Original Title: Vitalik Buterin: How Ethereum Becomes The World Ledger

Original Source: Bankless

Compiled and translated by: DeepTech TechFlow

Guest: Vitalik Buterin, Ethereum Co-Founder

Hosts: Ryan Sean Adams; David Hoffman

Broadcast Date: August 11, 2025

Key Points Summary

Ethereum celebrated its tenth birthday, and co-founder Vitalik Buterin looked back on Ethereum's past decade of development and looked ahead to its future in this conversation. He shared surprises and challenges that have arisen during Ethereum's growth, such as The DAO and NFT events, and discussed some different choices he might have made if starting over.

In this exchange, we delved into the evolution of Ethereum's culture, the importance of privacy as a core value, and the trade-offs between L1 and L2. Additionally, Vitalik shared his vision of how Ethereum could evolve in a future dominated by AI.

Key Insights Summary

· One of Ethereum's greatest contributions has been its role in driving openness and decentralization, gradually making these ideals a common way of thinking for many. These values need to be continually passed down and updated by each generation.

· If I had the opportunity to go back in time, I would tell a younger Vitalik all our current understanding of zero-knowledge proof (ZK-SNARKs) technology in advance.

· Ethereum should be an inclusive and diverse ecosystem that can accommodate many different people and viewpoints.

· The concept of Ethereum as a "world ledger" is now more concrete and can better convey Ethereum's core value.

· The emergence of NFTs was also a huge surprise. I had absolutely no foresight that NFTs would come into being.

· If we compare the ledger (Ethereum) to a book, then ETH is like the "ink" used to write the ledger. The ink can represent the function of L2. If there is a TM (trademark symbol) next to the ink, it means it is a branded L2; if there is no TM symbol, it is an unbranded L2.

· Each project has a responsibility to create the best version of its members' most passionate and comfortable philosophy. The hope is that the ultimate result is that we can create something beneficial to the world rather than having projects fighting against each other or devolving into a state of mere loud slogan shouting.

· Privacy is a key focus we must pay attention to; privacy is freedom, an important right that we all should protect. Everyone in the Ethereum ecosystem should support the concept of privacy.

· We should not have "privacy wallets"; privacy should be a feature of all wallets, and privacy features should seamlessly integrate into existing wallets.

· The rampant nature of a centralized data collection system is fragile because if these databases are hacked, data originally thought to contribute to national security could actually lead to national security instability.

· Ethereum's role can be divided into two parts. First, it provides a tool to protect people's freedoms, autonomy, and organizational capabilities, a tool that does not rely on any individual, company, or country; the second part is community building on a global scale. Ethereum has attracted a group of people interested in decentralized finance, innovative organizational forms, privacy protection, and democratic governance, and Ethereum's community itself still holds irreplaceable value.

· The challenges of 2024 lie in the fact that the decline in ETH price has put pressure on the ecosystem; on the other hand, many once popular projects and topics are gradually coming to an end, and new alternative projects have not yet successfully taken the baton. The future direction must be new projects that can bring tangible benefits to the community and receive widespread support.

· L1 should have moderately low latency to meet the needs of ordinary users; for scenarios requiring very low latency, such as high-frequency trading, L2 is a better choice. We need to find a way for L1 and L2 to work together to achieve balanced development of the entire ecosystem.

· Ethereum's greatest value lies in its openness. It is like a sandbox that allows people to experiment and innovate in different directions.

· "I believe that participants in the Ethereum ecosystem, including those involved in financial activities, are responsible and will not take risks lightly. ETH derivatives are a fundamental way to stabilize finance, so I support the existence of these treasury companies."

· Blockchain technology can drive a more fair and transparent world.

The First Two Years of Ethereum

David: Ethereum has just celebrated its tenth anniversary, so first of all, happy birthday Ethereum! The Ethereum whitepaper was first released in 2013, and the mainnet was officially launched in July 2015. Ten years have passed, Vitalik, how do you think Ethereum's development compares to the original vision?

Vitalik: It can be said that the development of Ethereum has far exceeded my expectations, which is the most important point. However, at the same time, this process has been much longer than I anticipated.

When I was writing the white paper, I originally planned to treat it as a side project, complete it within a few months, and then return to university to continue my studies. Of course, this did not happen. Later, we envisioned that Ethereum would go through four stages, ultimately completing the transition to Proof of Stake. At that time, we thought the Foundation's funds would run out, and the project would naturally transition to a state of self-sustainability, but that was not the case.

Furthermore, the rise of Decentralized Finance (DeFi) and the launch of various tokens are applications that I mentioned in the white paper. Although the terminology used by people in the end may differ from my original expressions, these phenomena have materialized as expected, such as Ethereum Name Service (ENS) and the birth of stablecoins. At the same time, there have been many discoveries that have surprised me.

Ethereum's Key Contributions

David: Ethereum has come a long way in the past decade. Looking back, we find that many things have essentially been achieved according to the initial plan. If you have read Ethereum's white paper and look at Ethereum today, you will see that it has indeed realized many of the original visions. Reflecting on this history, what do you think are the unique contributions that Ethereum has brought to the world? What are you most proud of or satisfied with?

Vitalik: I believe one of Ethereum's greatest contributions has been its significant role in promoting openness and decentralization, gradually making these ideas a habitual way of thinking for many. These values need to be continually passed down and renewed by each generation. Just like the rise of free and open-source software in the 1980s and 1990s, the blockchain world has largely inherited these spirits and carried them forward into the 2010s and 2020s of the 21st century. Ethereum has indeed achieved remarkable results in this regard, turning many ideas that were originally only theoretical into reality.

For example, a prediction market is a typical case. In the early 2010s, the prediction market was still just a theoretical concept, mainly used for analyzing market mechanisms for event outcomes. Ethereum provided an important experimental platform that brought this idea from concept to reality.

Another example is DAO (Decentralized Autonomous Organization). Although this field has experienced many twists and turns, Ethereum has made blockchain-based governance structures more flexible and operational. I am very proud of this, and I believe that in the next few decades, we will continue to see the results in these areas. Ethereum's contribution is not limited to a single field but has a wide-ranging impact on many different aspects, from technology to social ideas, with profound implications.

The Biggest Surprises

Ryan: You mentioned some surprises along the way. I imagine there were many unexpected events during this journey. Interestingly, you initially thought of Ethereum as just a side project, but now it has evolved into a large-scale full-time venture that has lasted for over a decade.

So, in the development of Ethereum, what were some major events that surprised you?

Vitalik: Firstly, it was the DAO (Decentralized Autonomous Organization) receiving such a massive amount of Ethereum support, only to almost immediately collapse. Looking back, the fact that the DAO received a huge amount of funds was more surprising to me than its collapse, but both of these events were very impactful.

Ryan: It was like a runaway use case and can also be seen as an early example of decentralized finance (DeFi) since it was closely tied to capital formation. I remember that at the time, around 5% of the Ethereum supply was drawn into the DAO, which was truly a staggering number.

Vitalik: It actually reached 11%. At that time, the total Ethereum supply was 11 million. If it had been a lighter-weight version, it might have reached 17%. But in any case, that proportion was indeed very high, a first in Ethereum's history.

Then there's the birth of Ethereum Classic (ETC). The controversy surrounding the hard fork was like a "war." I feel that this history was almost as dramatized as a TV series. Just after the ETC controversy was settled, the Shanghai DDoS attack followed one after another, as if carefully scripted by a playwright. These events brought many technical challenges, which were very intriguing.

The emergence of NFTs was also a huge surprise. I never anticipated the birth of NFTs. The development of decentralized finance (DeFi) also caught me by surprise. In 2019, the scale of DeFi was still very small, with barely Uniswap in existence. But just a year and a half later, DeFi saw explosive growth. Additionally, the implementation of Proof of Stake (PoS) took much longer than I anticipated, which is an area for reflection.

Of course, there were also some positive surprises, such as the rapid development of Zero-Knowledge (zk) proof technology, which was five times faster than I expected, a very delightful occurrence. Furthermore, the level of attention from institutions and governments towards blockchain technology surpassed my expectations. Even in the 2010s, many large companies and governments were already showing a strong interest in this field. Although the interest at that time was more to showcase innovation, this was still something I did not foresee. And now, institutional interest has once again returned, but this time in a more specific and practical form, along with many other things that have surprised me.

Oversights

Ryan: Vitalik, you mentioned a key issue that many things have taken longer than you initially expected, especially since you released the Ethereum whitepaper. Why have these things taken longer? When you refer to "taking longer," are you referring to aspects such as implementing Proof of Stake (PoS) and executing the roadmap for sharding? Which specific parts have taken longer than you initially envisioned, and what are the reasons for this?

Vitalik: I think one major reason is the complexity of software development. I lacked experience in this regard at the time and failed to fully grasp its difficulty. Another reason is we kept setting higher standards throughout the development process. The Ethereum version we originally planned to release in a few months was actually just a Layer 2 solution based on Prime Coin. However, as we saw increasing attention and interest in January, we realized that Ethereum was a project with high expectations from many people, deserving of our serious efforts. Therefore, we decided to truly build an L1 that was suitable for constructing Layer 2 solutions.

At that time, there were not many L1s that were truly suitable for building Layer 2. In general, these two reasons combined both extended the time for technical development and drove us to continuously raise our standards.

Overcoming Challenges

David: Throughout Ethereum's development, you have mentioned many significant challenges, often unpredictable, such as the DAO hard fork and the Shanghai attacks. However, even in moments of Ethereum's success, such as the NFT boom in 2021, various new challenges have emerged. The Ethereum project has faced these complex predicaments.

I'd like you to talk about how Ethereum specifically has developed strategies to address these challenges. How has this strategy gradually formed among Ethereum's culture, community, foundation, and core developers? With nearly a decade of experience accumulated, how would you describe Ethereum's unique strategy in overcoming unforeseen challenges?

Vitalik: I believe our approach to addressing issues at the ecosystem level is very effective. We always try many different approaches to problem-solving. For example, there are solutions based on the blockchain base layer (L1) and solutions developed directly at the application layer. In each category, there are usually multiple competing solutions in progress. Through this approach, we can advance work in multiple directions simultaneously and create synergy between efforts in different directions. Especially in advancing zero-knowledge proof technology, many different attempts have worked together.

Furthermore, I find the collaborative style of the Ethereum ecosystem impressive. Although this style is not perfect, overall, its effect is very good.

A Lesson for a Young Vitalik

David: If you had the opportunity to go back in time and impart some knowledge to a young Vitalik or the newly formed Ethereum Foundation to help them better develop Ethereum, which time period would you choose to go back to? What would you teach them?

Vitalik: An obvious answer is to go back to the early days of Ethereum and preemptively share with them all our current understanding of zero-knowledge succinct non-interactive argument of knowledge (ZK-SNARKs) technology. This technology is disruptive in many ways and is a very powerful tool.

David: Is it to have Ethereum's zero-knowledge technology lead by ten years?

Vitalik: Exactly. I think we have taken many detours in technical development or taken some unnecessary side paths. If we could know early on what the ultimate goal was, we could have saved a lot of resources and made progress more quickly. So, not knowing what the future holds is indeed a regrettable limitation in Ethereum's development.

People often ask me what message I would send to my past self if given the opportunity. Many times, my answer is simply to guide myself in the right technical direction. But I also reflect on whether, besides technology, there is any other valuable information to convey? For example, reminding myself to be more realistic about the timeline expectations.

Sometimes I also think, on a social or economic level, is it possible to adopt a better strategy to make the hindsight view more ideal. For example, in the early days of Ethereum (2014), could a temporary mechanism have been introduced to allocate a portion of the token supply to projects supporting public goods? Even if it could only be implemented in some crude ways back then, such as deciding developer reward allocations through miner voting (based on the past 1024 blocks' records). This mechanism might have avoided explicit premining, provided more adequate funding support to the Foundation and other organizations early on, and perhaps even earned Ethereum more credibility in its early days.

I also often contemplate whether Ethereum in its early days could have established a closer relationship with the Bitcoin community. I feel that Ethereum failed to attract more support from the Bitcoin community, which is somewhat regrettable.

Here is a bold assumption: What if Ethereum had initially adopted the formula I mentioned for token issuance, while being a fork of Bitcoin itself and declaring a shift to Proof of Stake from day one, even if the initial mechanism was not yet perfect? Perhaps Ethereum could have become part of the Bitcoin "Big Block" camp. The Bitcoin Big Block camp refers to the community that supports increasing the block size to improve transaction throughput. If Ethereum had chosen to stand with this camp from the beginning, perhaps the entire development process would have been smoother.

Of course, any choice would bring unexpected consequences. If you were to move forward from the beginning with an existing community, you might face many constraints from stakeholders, which would restrict you in executing certain things. So, these issues are indeed worth thinking about.

Bitcoin vs Ethereum

Ryan: I feel that the idea or philosophy of Bitcoin seems to have gradually evolved into an almost religious-like belief. This makes me think, would any form of forked coin inevitably lead to community fragmentation, even leading the community towards dissolution? However, it's been over a decade now, and Bitcoin has been around for about 16 years, so we have all grown up together, haven't we? One could say that Ethereum is in a stage of rapid growth, while Bitcoin is like a young adult who has just learned to stand on its own.

Do you think the relationship between Bitcoin and Ethereum has improved? Or is this relationship only changing due to price ratios? I feel when Bitcoin's price performance is poor, the Bitcoin community seems to be more friendly towards the Ethereum community. Now they seem to have quieted down a lot, but when the price trend changes, the situation may be different. However, I feel that the hostility between the new generation of the Bitcoin community and the Ethereum community seems to be less. How would you describe this relationship?

Vitalik: This depends on what you mean by the "new generation," as I think there are different types of "new generations." Some people focus on technology, such as researching the Virtual Machine (VM), Taproot (a privacy and efficiency upgrade technology for Bitcoin), OP_CAT (a script opcode for extending Bitcoin functionality), etc. And another group of people, such as "Michael Saylor's followers," I think they may never be particularly friendly, nor will they have particularly aligned values with Ethereum.

Technically, I think smart people in the tech field have indeed highly praised Ethereum's technological advancements and privacy efforts. Moreover, these efforts are not only theoretical but have also yielded practical results. At the same time, I also believe that some people in the Bitcoin community are indeed trying to drive technological progress through OP_CAT and some new Bitcoin layer-two solutions (such as the Lightning Network), and these efforts are very interesting. Therefore, from a technical perspective, the relationship between Bitcoin and Ethereum has indeed become more positive.

David: When you see someone building tech on Bitcoin, such as trying to enhance Bitcoin's virtual machine functionality or make Bitcoin more expressive, do you ever think, "You're just wasting your time, just come develop on Ethereum instead! We created Ethereum for these purposes." Or do you approach their attempts with curiosity and optimism?

Vitalik: I think both.

The Cultural Evolution of Ethereum

David: I want to talk about the stage Ethereum is currently in. Recently, with Donald Trump's election, we have observed a shift in societal trends that has not only impacted the crypto space but has also permeated broader societal culture. In a way, this trend reflects a transition from a World Economic Forum (WEF) style with feminine traits to a more traditional "Bronze Age mentality." Quoting a user on Twitter, this seems to be a cultural trend of "out with woke, in with base." This era's spirit of culture has also seeped into the crypto space, with many projects starting to emphasize their American identity. For example, the controversial Solana marketing video explicitly stated that their focus is on technical innovation rather than gender issues.

(TechFlow's Note: By "WEF style," it refers to the values advocated by the World Economic Forum, often associated with globalization, inclusivity, diversity, and may be considered to have feminine traits by some. "Bronze Age mentality" is a metaphor pointing to more traditional, more primal values emphasizing power, foundational development, and traditional culture.)

However, Ethereum does not seem to have participated in this cultural trend shift. What is your take? Regardless of what Ethereum was like before this cultural shift, it still looks the same today. Is this an intentional choice? Should Ethereum be a fortress against changing cultural trends?

Vitalik: I believe Ethereum should be an inclusive and diverse ecosystem that can accommodate many different people and viewpoints. However, at the same time, in a world with many different cryptocurrencies and ecosystems, different cultural tendencies naturally make choices. Even if Ethereum were the only cryptocurrency, I think there would still be cultural differences between it and other projects.

I believe every project has a responsibility to create the best version of its members' most passionately held and comfortable philosophies. The hope is that, in the end, we can create something that benefits the world rather than getting projects into fights with one another or devolving into simply yelling slogans. You'll see a group of people shouting one slogan and another group shouting a different slogan, feeling very righteous, but then a few months pass and they find they've made no progress.

So, personally, I am indeed concerned about the serious cultural shifts we're seeing. But if you're only concerned, then you'll end up just being a part of it. So, the actual question is, how do we move forward, respond, and create a better competitive alternative.

On that note, one of the emerging themes this year is I am trying to kick off the discussion around DAO public goods funding. I think these topics are incredibly important. If we give up on public goods funding or any form of governance other than founder dictatorship, it could lead to many negative consequences, ultimately regressing into a state of relying on founder personal authority.

At the same time, however, there are indeed issues with secondary funding allocation, and token voting delegation DAOs also face many challenges. Thus, I have been advocating for funding based on prediction markets and prediction market DAOs. I'm working with Divonch, who has done a lot of work in the public goods funding space, and version two is directly based on a prediction market, essentially combining prediction markets with an adjudication mechanism. The idea is to scale the evaluation of something's value through prediction markets while combining an adjudication mechanism to ensure high-quality evaluation.

My fundamental philosophy is to try to replicate the best aspects of the free market in the public goods funding space, creating an open participatory order. Such a system allows anyone to join and, if they do well, they have a fair opportunity rather than devolving into a pure social game.

Another important thing I've been pushing for is a greater focus on privacy, as privacy has always been a core part of the cypherpunk spirit. If you remember 1982's 'Chaum and E-Cash,' the E-Cash at that time was not decentralized; all transactions went through a centralized operator, but it was private and could protect user privacy. Due to technological constraints, we turned to Bitcoin, which is decentralized but lacks privacy features. However, now with ZK-SNARKs, those technological constraints are gone, and we can actually achieve decentralization and privacy.

Therefore, I believe that privacy is a focal point we must pay attention to. Privacy is freedom, a fundamental right that all of us should protect. We need to architect privacy into our technology. If we prioritize privacy, then the game we are playing is about action, not just empty talk.

I believe that everyone in the Ethereum ecosystem should support the concept of privacy. We must continue to drive in this direction.

Privacy on Ethereum

Ryan: Let's delve deeper into this issue because I see privacy as an intriguing and significant part of Ethereum's culture, involving how to balance Ethereum's core values with mainstream adoption. Milady, as you mentioned, seems to embody a "Bronze Age Popularity" — a front of Bronze Age imagery with effective policy and real-world work at the back. So, how do we achieve a "Bronze Age Popularity" of privacy on Ethereum?

In some areas, we have made tremendous strides in cryptography, such as the remarkable ZK technology. However, in terms of practical privacy applications, like Tornado Cash, we still face numerous challenges. Particularly, the trial of Roman Storm is ongoing, and the final judgment is unclear. Whenever financial privacy is involved, governments often intervene.

I have always believed that if Ethereum or Bitcoin had privacy by default from the beginning, where all transactions were private, we might not have gained today's widespread acceptance. This is because, in the early stages of immature technology, some forces might have tried to stifle it.

So, how do we find a balance to ensure privacy can develop to a reasonable degree without triggering strong regulatory opposition? Currently, privacy applications like Tornado Cash and Railgun are still niche, the user experience is not very friendly, and privacy is not a default option. Although projects like Aztec are emerging, they are independent Rollups. How do we strike a balance among these factors to meet user needs while making this progress acceptable to nations? What is the practical roadmap for privacy?

Vitalik: I believe this issue can be divided into two parts. The first part is how to transition privacy from a niche feature to a default part of the user experience; the second part is how to make governments and regulatory bodies content with this.

For the first question, the reason I did not support implementing privacy directly on Layer 1 was not because I thought it was fundamentally wrong, but because I believed the technology had not yet reached a mature enough stage. We are still unclear which privacy technology is optimal. If we were to implement a specific technology on Layer 1, it could lead to some very undesirable outcomes. This is a challenge in any EIP, but particularly pronounced in privacy because the nature of privacy data determines its sensitivity. You can't easily swap out some content in a tree structure, making upgrades much more difficult.

David: Does this mean you believe implementing privacy on the Ethereum Layer 1 is fundamentally the right direction?

Vitalik: In the long term, I am open to this idea. On one hand, there is future compatibility, and on the other hand, security. We must remember that if there are issues with privacy tools on Layer 1, it could have extremely serious consequences, such as someone being able to steal tokens unlimitedly without detection. I believe that as the technology matures, we will eventually achieve this goal.

In a recent blog post, I mentioned that the number of errors in code is actually decreasing. We will eventually reach a stage of high trust in code, where security researchers will consider it unthinkable for the past 20 years. I think the development of artificial intelligence will accelerate this process. However, before that, projects like Zcash have taken a brave step forward, but even then, they still face very high technical standards.

The question is, can we make privacy as much of a default option as possible without directly putting it into Layer 1? For me, the midterm goal is to make privacy features in wallets a default feature. Currently, a major mistake in the ecosystem is that we have created the concept of a "privacy wallet." In reality, we should not have a "privacy wallet"; privacy should be a feature in all wallets. Privacy features should seamlessly integrate into existing wallets.

Ryan: So, if I can choose to send a regular transaction or a private transaction in an existing crypto wallet browser extension, is this default setting feasible?

Vitalik: Exactly. You should have a private balance and a private send button, and these features should be part of Metamask or other wallets. The Ethereum Foundation has already started some related work internally and hopes to make progress in the coming months.

Privacy Resistant to State Intervention

Ryan: Regarding another aspect of privacy technology, how do we make the state accept it? Obviously, projects like Ethereum aim to promote the development of privacy, open source, and decentralization. However, these ideas may conflict with some governments and cultures. We hope to advance social culture through technology, while also hoping that these technologies can be mainstream accepted rather than banned globally. Is there a certain balance that can address the state's concerns about crime and money laundering while upholding the core values of cypherpunk? Or are these two fundamentally incompatible?

Vitalik: First, I believe the concept of privacy pools has made significant progress. For example, protocols like Railgun are now in use, and we can see some successful cases proving that it can effectively prevent funds stolen by hackers from large DeFi contracts from flowing into privacy pools. This indicates that privacy pool technology is becoming more mature and has withstood the test of practice.

Currently, most of the illicit funds circulating through privacy protocols come from theft in DeFi protocols or from individual accounts being hacked. In these cases, privacy protocols can actually restrict the flow of these funds through a blacklist mechanism. If your funds are stolen, you can flag these funds as suspicious via API; if a DeFi project is hacked, similar measures can also be taken. Therefore, this mechanism has been a key factor in driving the development of privacy technology.

Of course, we also need to recognize that the existing blockchain ecosystem cannot completely resist malicious actors. Various malicious actors still have many ways to transfer funds and hide their identities to avoid being tracked. However, compared to traditional financial systems, the transparent public blockchain at least makes transactions somewhat traceable. If your funds encounter issues, you can see the flow of funds through the blockchain. I believe that privacy technology can enhance resistance to malicious actors while providing more privacy protection for ordinary users, and this balance is achievable.

On the other hand, we need to actively argue for the importance of privacy technology from a law enforcement perspective. For example, there have been several cases recently where telecom company surveillance data leaked due to a hacker attack. This data was collected and provided to the government based on the requirements of the Communications Assistance for Law Enforcement Act, but the leakage of this data may actually threaten national security, as it could be exploited by other countries or organizations, similar events occur frequently globally.

An overreliance on a centralized data collection system is fragile because if these databases are hacked, data that was originally thought to contribute to national security could actually result in national security instability. I believe this is an argument that needs stronger support. Two lawmakers have publicly stated that actively reducing data collection is actually a safer practice. This is the direction we should be heading, and privacy-focused finance is a part of that.

Cypherpunk vs Mainstream Culture

Ryan: I feel like you want to maintain a firm stance on privacy issues in cryptocurrency and Ethereum. This actually relates to a broader cultural issue. Over the past decade, we have seen the ideals of cypherpunks attempted but not fully realized. And now, Ethereum is at a historic moment, gradually being embraced by the mainstream. For example, traditional financial institutions and mainstream culture are entering the Ethereum space with initiatives like Robinhood focusing on Layer 2, JP Morgan discussing on-chain business, and Coinbase expanding its influence. These traditional financial institutions and mainstream culture are flooding into the Ethereum space.

However, this also brings some challenges. How will those who do not align with cypherpunk values affect Ethereum? You have mentioned Ethereum's diversity; we indeed welcome more people to join, but these people may not necessarily prioritize the core values we care about. So, how do we draw boundaries? For example, stablecoin projects like Rye may align more with cypherpunk ideals, but they have not succeeded. On the other hand, stablecoins like Circle and Tether, while lacking in idealism, have made practical impacts in helping people in emerging countries. So, how do we balance sticking to cypherpunk values with meeting the demands of reality? When should we prioritize a product’s market fit and real-world usage?

Vitalik: I believe there are several areas where privacy and cypherpunk values should be a priority. First and foremost is the base layer protocol. A decentralized backend can support both centralized or decentralized applications, but if the backend is centralized, only centralized applications can be built. If the blockchain itself does not support privacy or trustless interactions, it cannot provide room for privacy-friendly applications.

For example, I have been advocating for Account Abstraction and improving EIP 7770 because without these, many use cases of smart wallets, such as multi-signature, quantum-resistant features, and privacy protocols, may be forced to rely on intermediary ecosystems. The limitation of intermediary ecosystems is that their effectiveness is limited, and once issues arise, users are in trouble. Therefore, we must ensure that interaction with Ethereum is at least privacy-friendly and does not rely on centralized intermediaries to perform basic operations.

The second aspect is that we need to ensure that Ethereum's privacy protection and decentralized implementation are at least feasible. This involves not only the protocol layer but also work at the wallet and application layers. While most people may not choose this route, we cannot allow infrastructure gaps or allow top-layer protocols and standards to be hostile to this approach.

An analogy is email. In theory, email is an open protocol, and anyone can set up their email server. However, due to spam issues, large service providers blacklist these servers. Therefore, email largely relies on centralized permission control rather than openness. We need to consider how to better protect the openness of email.

Similarly, for Ethereum's new standards, we need to ensure that privacy-friendly intermediary operations are feasible while supporting a sovereign way and avoiding unnecessary performance losses. Even if not everyone chooses this route, it's okay. Even if many people still choose to hold coins on Coinbase, it's acceptable, but the key is that this choice must exist, and the design of protocols and standards needs to consider these needs.

David: Before delving into specific Ethereum topics, I'd like to ask a macro question to provide background for the upcoming discussion. There are some foreseeable trends in the future, such as AI shaping the future. We can discuss various possibilities, such as escalating geopolitical tensions, a gradually fragmented world, and there are also some exciting developments like gene editing. Vitalik, what role do you think Ethereum will play in these future trends?

Vitalik: I'm glad we agree on gene editing and AI perspectives. Ethereum's role can be divided into two parts.

First, it provides a tool to protect people's freedom, autonomy, and organizational ability that does not rely on any individual, company, or country. In an increasingly fragmented world, this capability is particularly important. Looking back fifteen years ago, many people were willing to trust Facebook, but today we almost unanimously agree that only blockchain is trustworthy. Therefore, in the trust tech market, it is now ready. There are many people in the market willing to pay for these technologies, as well as many people concerned about social issues who want these technologies to be part of the solution. This lays a crucial foundation for technological development.

The second part is community building on a global scale. Ethereum has attracted a group of people who care about decentralized finance, innovative organizational forms, privacy protection, and democratic governance. This strong intellectual appeal makes Ethereum a unique community asset. Even in a hypothetical future, such as if we discovered the solution to NP problems tomorrow, resulting in all blockchains being unable to continue to exist, Ethereum's community itself still holds irreplaceable value.

World State

Ryan: In the early days of Ethereum, people often referred to it as the "world computer." However, the popularity of this concept has waned. Earlier this year, you mentioned in an article that Ethereum is the "world state," a description I find more fitting and specific. While this may still seem somewhat abstract to some, I see it as meaning that Ethereum can serve as a global tool for recording important information like ownership.

I've been pondering a question: What exactly is Ethereum? I lean towards viewing it as a decentralized property system. While this definition may still be somewhat challenging for the average person to grasp, do you believe that the positioning of "world state" accurately encapsulates Ethereum's core mission?

Vitalik: I believe that "world state" is indeed a more accurate description. Compared to "world computer," the concept of a "state" is more concrete and better conveys Ethereum's core value. The term "world computer" is too broad, as a computer can perform many functions such as generating cat pictures, translating text, or even creating videos, none of which are ideal for Ethereum's use case, especially on L1.

The term "state" is more focused on economic value, covering applications not only in the financial sector like DeFi but also extending to other areas such as ENS (Ethereum Name Service). Therefore, when I mention that Ethereum L1 is a global state, this not only clarifies its positioning but also articulates the relationship between L1 and L2 more clearly. The goal of this articulation is to make it easier for people to understand Ethereum's role. If this definition is accepted, it indicates the success of this positioning.

David: If Ethereum is the world state, then what is ETH?

Vitalik: That's an interesting question. If we liken the state to a book, then ETH is like the "ink" that writes the state. We can further extend this analogy: the ink can represent the functionality of L2. If the ink is accompanied by a TM (trademark symbol), it means it is a branded L2; if there is no TM symbol, then it is an unbranded L2. Such an analogy may help us better understand the role of ETH.

Ethereum Outlook in 2024

David: I think your point of view makes a lot of sense. Next, I'd like to discuss the current state of the Ethereum community in 2024. Personally, I believe that 2024 is a challenging period for Ethereum. The price of ETH has been consistently low, which has not only affected the entire ecosystem but has also led to some internal discord within the community. How do you see this? Do you think 2024 is indeed a difficult period for Ethereum? How would you explain this? If you were to tell the story of Ethereum in 2024, how would you describe it?

Vitalik: I believe that the sustained low price of ETH is indeed a core reason for many issues. For many people in the community, another key factor is that some past hot topics and projects have gradually lost attention, while new alternative projects have not yet emerged. For example, some people had high hopes for DAOs, but when the development of DAOs stalled, they became confused about what to focus on next.

Furthermore, the NFT market has also been cooling off in 2024, while at the same time, Memes have experienced explosive growth this year. However, the rise of Memes seems to have mainly occurred on Solana, not Ethereum. The core values of the Ethereum community are to promote freedom and openness, but the popularity of Memes has not significantly contributed to these goals, leaving many people puzzled.

Another significant challenge is the relationship between L1 and L2. Some in the community believe that there are issues in the collaboration between L1 and L2, especially in terms of incentive mechanisms. When people realize that the interests between the two may not align, the internal divisions within the community become more evident.

2024 is the result of multiple factors at play. On one hand, the drop in ETH price has strained the ecosystem; on the other hand, many once-popular projects and topics are gradually reaching their conclusions, while new alternative projects have yet to successfully take over. I believe the future direction must be towards new projects that both bring tangible benefits to the community and garner widespread support. In fact, by 2025, I believe we are already starting to see some positive changes, perhaps indicating that these issues are gradually being addressed. This is also one of the reasons why we can now feel more hopeful.

Changes in the Ethereum Foundation

David: Currently, the Ethereum community is still discussing various issues concerning the year 2024. Some of these issues may be merely narrative PSI ops, while others are genuine practical challenges that need to be addressed. One core topic is that Ethereum's "rollup-centric roadmap" appears to have deviated from the initial vision. The issue of fragmentation between chains is severe, with each chain and each L2 behaving like an independent system, while L1 has not made a real attempt to scale. This roadmap seems inconsistent with Ethereum's goal of being a globally unified computer.

Meanwhile, the Ethereum Foundation has also undergone some adjustments. Can you explain why these changes have taken place? What aspects does the Foundation need to improve? What is the current state of the Ethereum Foundation?

Vitalik: I believe these changes have long been brewing and just needed some triggering factors to drive them.

An example of this is the leadership changes at the Ethereum Foundation. For instance, Aya is now serving as the board chair, and she seems more at ease in this role while still actively engaging in specific projects, such as promoting Ethereum's application in Bhutan. She is also very interested in Russell and financial inclusivity-related issues and has dedicated more time to that. These changes indicate that the role of an executive director is not suitable for being held by the same person in the long term.

My own tenure is relatively long, so the changes in leadership also include adjustments to my role. Additionally, the Foundation has brought in some new voices and new focuses, such as Tom and Shelley, each with their expertise in the technical field.

At the same time, many new leaders have emerged in various departments and projects within the Foundation. For example, work related to scaling and user experience is undergoing restructuring. One area I am currently focusing on is how to better organize transactions involving resistance to scrutiny and privacy. This means we are transitioning from the theoretical exploration phase to actually implementing privacy technology in a real-world production environment. Many new and interesting projects have already been launched. I believe these changes would have naturally occurred at some point, but key events have accelerated this process.

Regarding the issues between L1 and L2, I think this is not directly related to the Foundation's adjustments. Clearly, increasing the gas limit on L1 is a significant topic for the Foundation, and we are also working on improving interoperability between L2 solutions.

In fact, this work began in mid-2024, but events in early 2025 accelerated the process. Improvements in L2 interoperability are ongoing, and many L2s have achieved their initial goals. Our focus now is on reducing withdrawal times. The current target is to reduce withdrawal times from one hour to a few minutes, or possibly even 12 seconds, depending on how much gas users are willing to pay. If withdrawal times are too long, such as one hour or even a week, the efficiency of native deposits and withdrawals will be very low.

Therefore, asset issuance based on Layer 1 trust models may not have a long-term advantage, and more competitive are those that rely on custom minting and burning bridges, which may ultimately centralize power under multisig control. To make Layer 1-based approaches competitive, we must significantly reduce withdrawal times.

If withdrawal times could be reduced to one hour, liquidity would become cheaper, even free in some cases. If reduced to 12 seconds, we might see more users using Layer 1 for asset interaction. These improvements require a concerted effort from the entire ecosystem, including foundation internal teams, L2 projects, and technical development teams like zkEVM. Overall, this is a complex multi-stakeholder process that requires time and resources to accomplish.

I am optimistic about the progress in addressing these issues. We need a robust Layer 1 alongside L2 systems that have a clear relationship with Layer 1. While all the technical steps still take time to complete, overall, we are moving in the right direction.

Economic Coordination

Ryan: I still have some concerns about the rollup roadmap. While there have been some successes in the deployment of rollup technology, such as the recent promotion by RobinHood, I am concerned that we do not pay enough attention to user property rights on Ethereum L2.

The first stage has made some progress, and I believe the second stage will also proceed smoothly. But we lack focus on coordination between the L1 and L2 layers. While some UX and standardization issues can be addressed through tactical adjustments, I am more concerned about the overall lack of collaboration. If we enter a state where, as you mentioned in 2021, Ethereum is decentralized, L1 is also decentralized, but there may be a large rollup chain where all execution states are centralized. In this case, I am concerned that L2 may become more powerful than L1, thereby dominating the rules, and may even detach from Ethereum. This situation seems to lack a good economic balance. The relationships between different chains and brands are not as closely knit as in the past Ethereum L1. How do you view this economic coordination issue? Do you think we can resolve it, or will it take a long time?

Vitalik: I agree with your view. I think the economic coordination issue can be viewed from two perspectives. One perspective is the cost issue of L2. Currently, the basic fees of L2 are relatively low, and I think properly increasing fees may address many issues. But at the same time, I am not sure if fees are the most critical variable. I believe the more critical factor is the network effect.

Another important consideration is withdrawal time. If all assets are issued on L2 and users transfer assets through minting and burning bridging, then L1 participation will be significantly reduced. Maintaining the core role of L1 is crucial, even if most activity takes place on L2, assets should still be issued on L1. This is not only safer from a trust perspective but also addresses L2 governance and upgrade issues. If assets are issued on L2, regardless of how users transfer assets, they must trust that L2. But if assets are issued on L1, users can rely on L1's final settlement through its native withdrawal functionality. This model enhances security and allows users to more freely move from one L2 to another, thus promoting the development of applications across multiple L2s.

Therefore, encouraging asset issuance on L1 and making it economically viable is crucial to maintaining the core role of L1. I believe we should strive to achieve this goal.

Furthermore, increasing the base fee to a reasonable level would also be helpful. Additionally, we should continue to explore how to achieve synchronous composability of blocks, such as enabling L2 to interact with L1 in real-time. This model can allow the value of L2 to be more derived from its collaboration with L1 rather than just being an independent chain connected via bridging.

Scaling L1

Ryan: David and I are primarily focused on Ethereum's social layer. We believe that to quietly achieve significant influence while enhancing Ethereum L1's soft power, we need a stronger L1. This is not only from the perspective of increasing transactions per second (TPS) but also to make L1 the core of decentralized finance (DeFi), a hub of liquidity, and a primary platform for asset minting. The stronger L1 is, the more effectively it can attract and guide L2, providing them with liquidity support, which is also why they are closely tied to Ethereum. We are very excited about initiatives to improve L1 performance.

In recent discussions, there seems to be some new trends, especially under the leadership of the Ethereum Foundation's (EF) new leadership, where improving L1 performance has become the current top priority. Could you talk from your perspective about why enhancing L1 performance is so important?

Vitalik: The key issue has always been how to scale L1 while maintaining security. Security means not compromising the network's stability, not fully centralizing node operations, and not disrupting the staking ecosystem. I believe the technologies we have today, such as zero-knowledge virtual machines (ZKVMs), were completely non-existent a few years ago. This year it is almost ready for production, whereas a year ago it was still impossible. Hence, many people are actively driving the development of this technology.

We plan to increase the block gas limit by 3 to 5 times. If this results in the bottom 10% of individual stakers being priced out due to resource constraints, we will not overlook these stakers. Instead, we hope they can utilize ZKVM technology to validate the chain rather than manually re-executing everything. This approach is secure, as even if 10% of the network relies on ZKVM technology, it is acceptable as long as this ratio remains below one-third.

As ZK technology gradually matures, we can strategically begin applying it in various areas. This can be seen as the process of L1 entering its initial phase, with further enhancements in technical security pushing L1 into a state equivalent to a second stage.

Furthermore, there are other technologies that can help enhance L1 performance. For instance, the historical storage issue has long consumed significant node space. We recently implemented a basic historical data cleanup mechanism that removes pre-merge historical data, reducing the storage requirements of each Ethereum node by hundreds of gigabytes. In the future, we plan to optimize further, ultimately aiming to clean up historical data after each network upgrade, with the long-term goal of data expiring after 36 days. For this, we need a peer-to-peer distributed storage network to ensure full accessibility and verifiability of the chain.

Another noteworthy technology is gas repricing. The Block Access Operating System (Block Access OS) is also a significant innovation. It allows every node (except the block creator node) to execute blocks with maximum parallelism. The block creator node must execute sequentially, but the hints it produces enable other nodes to validate and re-execute blocks in parallel. This mechanism can securely operate Ethereum at higher gas throughput.

Therefore, we now have a multitude of technological choices, and these technologies have been well optimized. We have more tools than ever before to find a balance between scalability and security.

Ryan: Do you think that by combining these technologies, we can achieve Don Krad's proposed goal while maintaining Ethereum's decentralization? He believes Ethereum's transaction volume can increase from the current 20 transactions per second to 10,000 transactions per second in the next three to five years. Do you think this goal is realistic?

Vitalik: My confidence in some high-end targets has diminished, but I believe the issue lies primarily in ultra-short block times rather than ultra-high TPS. If I were to choose, I would consider 10,000 transactions per second with a 12-second block time to be safer than a 1-second block time. Because in these extreme cases, we would encounter very fundamental decentralization issues like the speed of light. Therefore, I personally think that caution should be exercised with high-end metrics, but I do believe there is still significant optimization potential.

From a decentralized perspective, I believe we are in a very hard-to-judge position, but actually I hope that in many important ways, decentralization can be further enhanced. I can give an example to illustrate my point. For instance, people usually silently complain that not many actually run full nodes and instead rely on RPC services. I think now we finally have a very reliable roadmap to get out of this situation. A part of it, of course, is Helios—able to run a light client in a wallet, and its efficiency is continuously improving.

Another important reason is that Cypherpunk-type individuals usually value the privacy of operating personal nodes. This is something I didn't realize before until I spent time interacting with some of these people. Running a personal node can provide strong privacy protection. For example, if you use Ethereum's privacy protocol and perform different operations across multiple accounts while being very concerned about your privacy not being leaked, but if you still query each address's balance through Infura, then Infura knows all your linkages. Running your own node can completely avoid this issue because you only need to download the blockchain data, and all queries are done locally, and no one knows what you are reading.

So the question is, how can we achieve both? The answer is that we can do this soon. There are two paths to achieving this goal. The first path is to start from the current Ethereum node concept and improve its efficiency. Specifically, this can be achieved by an aggressive historical data expiry policy, not storing all data to enhance efficiency. In fact, you don't even need to store branches of the state tree; you only need to store a state table, which only requires 80 GB.

If you have a block-level access list and use zero-knowledge proofs (like zkVMs) to verify the correctness of the block-level access list, you can keep the Ethereum state updated with almost no local computation, just maintaining an 80 GB local database. 80 GB of storage is very small, equivalent to the size of 3 to 4 different LLM models. Nowadays, almost everyone's devices have about 80 GB of storage space, such as my phone also has 80 GB.

But if we moderately conservatively scale L1, such as by a factor of 30, obviously 80 GB would become 2.4 TB. 2.4 TB of storage would then return to the level of current full node operation. In fact, we have already provided ourselves with a 30x expansion capacity. However, if we want to further scale, we can adopt the concept of partial state nodes, only storing the state related to the first 100 applications and all data of EOA and smart contracts. This approach will significantly reduce storage requirements.

Another approach is to start from the browser wallet and add more security measures to it. The first part is Helios, a light client that can validate the chain. The second part is to use technologies in the short term, such as TEEs and Oram. In the long run, Private Information Retrieval (PIR) can be used, which has a trust attribute at the encryption level, allowing a client to send a request to a server without the server knowing the content of the request. The server will respond to the request, but it will have no idea what it just responded to. Once this technology is standardized, you can actually achieve strong privacy protection.

For example, you can have a light client that not only provides the same security properties as a full node but also offers the same privacy properties as a full node without actually running a full node. Essentially, we have several different paths that can provide users with decentralized attributes that were not achievable even in 2017.

Even in the early stages, before significant scaling on L1, I believe we have achieved greater scale, higher decentralization, stronger privacy protection, and better censorship resistance in many ways. At the same time, there are some concerns such as ensuring that Proof of Stake remains decentralized and that block building remains decentralized is one of the key focuses. I think having many different high-quality research teams focused on different areas and approaches would be very valuable in this regard.

Overall, I think we have made very good progress in increasing decentralization and scale at the same time. We just need to keep working on it.

The Ethereum Barbell Strategy

David: "If Ethereum directly participates in the high-frequency trading (HFT) game as L1, it will fundamentally damage Ethereum's core value, as the excessive pursuit of HFT will cause Ethereum to deviate from its original purpose." I don't quite understand this conclusion. Can you explain why participating in HFT would harm the core value of L1? How does Ethereum's L1 scaling strategy address this issue?

Vitalik: The core reason is that if we over-optimize for one aspect, such as low-latency high-frequency trading, we will sacrifice other key attributes, potentially leading to an imbalance in the entire ecosystem. This is similar to discussions in the field of AI safety: When certain technologies are pursued without limits, they may bring unexpected negative outcomes.

In high-frequency trading, low latency is key. To achieve lower latency, participants in the ecosystem are incentivized to continuously optimize their technology and setup, and this optimization has no natural endpoint. Ultimately, this trend may lead to the gradual abandonment of Ethereum's global decentralization. For example, if we set the block time to 1 second, then the block propagation and confirmation times must be kept within 500 milliseconds each. This would force the network to make extreme optimizations in peer-to-peer communication, while also creating strong "co-location incentives."

The so-called "co-location incentive" refers to participants positioning their servers as close as possible to the block proposer's server to reduce latency significantly, thereby enhancing transaction speed and competitiveness. For instance, as a participant in decentralized finance (DeFi), you would want to send transactions quickly to access the latest market information; and as a developer, reducing latency by 5 milliseconds could potentially allow you to submit 1% more transactions in a block, leading to increased profits.

The reality of high-frequency trading systems is that all participants will strive to consolidate servers to pursue the lowest latency. Therefore, I believe Ethereum's adoption of a "dual strategy" is reasonable: L2 is responsible for handling transactions that require centralization, such as high-frequency trading, while L1 focuses on providing security and censorship resistance. In this way, L2 to some extent isolates L1's co-location incentives, mitigating the risk of overcentralization.

One of L2's advantages is its independent ordering mechanism. This is why my recent interest in the Base Layer has waned while my focus on L2 has increased. L2 can leverage the efficiency benefits brought by centralization while maintaining decentralization in governance, striking a very effective balance. Therefore, L2 is well-equipped to meet the needs of high-frequency trading.

If we look further ahead, the thinking speed of AI is 1,000 times that of humans. From an AI perspective, the subjective speed of light is only 300 kilometers per second. With the emergence of AI, the concept of a global financial ledger may no longer be viable. At this point, what we need is a city ledger, and L2 happens to be a natural choice for this.

If L1 begins to move in this direction, many centralized incentives will accumulate. If we commit to competing in the high-frequency trading space, it means we need to engage in extreme optimization in an environment where decentralization is not a priority for others.

Therefore, I believe that the "dual strategy" is the right choice. L1 does need improvement, especially in terms of block time. Bitcoin's 10-minute block time is clearly too long. If Bitcoin's block time were set to 20 seconds instead of 10 minutes, I believe this would significantly alter its development direction.

L1 should have moderately low latency to meet the needs of ordinary users; and for scenarios requiring very low latency, such as high-frequency trading, L2 is a better choice. We need to find a way to make L1 and L2 work together to achieve a balanced development of the entire ecosystem.

Ethereum Nationalism

David: In your response, I heard a point that I often hear, which is downstream of the product. An article you and Ryan often discuss in the podcast talks about the "open" and "focus" ecosystems. For example, Bitcoin belongs to a focus-type ecosystem, which has built its culture around the 21 million hard cap limit. Solana, on the other hand, focuses on low latency and high-frequency trading, which has become its core value.

In contrast, Ethereum leans more towards an open ecosystem, trying to keep all possible choices open, pursuing a balanced middle ground. However, I really like the phrase you once said: "Everything in moderation, including moderation." Following this logic, Ethereum should maintain balance in many aspects, but also focus on some key areas.

My partner Ryan advocates for Ethereum's cultural pride, which he calls "Ethereum Nationalism." How do you define this cultural pride? In which aspects should Ethereum's culture and values be more highlighted?

Vitalik: This is a very interesting question. The discussion of Ethereum as a nation is also intriguing. First of all, I think an important point is that the complexity of the world far exceeds simple singular choices. Ethereum's success is largely due to its multi-layer structure. This structure allows us to achieve the best of both worlds in different areas.

I can use the analogy of a nation to illustrate this point. Some people believe that a country managed by a dictator may be more efficient because the dictator does not need to negotiate with others and can quickly drive large projects to improve society. Of course, I do not support dictatorship because its drawbacks far outweigh the benefits. However, it is worth noting that dictatorship does demonstrate efficiency advantages in some aspects. Democratic capitalism can be seen as a framework that incorporates the advantages of a dictator while avoiding its drawbacks. In this framework, the "dictator" can be an entrepreneur, who holds significant resources and creates results through efficient resource allocation.

However, this model needs to be strictly maintained. If entrepreneurs deviate from the framework and create their own incentive mechanisms, this balance will be disrupted, and the drawbacks of dictatorship may emerge.

This analogy also applies to Ethereum's L1 and L2. The design of L2 is usually more centralized than Ethereum L1 and tends to be more conventional in terms of user experience. Ethereum L1, on the other hand, focuses more on cypherpunk values such as decentralization and censorship resistance.

If properly designed, we can establish mechanisms on L1 to constrain L2. For example, a proof system can ensure that L2 does not incorrectly claim certain information to be true, thus safeguarding user funds. Additionally, there are mechanisms to bypass channels so that if L2 begins censoring users, users can force transactions to be included on-chain to retrieve their assets.

These bypass mechanisms have already been applied in practice and are very interesting. Another example is that if a centralized sequencer misbehaves, we can use on-chain tools to replace it. Users can vote to decide whether to change the sequencer, ensuring the fairness and efficiency of the system.

This leads to a core advantage of Ethereum: it is an ecosystem with diverse roles. Ethereum's task is to design reasonable incentive mechanisms to maintain a balance between these roles. A robust L1 is a critical part of these mechanisms because it can prevent entrepreneurs from deviating from the framework.

If the proof system is theoretically sound but cannot support all users exiting simultaneously in practice, the entire system will collapse. Therefore, the role of L1 is to establish these frameworks, find a balance between scalability and decentralization, and enable users to choose freely.

I believe that Ethereum's greatest value lies in its openness. It is like a sandbox that allows people to experiment and innovate in different directions.

ETH Treasury

Ryan: We can continue discussing this topic. We often liken Ethereum to a country, and this analogy can also be extended to assets. Every country has its own currency, and some countries even have world reserve assets. We can call this the social layer of Ethereum, and part of Ethereum's cultural pride is to see ETH as the bond connecting the entire ecosystem. Let's explore some related concepts.

First, I'd like to ask you about your thoughts on the emerging ETH treasury companies. For example, Tom Lee mentioned in a podcast that he aims to acquire 5% of the ETH supply. To achieve this, it would evidently drive up the market price. What's your view on these institutions? Do you think they are a good thing, a bad thing, or are they irrelevant?

Vitalik: Regarding this issue, I believe the core value of ETH lies in being the foundation of the entire Ethereum ecosystem, a key asset recognized by all. Therefore, maintaining the strong role of ETH is crucial. If different organizations within Ethereum, such as Bankless and the Ethereum Foundation, are entirely misaligned in their incentive direction, with almost no intersection, then Ethereum as a unified community may face the risk of collapse. This is also why we need to protect the role of ETH and ensure it is the core of the entire ecosystem.

I have many theories to explain the source of ETH's value. Sometimes, I feel that these theories cannot even fully explain ETH's price action. The price of ETH seems to be determined by some mysterious forces, as if 14 demons living on Jupiter are manipulating it, and market narratives are just trying to cater to the preferences of these forces.

Nevertheless, from a more practical perspective, building a central ecosystem related to the global economic and financial applications is still the right direction. Therefore, transaction fees, network effects, and so on are all important factors supporting ETH's value.

As for these treasury companies, I am somewhat puzzled by their operation. They do not directly use their own funds but raise funds by issuing shares, then use this money to buy ETH. In some sense, they have created a form of ETH-based leverage financial product, somewhere between an auction and a derivative. This model has clearly attracted many participants and gained market recognition.

David: So which one is your favorite?

Vitalik: My favorite ETH treasury company? It might be the U.S. government because they have accumulated quite a bit of ETH through the seizure of hacker funds, which is quite interesting in its own way.

Ryan: Let me defend these ETH treasury companies. These companies provide a new coordination mechanism for ETH to some extent, helping spread ETH's value story. This mechanism is similar to Bitcoin's successful path, extending ETH's influence into the mainstream financial sector. While they may carry the risk of over-leverage, at present, these activities are improving the health of the Ethereum ecosystem. With the increasing attention of traditional finance on ETH, capital inflows will also grow. This not only enhances the community's security but also provides resources for developing more cypherpunk innovations.

From the current perspective, it seems that the Treasury's actions, holding 0% to 1% of the ETH supply, have had a positive effect. This is also why I think the ETH Treasury is beneficial.

Vitalik: I agree with your point of view. I believe that socially coordinated mechanisms around ETH, such as being part of a corporate treasury, are a great complement. This allows people to participate in the Ethereum ecosystem in different ways based on their financial situation and needs. Therefore, these Treasury entities do provide a very valuable service.

Of course, if you tell me in three years that these Treasuries have caused a decline in ETH, my guess is that they may have turned into an overly leveraged game, leading to a market crash, triggering forced liquidations, resulting in a more severe downturn along with a loss of reputation. But I believe that participants in the Ethereum ecosystem, including those involved in financial activities, are responsible and will not take risks lightly. Therefore, as long as the leverage levels remain moderate, these mechanisms are not overly complex, and I believe that ETH derivatives are a fundamentally stable financial way, so I support the existence of these Treasuries.

The Next Decade of Ethereum

David: Looking ahead, some of these ETH Treasuries may still exist ten years from now. This is one of the reasons people are excited because if these companies can operate successfully, they will have the opportunity to withstand the test of time. But I want to shift the topic to the next decade of Ethereum. By the time Ethereum turns twenty, we hope to invite you back for another podcast. Although we may all be elderly by then, Ethereum will still be vibrant, as it will only be twenty.

Vitalik, Ethereum is an evolving project, and its work will never truly be done. While we can make it more and more perfect, I don't think there will ever be a day of "100% completion." So, in the next decade, what are your expectations, dreams, and goals for Ethereum's development?

Vitalik: Technically, I hope Ethereum can approach some kind of "finish line" and enter a "maintenance mode." This means we need to complete key technological upgrades, such as fully adopting ZK proofs (zero-knowledge proofs) and replacing existing components with optimized technologies. For example, replacing Kajak with a more efficient Poseidon hash algorithm, replacing the EVM (Ethereum Virtual Machine) with RISC-V or other more advanced technologies. Ultimately, we hope all validation can be done through ZK proofs.

Furthermore, I hope that Ethereum nodes can become extremely lightweight, while privacy protection can become a default user experience. Starting from payment privacy and gradually expanding to more complex Decentralized Finance (DeFi) applications. At the same time, we need to develop a solution that supports user self-sovereignty and is suitable for ordinary users' self-custody. I believe this is achievable, and I hope we can reach this goal. Furthermore, we also need to formally verify all systems to ensure their security and reliability. If we can build an economically affordable and open-source ecosystem that extends from DApps (Decentralized Applications) to Ethereum clients, to operating systems, and ultimately to hardware, that would be an ideal state.

From a social impact perspective, I envision Ethereum becoming the default platform for global financial activities. If we can achieve a world where users can freely extract assets from one application, transfer them to another application, and the entire process is subject to legitimate permission management, that would be very exciting. At the same time, we also need to ensure that users have robust privacy protection options, such as being able to easily transfer funds from one wallet to another. These are all crucial goals.

My envisioned future is a trustless secure world based on cryptography and code verification, where such security becomes the default standard in society. We will enter an era where system security can be strongly guaranteed, and the "rely on trust for security" approach will gradually be phased out, much like "unclean water" today.

I believe this is an exciting vision. We have already achieved this goal in the Internet field through HTTPS, and Ethereum can play a similar role in other areas, promoting the adoption of this security standard.

Vitalik's Next Ten Years

Ryan: Vitalik, you wrote the Ethereum whitepaper in 2013 when you were a teenager. Now, ten years have passed, and Ethereum has grown into a network with nearly $1 trillion in assets. The whole world seems to be increasingly building its ecosystem on this global ledger. In the next ten years, what do you think your role in Ethereum will be? Will you continue to be involved? Will you achieve your vision? What does this future look like for you?

Vitalik: Yes, I think continuing to be involved in Ethereum's development is crucial. Ethereum is undoubtedly a core part of that. Over the past few years, I have been deeply involved in this project, and I expect to continue to dedicate my energy to it, while expanding into some broader areas, such as Decentralized Autonomous Organizations (DAOs). We have also discussed some interdisciplinary issues before, such as biodefense and base-layer security, which I think are equally important as they are closely related to Ethereum's technology and principles.

My goal is to help build an open, secure, and trustworthy ecosystem, which not only includes Ethereum but also extends to many other areas, such as global technical standards and societal infrastructure. I anticipate this will be a key focus for me in the next decade. This is in line with my original intent since joining the Bitcoin community in 2011: to drive a fairer, more transparent world through blockchain technology. I am excited about this opportunity to realize this vision and truly change the world.

The Next Ten Years of Bankless

David: Vitalik, Bankless has been alongside Ethereum for about five years, which is exactly half of blockchain's ten-year history. Ryan and I might continue to do so, right?

Ryan: Of course, David. So, Vitalik, do you have any suggestions or guidance on how Bankless should stay closely connected to Ethereum in the next five to ten years?

Vitalik: I think you've been doing an excellent job, always focusing on the core of the Ethereum ecosystem and covering many different valuable areas. I believe it's crucial to continue this focus and stability. At the same time, there will be many noteworthy new directions in the future, such as breakthroughs in privacy technology, the development of next-generation DAOs (Decentralized Autonomous Organizations), and some bold ideas like shaping Ethereum as a nation-like ecosystem. These emerging areas will require ongoing support and coverage, where you can play a vital role.

So, it is indeed a vast field, and I greatly appreciate the work you do in this space.

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