Interpreting the Cypherpunk spirit of Ethereum: How to break free from the pure Degen dilemma.

Haotian

24-01-02 11:50

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Original author: Haotian

Vitalik's new article seems to reiterate the Cypherpunk spirit of Ethereum (decentralization, censorship resistance, auditability, tooling, and open collaboration), but it is actually his hidden worries and dissatisfaction with the current ecosystem being too financialized (Degen). How to get out of the pure Degen dilemma?

Vitalik Buterin has proposed five major directions for positive development, and I will briefly add some personal comments:

1）Rollups are starting to actually exist.

Commentary: In the past year, the layer2 track has presented a market of competition and prosperity. The layer2 War is intensifying, and for Ethereum, the more Rollups chains there are, the more drainage and empowerment there will be. However, Ethereum's layer2 is gradually being taken over by various RaaS solutions, DA solutions, and modular VM solutions, and the layer2 market is escaping the control of Ethereum's orthodox spirit.

For Ethereum, this is certainly not what Vitalik wants to see, but for the crypto industry, the ultimate outcome of the layer2 market is inevitably divided into two factions: those that are friendly to Ethereum and those that are not. In the end, which layer2 solutions can break free from the constraints of political orthodoxy and drive mass adoption remains to be seen.

2）Following a temporary lull after the regulatory crackdowns on Tornado Cash, second-generation privacy solutions such as Railway and Nocturne are seeing the (moon) light.

Commentary: Privacy Centric privacy transactions are a necessary but slow-to-implement track. Due to the exposure issues of public transparency, MEV space, and trading intentions in the DEX environment, most market makers and individual traders tend to focus on CEX.

The future of DEX being on par with CEX depends entirely on the development of privacy infrastructure. The first generation of privacy trading solutions, such as Tornado, which uses contract layer to split funds and obscure assets, has been widely used for illegal money laundering and has been frequently sanctioned by regulators. The second generation of privacy trading solutions, such as Nocturne's Teller and Handler and Railway's Relayer, all rely on an intermediate privacy layer to take on the role of the From address in privacy transactions, hiding the user's true trading intentions.

The specific implementation technologies usually include ZK-Snarks, Paymaster with AA account abstraction, and multi-signature management under MPC trusted environment. Users only need to wrap their assets into privacy assets, and then initiate transaction intentions to the middle layer. The middle layer Pool will complete a series of DeFi interactions on behalf of the users. The more assets accumulated in this middle layer and the larger the user base, the better the privacy effect will be. The key is that there can be parallel compliance solutions, which makes it easier to become the mainstream in the future. (Detailed analysis will be provided at a later time.)

3）Account abstraction is starting to take off.

Commentary: The market has already desensitized to the concept of Account Abstraction because it is too fundamental. Only when it reaches the application layer explosion stage can the value of account abstraction be demonstrated. It can be said that account abstraction is like a patch, giving Ethereum the confidence not to lose liquidity to high-performance public chains such as Solana.

Moreover, at present, the abstract account track has already been very prosperous, but most of the solutions are biased towards the underlying Infra construction and have not yet been market validated, which makes people feel indifferent.

However, I believe that whether Ethereum layer2 can truly burst high-frequency applications and become the entry point for incremental users, account abstraction is a must-have topic. When playing with layer2, don't forget to choose some applications with underlying account abstraction.

4）Light clients, forgotten for a long time, are starting to actually exist.

Review: Lightweight clients are even more important after Ethereum's transition to POS, as they can extend the validation capabilities of Ethereum validators and extend Ethereum's consensus to other chains. For example, if a three-party DA solution is implemented, the Restaking mode can be used to allow a portion of Ethereum validators to participate in the maintenance of sidechain consensus, which is more convincing than consensus built purely by third-party validators. Another example is to implement a decentralized Sequencer solution, which can also use Restaking to allow Ethereum validators to participate in the sidechain Sequencer team.

All of these assumptions are based on the lightweight client solution. Eigenlayer, which we are familiar with, is based on the lightweight client to implement the extension of Ethereum Validators' capabilities. From a strategic perspective, this solution is a powerful weapon for Ethereum to resist third-party DA invasion and maintain its orthodox position in Ethereum.

5）Zero knowledge proofs, a technology which we thought was decades away, are now here, are increasingly developer-friendly, and are on the cusp of being usable for consumer applications.

Review: Zero-knowledge proof was once highly praised and anticipated, but now it is also a source of disappointment. This is because zero-knowledge proof does not provide immediate solutions to privacy and scalability issues. For example, in the competition between OP-Rollup and ZK-Rollup, it is known that ZK is more powerful, but it cannot hide the fact that OP is more popular than ZK.

In my opinion, ZK technology is more suitable for the future and transcends pure financial narratives. The current emotional response to ZK technology is understandable, but in the era of real-world applications, ZK will become a necessary presence like blockchain (which Vitalik seems to have also said).