian Perez (Tech Lead at Mighty Block) and Uri Chami (Solidity Developer at Mighty Block) discuss these topics.
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2022 was a year of unprecedented events for the cryptocurrency ecosystem. With Diego Gurpegui Improve-in Co-founder and CTO we took a look back at the most important events of the year.
One of the first things we learn in Solidity/Ethereum is that contracts are immutable. If you upload a contract on the blockchain, you can’t change its source code and therefore you can’t change its logic.
We must be extremely careful with the code we use: if we make one simple mistake it could be extremely expensive. That’s why we consider alternatives as a way to avoid this limitation. Let’s see how we can use an upgradeable contracts.
Contracts Old School
The simplest thing we can do is upload a new version of the contract (and thus a new deploy and a new address). But this has its issues, for example let’s think about what it was like to have a shop a few years ago (before the internet). If we wanted to move to another address, we had no way of notifying all our clients and potential future clients of this change. The same thing happens in smart contracts, all users must know that the address has changed, but not having a user registry makes it very difficult.
Ways to create a upgradeable contracts
There are currently 4 ways to create an upgradeable contracts.
Using an interface / proxy
Taking advantage of inheritance and polymorphism, an interface with the contract structure can be exposed. So now we have two contracts: one with the contract definition (and external calls) and the other with the function’s implementation. The user interacts with the contract through the interface and if an update is required, the address of the contract is simply changed for the new version in a simple variable inside the contract.
It is not possible to modify the contract’s structure since we MUST respect its interface, but its main disadvantage is that the stored values will remain in the contract that has the logic, and if we want to update it with that of another contract, we will lose the storage state.
What is done to solve the storage issue is to have a “proxy” contract that has the same structure as the one with the logic, and it is accessed through the delegatecall instruction. It is SUPER IMPORTANT to keep the same variable structure in the contracts since we will be sharing the storage, and if both do not have the same variable structure, a collision could occur. A possible solution for this is that they both inherit from a base contract that sets the same variable-structure for all of the contract versions.
It seems to be a better alternative but in terms of gas it is expensive: we are always adding variables that we will most likely never use in every logic contract we implement. This can be improved if a third-party storage contract is used, for this, we can use solutions such as OpenZeppelin or combine it with an unstructured storage.
OpenZeppelin Transparent Proxy
If you are a user of the OpenZeppelin contracts you have noticed this plugin for sure. Inside, it uses a mechanism known as Transparent Proxy, which uses unstructured storage to avoid collisions (as long as we add the variables at the end and never at the beginning). This proxy is already integrated as a plugin and is compatible with Hardhat and Truffle.
This is one of the most popular and most complex, since we have an intermediary contract, but instead of aiming for a single final contract, each function will be implemented in a different smart contract. In addition, each “Facet” contract (as they are called) will have a fixed memory space to avoid collisions. A major advantage is, a whole contract deployment is not required, just a contract with one function implementation. That’s cheaper than deploying a complete-structure contract with all of the functions and also as there is just one function per contract, the size limit is very hard to reach. It is undoubtedly the favoured solution for the complex scenarios that are created today and there is even an EIP that refers to it.
What? Well, we are not actually modifying the contract,but if we had the ability to remove the contract from storage, we could force a deployment to that same address, then replace one contract with another.And this is how this technique works. Through the selfdestruct() statement, it is possible to remove a contract from the blockchain storage, and using the create2 operation, a new version of the contract is deployed to THE SAME ADDRESS.
In centralized software, not only is this not a bad thing, it is a necessary thing. What happens in decentralized projects? Who should update the code? Is a DAO reliable enough? On the one hand, an immutable contract seems more reliable than an upgradeable contracts but it also makes it more vulnerable to attacks. In my opinion, it is good to consider all these alternatives and use them if the project requires a sophisticated architecture. Making a contract upgradeable makes its code much harder to understand and trace, but improves its resistance to attacks. If the strength of a project is its simplicity, I would not work on making the contract updatable, but I would do so in complex projects with multiple contracts.
For Buterin, building a better-decentralized ecosystem requires short-term pain for long-term gain
On Thursday, Vitalik Buterin, co-founder of Ethereum, shared his long-term vision for the namesake blockchain live at the annual Ethereum Community Conference, or EthCC, in Paris. As told by Buterin, Ethereum is currently at an inflection point, or period of rapid change, before the ecosystem’s capability will eventually settle down.
Currently, the foremost priority for Ethereum is building an easy-to-use light client for the consensus layer, execution layer, and layer-2 solutions by default. Next is better support for home stakers or those looking to validate network transactions when Ethereum transitions to a proof-of-stake blockchain but possess less than the required 32 Ether (ETH). Finally, Buterin believes it’s critical that Ethereum can eventually be run on a full node with lighter hardware.
As for the long-horizon roadmap, Buterin plans to upgrade Ethereum with better cryptographic technologies, potentially for quantum resistance, if they come out and additionally further integrate with zero knowledge Ethereum Virtual Machines, or zk-EVMs, should they work out. “We also need to keep an open mind,” says Buterin. “We don’t know exactly what the needs of 2032 will demand.”
But the Ethereum co-founder also shared his skepticism about a few other potential opportunities. These include adding support for multiple, complex virtual machines, getting too comfortable with black box technologies such as zk-SNARKs or making the protocol so complex as to render it incomprehensible without the aid of specialists. Ethereum is on the verge of its proof-of-stake transformation dubbed the “Merge.” Despite being over two years in the making, some developers are still skeptical about whether there will be a safe transition.
Ethereum has rolled out a new scheduled major network upgrade called “Gray Glacier,” pushing the difficulty bomb back another 100 days.
It’s another day, another upgrade for Ethereum as the world’s largest smart contracts platform has just rolled out a new major update.
Called “Gray Glacier,” the upgrade occurred at block 15,050,000 on June 30 with the sole goal of introducing changes to the parameters of the network’s difficulty bomb, pushing it back by 700,000 blocks, or roughly 100 days.
The Gray Glacier upgrade is the network’s hard fork, which means it is creating new rules to improve the system and requires the node operators and miners to download the latest version of their Ethereum clients.
“If you are using an Ethereum client that is not updated to the latest version, […] your client will sync to the pre-fork blockchain once the upgrade occurs,” the Ethereum Foundation said in a blog postearlier this month.
In other words, the non-upgraded clients are stuck on an incompatible chain following the old rules, meaning that operators won’t be able to send transactions or operate on the post-upgrade Ethereum network.
What’s more, not all node operators and miners followed the recommendation though, as data from Ethernodes shows that only 65% of clients were fully prepared for the Gray Glacier upgrade.
Erigon, the network’s second-largest client, was the only one to have all of its 164 clients upgraded.
Geth, the network’s most popular client, was only 67% ready, with as many as 448 clients running the outdated software. Nethermind and Besu had 76% and 78% of its clients updated, respectively.
What is Ethereum’s difficulty bomb?
The difficulty bomb, which has been a part of Ethereum since day one, is a piece of code responsible for exponentially increasing the difficulty of mining Ethereum (ETH), the network’s native cryptocurrency, and thus disincentivizing miners to continue their operations as the network transitions from its current proof-of-work(PoW) algorithm to proof-of-stake (PoS) consensus model.
In other words, detonating the difficulty bomb would mean that the actual transition—otherwise known as The Merge—could be just around the corner.
An implementation of The Merge has already gone live on Ethereum’s Ropsten testnet at the beginning of June, with Vitalik Buterin and other developers previously saying that ”if everything goes to plan,” the transition could happen as early as August this year.
Pushing back the difficulty bomb for another 100 days, however, makes it unlikely that the schedule will be met, with the updated EIP-5133 proposal now pointing to mid-September as a new time frame for the implementation of the mechanism.
Previously, the difficulty bomb mechanism has been pushed back in five different network upgrades: Byzantium, Constantinople, Muir Glacier, London, and the most recent Arrow Glacier upgrade in December 2021.
Ethereum has completed The Merge on a public testnet for the first time, comprising a major milestone in its roadmap towards Proof-of-Stake. By thedefiant.io
On June 8 at 1210pm ET, Ropsten transitioned from Proof-of-Work consensus to Proof-of-Stake, unifying the testnet’s existing execution layer with the Ropsten Beacon Chain’s PoS consensus layer.
Ethereum developers celebrated the Merge on a livestream hosted by ETHStaker and will now monitor the blockchain for any inconsistencies.
Ethereum’s core developers will next deploy the chain-merge on two more public testnets — Sepolia and Goerli — plus complete several more shadow forks on dedicated closed testnets. At that point, The Merge will be deemed ready for prime-time on mainnet.Significant Milestone
Combined with base transaction fees being burned since the introduction of EIP-1559 last August, the upgrade is expected to result in more ETH being destroyed than created, making Ether increasingly scarce over time.
The Ethereum Foundation recently urged devs to deploy their code on Ropsten to check if their protocols are operating normally and to report any issues identified as a result of The Merge. Top dapps including leading money market Aave and decentralized social graph Lens launched Ropsten deployments to help test the merge.
Gnosis Chain, an Ethereum scalability solution previously known as xDai, is also gearing up for its own chain-merge. The upgrade will see its Proof-of-Authority-based EVM chain merge with the Proof-of-Stake Gnosis Beacon Chain — which was launched in December 2021.
Gnosis merge coordinator, dapplion, tweeted on June 7 that Gnosis will soon launch shadow forks to begin testing its own merge.
One of the most overlooked problems of blockchain systems is their ability to resist the fast-evolving machines known as quantum computers.
These powerful computers use quantum physics to solve complex problems that are beyond the reach of traditional devices by using qubits—an evolution of the classic binary bit. Qubits are able to represent the value 1 or 0 at the same time, which promises to deliver an exponential increase of computing power.
The world’s top superpowers are pouring billions of dollars into the development of this technology—and for good reason. The first nation or company to harness quantum computing will be poised to crack the encryption protecting rivals’ sensitive documents.
In the case of blockchain systems, the cryptography protecting their tamper-proof ledgers may be at risk. Researchers at the University of Sussex estimated in February that a quantum computer with 1.9 billion qubits could essentially crack the encryption safeguarding Bitcoin within a mere 10 minutes. Just 13 million qubits could do the job in about a day.
Fortunately, the ability to deploy quantum computers with so many qubits still seems many years away. IBM unveiled its 127-qubit processor just last year, while a unit sporting 1,000 qubits is set to be completed by the end of 2023.
“We’re not there yet,” said Jens Groth, a Danish professor in cryptology and encryption researcher at Dfinity. “Nobody knows what the exact time frame looks like, but blockchain might only be at risk within 10 to 20 years.”
Groth underlines that there’s an important distinction between two types of qubits—physical and logical ones. The latter describes a qubit that achieves a superposition between 1 and 0 via a quantum gate. A logical qubit consists of nine physical qubits. “Company announcements about a novel qubit milestone usually concern physical qubits, not logical ones,” he explains.
Defenders have the upper hand
Although researchers like Groth don’t classify quantum computers as an immediate threat to blockchain technology, experimentation with solutions is nevertheless ongoing. “Cryptographers do reflect on what a suitable countermeasure would look like,” Groth says.
Blockchain developers have a clear advantage in the race to defend against mounting computing power. Specifically, they can increase the number of digits in the cryptographic keys that protect the chain—a process that’s faster to scale than it is for the attackers to catch up. “The defenders are winning this battle in the long run,” Groth claims.
This is evident in the field of symmetric key encryption when examining the popular Advanced Encryption Standard (AES). The most common variation of 128 keys could be cracked by quantum computers and even classic attackers. However the AES 256 variation, featuring twice the amount of keys, appears strong enough to fend off brute force attacks by quantum machines for the foreseeable future.
In a few minutes, electronic music will start pulsing, stuffed animals will be flung through the air, women will emerge spinning Technicolor hula hoops, and a mechanical bull will rev into action, bucking off one delighted rider after another. It’s the closing party of ETHDenver, a weeklong cryptocurrency conference dedicated to the blockchain Ethereum. Lines have stretched around the block for days. Now, on this Sunday night in February, the giddy energy is peaking.
But as the crowd pushes inside, a wiry man with elfin features is sprinting out of the venue, past astonished selfie takers and venture capitalists. Some call out, imploring him to stay; others even chase him down the street, on foot and on scooters. Yet the man outruns them all, disappearing into the privacy of his hotel lobby, alone.
Vitalik Buterin, the most influential person in crypto, didn’t come to Denver to party. He doesn’t drink or particularly enjoy crowds. Not that there isn’t plenty for the 28-year-old creator of Ethereum to celebrate. Nine years ago, Buterin dreamed up Ethereum as a way to leverage the blockchain technology underlying Bitcoin for all sorts of uses beyond currency. Since then, it has emerged as the bedrock layer of what advocates say will be a new, open-source, decentralized internet. Ether, the platform’s native currency, has become the second biggest cryptocurrency behind Bitcoin, powering a trillion-dollar ecosystem that rivals Visa in terms of the money it moves. Ethereum has brought thousands of unbanked people around the world into financial systems, allowed capital to flow unencumbered across borders, and provided the infrastructure for entrepreneurs to build all sorts of new products, from payment systems to prediction markets, digital swap meets to medical-research hubs.
But even as crypto has soared in value and volume, Buterin has watched the world he created evolve with a mixture of pride and dread. Ethereum has made a handful of white men unfathomably rich, pumped pollutants into the air, and emerged as a vehicle for tax evasion, money laundering, and mind-boggling scams. “Crypto itself has a lot of dystopian potential if implemented wrong,” the Russian-born Canadian explains the morning after the party in an 80-minute interview in his hotel room.
Buterin worries about the dangers to overeager investors, the soaring transaction fees, and the shameless displays of wealth that have come to dominate public perception of crypto. “The peril is you have these $3 million monkeys and it becomes a different kind of gambling,” he says, referring to the Bored Ape Yacht Club, an überpopular NFT collection of garish primate cartoons that has become a digital-age status symbol for millionaires including Jimmy Fallon and Paris Hilton, and which have traded for more than $1 million a pop. “There definitely are lots of people that are just buying yachts and Lambos.”
Buterin hopes Ethereum will become the launchpad for all sorts of sociopolitical experimentation: fairer voting systems, urban planning, universal basic income, public-works projects. Above all, he wants the platform to be a counterweight to authoritarian governments and to upend Silicon Valley’s stranglehold over our digital lives. But he acknowledges that his vision for the transformative power of Ethereum is at risk of being overtaken by greed. And so he has reluctantly begun to take on a bigger public role in shaping its future. “If we don’t exercise our voice, the only things that get built are the things that are immediately profitable,” he says, reedy voice rising and falling as he fidgets his hands and sticks his toes between the cushions of a lumpy gray couch. “And those are often far from what’s actually the best for the world.”
The irony is that despite all of Buterin’s cachet, he may not have the ability to prevent Ethereum from veering off course. That’s because he designed it as a decentralized platform, responsive not only to his own vision but also to the will of its builders, investors, and ever sprawling community. Buterin is not the formal leader of Ethereum. And he fundamentally rejects the idea that anyone should hold unilateral power over its future.
Buterin dons Shiba Inu pajama pants onstage at ETHDenver
Three days after the music stops at ETHDenver, Buterin’s attention turns across the world, back to the region where he was born. In the war launched by Russian President Vladimir Putin, cryptocurrency almost immediately became a tool of Ukrainian resistance. More than $100 million in crypto was raised in the invasion’s first three weeks for the Ukrainian government and NGOs. Cryptocurrency has also provided a lifeline for some fleeing Ukrainians whose banks are inaccessible. At the same time, regulators worry that it will be used by Russian oligarchs to evade sanctions.
Which has left Buterin reliant on the limited tools of soft power: writing blog posts, giving interviews, conducting research, speaking at conferences where many attendees just want to bask in the glow of their newfound riches. “I’ve been yelling a lot, and sometimes that yelling does feel like howling into the wind,” he says, his eyes darting across the room. Whether or not his approach works (and how much sway Buterin has over his own brainchild) may be the difference between a future in which Ethereum becomes the basis of a new era of digital life, and one in which it’s just another instrument of financial speculation—credit-default swaps with a utopian patina.
Buterin has sprung into action too, matching hundreds of thousands of dollars in grants toward relief effortsand publicly lambasting Putin’s decision to invade. “One silver lining of the situation in the last three weeks is that it has reminded a lot of people in the crypto space that ultimately the goal of crypto is not to play games with million-dollar pictures of monkeys, it’s to do things that accomplish meaningful effects in the real world,” Buterin wrote in an email to TIME on March 14.
His outspoken advocacy marks a change for a leader who has been slow to find his political voice. “One of the decisions I made in 2022 is to try to be more risk-taking and less neutral,” Buterin says. “I would rather Ethereum offend some people than turn into something that stands for nothing.”
The war is personal to Buterin, who has both Russian and Ukrainian ancestry. He was born outside Moscow in 1994 to two computer scientists, Dmitry Buterin and Natalia Ameline, a few years after the fall of the Soviet Union. Monetary and social systems had collapsed; his mother’s parents lost their life savings amid rising inflation. “Growing up in the USSR, I didn’t realize most of the stuff I’d been told in school that was good, like communism, was all propaganda,” explains Dmitry. “So I wanted Vitalik to question conventions and beliefs, and he grew up very independent as a thinker.”
The family initially lived in a university dorm room with a shared bathroom. There were no disposable diapers available, so his parents washed his by hand. Vitalik grew up with a turbulent, teeming mind. Dmitry says Vitalik learned how to read before he could sleep through the night, and was slow to form sentences compared with his peers. “Because his mind was going so fast,” Dmitry recalls, “it was actually hard for him to express himself verbally for some time.”
Instead, Vitalik gravitated to the clarity of numbers. At 4, he inherited his parents’ old IBM computer and started playing around with Excel spreadsheets. At 7, he could recite more than a hundred digits of pi, and would shout out math equations to pass the time. By 12, he was coding inside Microsoft Office Suite. The precocious child’s isolation from his peers had been exacerbated by a move to Toronto in 2000, the same year Putin was first elected. His father characterizes Vitalik’s Canadian upbringing as “lucky and naive.” Vitalik himself uses the words “lonely and disconnected.”
In 2011, Dmitry introduced Vitalik to Bitcoin, which had been created in the wake of the 2008 financial crisis. After seeing the collapse of financial systems in both Russia and the U.S., Dmitry was intrigued by the idea of an alternative global money source that was uncontrolled by authorities. Vitalik soon began writing articles exploring the new technology for the magazine Bitcoin Weekly, for which he earned 5 bitcoins a pop (back then, some $4; today, it would be worth about $200,000).
Even as a teenager, Vitalik Buterin proved to be a pithy writer, able to articulate complex ideas about cryptocurrency and its underlying technology in clear prose. At 18, he co-founded Bitcoin Magazine and became its lead writer, earning a following both in Toronto and abroad. “A lot of people think of him as a typical techie engineer,” says Nathan Schneider, a media-studies professor at the University of Colorado, Boulder, who first interviewed Buterin in 2014. “But a core of his practice even more so is observation and writing—and that helped him see a cohesive vision that others weren’t seeing yet.”
As Buterin learned more about the blockchain technology on which Bitcoin was built, he began to believe using it purely for currency was a waste. The blockchain, he thought, could serve as an efficient method for securing all sorts of assets: web applications, organizations, financial derivatives, nonpredatory loan programs, even wills. Each of these could be operated by “smart contracts,” code that could be programmed to carry out transactions without the need for intermediaries. A decentralized version of the rideshare industry, for example, could be built to send money directly from passengers to drivers, without Uber swiping a cut of the proceeds.
In 2013, Buterin dropped out of college and wrote a 36-page white paper laying out his vision for Ethereum: a new open-source blockchain on which programmers could build any sort of application they wished. (Buterin swiped the name from a Wikipedia list of elements from science fiction.) He sent it to friends in the Bitcoin community, who passed it around. Soon a handful of programmers and businessmen around the world sought out Buterin in hopes of helping him bring it to life. Within months, a group of eight men who would become known as Ethereum’s founders were sharing a three-story Airbnb in Switzerland, writing code and wooing investors.
While some of the other founders mixed work and play—watching Game of Thrones, persuading friends to bring over beer in exchange for Ether IOUs—Buterin mostly kept to himself, coding away on his laptop, according to Laura Shin’s recent book about the history of Ethereum, The Cryptopians. Over time, it became apparent that the group had very different plans for the nascent technology. Buterin wanted a decentralized open platform on which anyone could build anything. Others wanted to use the technology to create a business. One idea was to build the crypto equivalent to Google, in which Ethereum would use customer data to sell targeted ads.The men also squabbled over power and titles. One co-founder, Charles Hoskinson, appointed himself CEO—a designation that was of no interest to Buterin, who joked his title would be C-3PO, after the droid from Star Wars.
The ensuing conflicts left Buterin with culture shock. In the space of a few months, he had gone from a cloistered life of writing code and technical articles to a that of a decisionmaker grappling with bloated egos and power struggles. His vision for Ethereum hung in the balance. “The biggest divide was definitely that a lot of these people cared about making money. For me, that was totally not my goal,” says Buterin,whose net worth is at least $800 million, according to public records on the blockchain whose accuracy was confirmed by a spokesperson.“There were even times at the beginning where I was negotiating down the percentages of the Ether distribution that both myself and the other top-level founders would get, in order to be more egalitarian. That did make them upset.”
Buterin says the other founders tried to take advantage of his naiveté to push through their own ideas about how Ethereum should run. “People used my fear of regulators against me,” he recalls, “saying that we should have a for-profit entity because it’s so much simpler legally than making a nonprofit.” As tensions rose, the group implored Buterin to make a decision. In June 2014, he asked Hoskinson and Amir Chetrit, two co-founders who were pushing Ethereum to become a business, to leave the group. He then set in motion the creation of the Ethereum Foundation (EF), a nonprofit established to safeguard Ethereum’s infrastructure and fund research and development projects.
One by one, all the other founders peeled off over the next few years to pursue their own projects, either in tandem with Ethereum or as direct competitors. Some of them remain critical of Buterin’s approach. “In the dichotomy between centralization and anarchy, Ethereum seems to be going toward anarchy,” says Hoskinson, who now leads his own blockchain, Cardano. “We think there’s a middle ground to create some sort of blockchain-based governance system.”
With the founders splintered, Buterin emerged as Ethereum’s philosophical leader. He had a seat on the EF board and the clout to shape industry trends and move markets with his public pronouncements. He even became known as “V God” in China. But he didn’t exactly step into the power vacuum. “He’s not good at bossing people around,” says Aya Miyaguchi, the executive director of the EF. “From a social-navigation perspective, he was immature. He’s probably still conflict-averse,” says Danny Ryan, a lead researcher at the EF. Buterin calls his struggle to inhabit the role of an organizational leader “my curse for the first few years at Ethereum.”
It’s not hard to see why. Buterin still does not present stereotypical leadership qualities when you meet him. He sniffles and stutters through his sentences, walks stiffly, and struggles to hold eye contact. He puts almost no effort into his clothing, mostly wearing Uniqlo tees or garments gifted to him by friends. His disheveled appearance has made him an easy target on social media: he recently shared insults from online hecklers who said he looked like a “Bond villain” or an “alien crackhead.”
Yet almost everyone who has a full conversation with Buterin comes away starry-eyed. Buterin is wryly funny and almost wholly devoid of pretension or ego. He’s an unabashed geek whose eyes spark when he alights upon one of his favorite concepts, whether it be quadratic voting or the governance system futarchy. Just as Ethereum is designed to be an everything machine, Buterin is an everything thinker, fluent in disciplines ranging from sociological theory to advanced calculus to land-tax history. (He’s currently using Duolingo to learn his fifth and sixth languages.) He doesn’t talk down to people, and he eschews a security detail. “An emotional part of me says that once you start going down that way, professionalizing is just another word for losing your soul,” he says.
Buterin, seen through a monitor at ETHDenver
Benjamin Rasmussen for TIME
Alexis Ohanian, the co-founder of Reddit and a major crypto investor, says being around Buterin gives him “a similar vibe to when I first got to know Sir Tim Berners-Lee,” the inventor of the World Wide Web. “He’s very thoughtful and unassuming,” Ohanian says, “and he’s giving the world some of the most powerful Legos it’s ever seen.”
For years, Buterin has been grappling with how much power to exercise in Ethereum’s decentralized ecosystem. The first major test came in 2016, when a newly created Ethereum-based fundraising body called the DAO was hacked for $60 million, which amounted at the time to more than 4% of all Ether in circulation. The hack tested the crypto community’s values: if they truly believed no central authority should override the code governing smart contracts, then thousands of investors would simply have to eat the loss—which could, in turn, encourage more hackers. On the other hand, if Buterin chose to reverse the hack using a maneuver called a hard fork, he would be wielding the same kind of central authority as the financial systems he sought to replace.
Buterin took a middle ground. He consulted with other Ethereum leaders, wrote blog posts advocating for the hard fork, and watched as the community voted overwhelmingly in favor of that option via forums and petitions. When Ethereum developers created the fork, users and miners had the option to stick with the hacked version of the blockchain. But they overwhelmingly chose the forked version, and Ethereum quickly recovered in value.
To Buterin, the DAO hack epitomized the promise of a decentralized approach to governance. “Leadership has to rely much more on soft power and less on hard power, so leaders have to actually take into account the feelings of the community and treat them with respect,” he says. “Leadership positions aren’t fixed, so if leaders stop performing, the world forgets about them. And the converse is that it’s very easy for new leaders to rise up.”
Over the past few years, countless leaders have risen up in Ethereum, building all kinds of products, tokens, and subcultures. There was the ICO boom of 2017, in which venture capitalists raised billions of dollars for blockchain projects. There was DeFi summer in 2020, in which new trading mechanisms and derivative structures sent money whizzing around the world at hyperspeed. And there was last year’s explosion of NFTs: tradeable digital goods, like profile pictures, art collections, and sports cards, that skyrocketed in value.
Skeptics have derided the utility of NFTs, in which billion-dollar economies have been built upon the perceived digital ownership of simple images that can easily be copied and pasted. But they have rapidly become one of the most utilized components of the Ethereum ecosystem. In January, the NFT trading platform OpenSea hit a record $5 billion in monthly sales.
Benjamin Rasmussen for TIME
Buterin didn’t predict the rise of NFTs, and has watched the phenomenon with a mixture of interest and anxiety. On one hand, they have helped to turbocharge the price of Ether, which has increased more than tenfold in value over the past two years. (Disclosure: I own less than $1,300 worth of Ether, which I purchased in 2021.) But their volume has overwhelmed the network, leading to a steep rise in congestion fees, in which, for instance, bidders trying to secure a rare NFT pay hundreds of dollars extra to make sure their transactions are expedited.
The fees have underminedsome of Buterin’s favorite projects on the blockchain. Take Proof of Humanity, which awards a universal basic income—currently about $40 per month—to anyone who signs up. Depending on the week, the network’s congestion fees can make pulling money out of your wallet to pay for basic needs prohibitively expensive. “With fees being the way they are today,” Buterin says, “it really gets to the point where the financial derivatives and the gambley stuff start pricing out some of the cool stuff.”
Inequities have crept into crypto in other ways, including a stark lack of gender and racial diversity. “It hasn’t been among the things I’ve put a lot of intellectual effort into,” Buterin admits of gender parity. “The ecosystem does need to improve there.” He’s scornful of the dominance of coin voting, a voting process for DAOsthat Buterin feels is just a new version of plutocracy, one in which wealthy venture capitalists can make self-interested decisions with little resistance. “It’s become a de facto standard, which is a dystopia I’ve been seeing unfolding over the last few years,” he says.
These problems have sparked a backlash both inside and outside the blockchain community. As crypto rockets toward the mainstream, its esoteric jargon, idiosyncratic culture, and financial excesses have been met with widespread disdain. Meanwhile, frustrated users are decamping to newer blockchains like Solana and BNB Chain, driven by the prospect of lower transaction fees, alternative building tools, or different philosophical values.
Buterin understands why people are moving away from Ethereum. Unlike virtually any other leader in a trillion-dollar industry, he says he’s fine with it—especially given that Ethereum’s current problems stem from the fact that it has too many users. (Losing immense riches doesn’t faze him much, either: last year, he dumped $6 billion worth of Shiba Inu tokens that were gifted to him, explaining that he wanted to give some to charity, help maintain the meme coin’s value, and surrender his role as a “locus of power.”)
In the meantime, he and the EF—which holds almost a billion dollars worth of Ether in reserve, a representative confirmed—are taking several approaches to improve the ecosystem. Last year, they handed out $27 million to Ethereum-based projects, up from $7.7 million in 2019, to recipients including smart-contract developers and an educational conference in Lagos.
The EF research team is also working on two crucial technical updates. The first is known as the “merge,” which converts Ethereum from Proof of Work, a form of blockchain verification, to Proof of Stake, which the EF says will reduce Ethereum’s energy usage by more than 99% and make the network more secure. Buterin has been stumping for Proof of Stake since Ethereum’s founding, but repeated delays have turned implementation into a Waiting for Godot–style drama. At ETHDenver, the EF researcher Danny Ryan declared that the merge would happen within the next six months, unless “something insanely catastrophic” happens. The same day, Buterin encouraged companies worried about the environmental impact to delay using Ethereum until the merge is completed—even if it “gets delayed until 2025.”
Benjamin Rasmussen for TIME
In January, Moxie Marlinspike, co-founder of the messaging app Signal, wrote a widely read critique noting that despite its collectivist mantras, so-called web3 was already coalescing around centralized platforms. As he often does when faced with legitimate criticism, Buterin responded with a thoughtful, detailed post on Reddit. “The properly authenticated decentralized blockchain world is coming, and is much closer to being here than many people think,” he wrote. “I see no technical reason why the future needs to look like the status quo today.”
Buterin is aware that crypto’s utopian promises sound stale to many, and calls the race to implement sharding in the face of competition a “ticking time bomb.” “If we don’t have sharding fast enough, then people might just start migrating to more centralized solutions,” he says. “And if after all that stuff happens and it still centralizes, then yes, there’s a much stronger argument that there’s a big problem.”
As the technical kinks get worked out, Buterin has turned his attention toward larger sociopolitical issues he thinks the blockchain might solve. On his blog and on Twitter, you’ll find treatises on housing; on voting systems; on the best way to distribute public goods; on city building and longevity research. While Buterin spent much of the pandemic living in Singapore, he increasingly lives as a digital nomad, writing dispatches from the road.
Those who know Buterin well have noticed a philosophical shift over the years. “He’s gone on a journey from being more sympathetic to anarcho-capitalist thinking to Georgist-type thinking,” says Glen Weyl, an economist who is one of his close collaborators, referring to a theory that holds the value of the commons should belong equally to all members of society. One of Buterin’s recent posts calls for the creation of a new type of NFT, based not on monetary value but on participation and identity. For instance, the allocation of votes in an organization might be determined by the commitment an individual has shown to the group, as opposed to the number of tokens they own. “NFTs can represent much more of who you are and not just what you can afford,” he writes.
While Buterin’s blog is one of his main tools of public persuasion, his posts aren’t meant to be decrees, but rather intellectual explorations that invite debate. Buterin often dissects the flaws of obscure ideas he once wrote effusively about, like Harberger taxes. His blog is a model for how a leader can work through complex ideas with transparency and rigor, exposing the messy process of intellectual growth for all to see, and perhaps learn from.
Some of Buterin’s more radical ideas can provoke alarm. In January, he caused a minor outrage on Twitter by advocating for synthetic wombs, which he argued could reduce the pay gap between men and women. He predicts there’s a decent chance someone born today will live to be 3,000, and takes the anti-diabetes medication Metformin in the hope of slowing his body’s aging, despite mixed studies on the drug’s efficacy.
As governmental bodies prepare to wade into crypto—in March, President Biden signed an Executive Order seeking a federalplan for regulating digital assets—Buterin has increasingly been sought out by politicians.At ETHDenver, he held a private conversation with Colorado Governor Jared Polis, a Democrat who supports cryptocurrencies. Buterin is anxious about crypto’s political valence in the U.S., where Republicans have generally been more eager to embrace it. “There’s definitely signs that are making it seem like crypto is on the verge of becoming a right-leaning thing,” Buterin says. “If it does happen, we’ll sacrifice a lot of the potential it has to offer.”
To Buterin, the worst-case scenario for the future of crypto is that blockchain technology ends up concentrated in the hands of dictatorial governments. He is unhappy with El Salvador’s rollout of Bitcoin as legal tender, which has been riddled with identity theft and volatility. The prospect of governments using the technology to crack down on dissent is one reason Buterin is adamant about crypto remaining decentralized. He sees the technology as the most powerful equalizer to surveillance technology deployed by governments (like China’s) and powerful companies (like Meta) alike.
If Mark Zuckerberg shouldn’t have the power to make epoch-changing decisions or control users’ data for profit, Buterin believes, then neither should he—even if that limits his ability to shape the future of his creation, sends some people to other blockchains, or allows others to use his platform in unsavory ways. “I would love to have an ecosystem that has lots of good crazy and bad crazy,” Buterin says. “Bad crazy is when there’s just huge amounts of money being drained and all it’s doing is subsidizing the hacker industry. Good crazy is when there’s tech work and research and development and public goods coming out of the other end. So there’s this battle. And we have to be intentional, and make sure more of the right things happen.”
The arrival of new applications on Ethereum has led to development teams designing new kinds of token standards. In its early years, the ERC-20 token standard, which defines how a traditional token such as DAI or UNI functions, dominated the market. This approach to crypto treats all assets as completely interchangeable (known as fungibility), functioning conceptually like a currency such as USD.
However, in the past 18 months NFTs have captured the market’s attention, which rely on a newer standard termed ERC-721. This standard allows for the creation of one-off, custom tokens: for instance, a collectible trading card, or personal avatar that is totally unique and can’t be replicated.
Lately, attention in the crypto market has been moving towards another standard, which has a newly revised set of properties — the ERC-1155 token standard. This debate of ERC-721 vs. ERC-1155 can perplex teams, and it’s worth knowing when to employ each. Though ERC-1155 is a newer standard and has some technical benefits that may give it an edge in the future, it’s not a strict upgrade and differs in certain ways.
A Brief History of NFTs
Why has this choice between the two token standards become such a pain point? After all, many NFT projects today continue to use the ERC-721 standard.
Ethereum’s ecosystem initially had little need for a new token standard. After all, most were eager to use the highly praised smart contract feature, which set Ethereum apart in the early days. Creating a blockchain network with an accompanying ERC-20 token was comparatively easy and resulted in the birth of numerous new projects, such as Crypto.com and Circle’s USDC.
But the Ethereum ecosystem experienced a seismic shift when developers saw the potential for other use cases with its smart contract feature. Unlike fungible tokens which are fully interchangeable and function similar to a dollar bill, non-fungible tokens that uniquely identified each token allowed for a swathe of new applications.
Both token standards have their applications, and it’s worth knowing their unique properties to help decide which to implement in your project.
What Is the ERC-721 Token Standard?
The ERC-721 token standard kicked off the NFT craze. It was the first of its kind, and consequently, the most popular standard for creating these unique tokens. NFTs have a long history, but along with the ERC-721 token standard, they only truly came to the forefront with the CryptoKitties project.
Dapper Labs, the company behind CryptoKitties, introduced ERC-721 via an Ethereum Improvement Proposal (EIP) in 2017. CryptoKitties are a set of collectible, randomly generated kittens that can be individually traded, similar to Tamagotchis or Pokemon. Each CryptoKitty is 100% unique – they can’t be replicated, and they have a transaction history letting the public know exactly who has owned the kitty over its entire lifespan.
In addition to being completely, unique, here are some of the additional feature specifications of ERC-721:
It allows you to transfer NFTs between accounts, allowing NFTs to be traded for other currencies.
It allows you to identify the total supply of a set of NFTs on the network.
It allows you to query for the owners of a specific asset.
The ERC-1155 token standard was developed by the team behind the Enjin project, which focuses on blockchain-based solutions for games. Enjin introduced the token standard in 2019, and it is a middle ground between the ERC-20 standard and the ERC-721 standard.
Enjin identified a number of challenges associated with the comparatively limited ERC-721 standard — in particular, the inability to conduct batch transfers.
Unlike ERC-721, if one were to transfer multiple NFTs, each NFT would require a single transaction — because each NFT is represented by a single smart contract. This results in exorbitantly high transaction costs when minting or trading individual NFTs. The ERC-1155 allows batch transfers — multiple assets on a single smart contract — that result in all tokens being transferred at once with, leading to a less congested network and consequently lower gas costs. For example, when a user wants to sell a thousand items in a game to another user, he or she can use the batch token transfer of ERC-1155 to send them all in one go 💸.
Another major feature of this multi-token standard is it supports both fungible and non-fungible tokens — because of its ability to support multiple states — on the same address and contract. In practical terms, this means you can make in-game payments using a fungible token on that address and simultaneously transfer unique NFT assets as well.
An additional feature of ERC-1155 is that it supports the creation of semi-fungible tokens. SFTs trade as fungible tokens, but once redeemed, they convert into NFTs. For example, a ticket to a concert prior to the event may be considered a fungible asset – any ticket will give you identical GA entry into the concert. However, after the concert, the ticket loses its tradeable value and becomes a unique item of memorabilia. SFTs enable that type of functionality directly into the code of the ticket itself.
Lastly, token transfers on this standard can be reverted in the event of a mistake. On the ERC-721 standard, you can’t reclaim assets if they are sent to the wrong address. However, ERC-1155 contains a function that addresses this. The safe transfer function and a number of other rules are in place to prevent exploitation.
ERC-721 vs. ERC-1155
The ERC-1155 token standard could see much more prominent use than the ERC-721 token standard in the near future, thanks to its additional features. Both allow you to be able to mint new NFTs, but there are some key differences:
ERC-1155 permits the creation of both semi-fungible tokens and non-fungible tokens, whereas ERC-721 permits only the latter.
In ERC-1155, smart contracts are linked to multiple URIs and do not store additional metadata (such as file names). In comparison, ERC-721 only supports static metadata stored directly on the smart contract for each token ID,, increasing deployment costs and limiting flexibility.
ERC-1155’s smart contracts support an infinite number of tokens, whereas ERC-721 needs a new smart contract for each type of token.
ERC-1155 also allows batch transfers of tokens, which can reduce transaction costs and times. With ERC-721, if you want to send multiple tokens, they happen individually.