so today I want to talk to you about
proof of stake proof of work and some
fun ideas that we should all consider as
a community so I've been thinking about
this topic of course for a long long
time and and it started out by us
looking into this much vaulted you know
this this thing that has become almost
religious this notion of
decentralization that's at the core of
many decisions made today in
cryptocurrencies so we started to look
at this scientific thing just how much
these cent relation this centralization
is there out there and what exactly are
we paying to get to that level and so
and my thesis here is going to be very
very simple proof of work and the
decentralization that it brings is
incredibly limited we have to move to
proof of stake and on that front I have
a suggestion for this particular
audience and in an offer and I want to
talk about it very openly and put
certain topics some of them might be
difficult for some people on the table
so one of the things we did was starting
in 2015 we did a very long longitudinal
study of proof-of-work networks we
looked at Bitcoin and aetherium and we
discovered a few things so this graph
shows the bandwidth available to unknown
to a Bitcoin node versus an aetherium
node okay so and then of course there's
one line that's for tor so it's better
to be to the right and you can see that
tor nodes have very low bandwidth as you
would expect because they get the
unanimity you can see where bitcoin is
and you can also see that aetherium
nodes are actually doing fairly well as
well so there's a lot of bandwidth
available there there's a big big
network when we look at the network
location we discovered some interesting
factoids about both Bitcoin any theory
on Bitcoin turns out to have the
majority of its nodes housed in data
centers 58 percent of Bitcoin nodes at
the time of our study were in data
centers the etherium nodes tended to be
geographically more distributed there
are many many more of them at the time
we did this
there were about slightly less than
10,000 Bitcoin nodes and slightly more
than 25,000 aetherium notes this
community is strong its large it's huge
and it's globally distributed and that's
fantastic
that does mean that the node to node
communication latencies are a little
higher as you can see on this graph the
green bars are toward are more further
to the right which is not good for this
graph but regardless it's not so bad
their communication latencies are about
100 milliseconds not that bad there are
many many many of us and that's
fantastic now the problem is when it
comes to making decisions those nodes
that we run bring no value okay the
entirety of the blockchain is created
and controlled by a very small number of
mining pool operators at the time we did
our study the Bitcoin the Bitcoin
blockchain was being created by 19
mining pools the etherium block chain
was being created 99 percent of it was
being created at the time by 11 mining
pools that's gotten a little better
today I just checked and there are about
37 of them that's kinda nice if you look
at the field that actually control the
hash power it's tiny
so Bitcoin you could launch a 51% attack
on Bitcoin you could revert the chain
you could rewrite it
after making three to four phone calls
and the same is also true for aetherium
so all of that that anxiety all of those
internet attacks all of those decisions
and compromises made in the name of
decentralization come down to a tiny
amount of decentralization a tiny amount
of distribution three to four people
define this thing and that's it so
that's a crazy crazy thing to be doing
not to mention the environmental
disaster that is proof-of-work so
Nakamoto consensus consumes an immense
amount of energy just so we can
visualize this it's about the equivalent
of the entire energy consumption of
Austria it's the equivalent of -
Denmark's 3 Ireland's and if you want to
think about those cooling stacks and so
forth that you see when you see a
nuclear power station before nuclear
power
plants go into cryptocurrency mining and
so there are of course two different
sort of approaches to this some people
are inherently concerned about this
because it melts the polar icecaps
it literally kills the polar bears I'm
in that camp it's really really bad when
I think about what I'm doing and what
that's helping the world you know where
that stake in the world I feel terrible
about myself other people are more like
well I got mine you know screw everybody
else kind of mode and you know there are
many other sort of justifications they
use that's okay and to them you know
especially the store of value crowd and
to them I say well look you're leaking a
lot of value out of your system so to be
able to construct your your blockchain
with the help of these you know whatever
you want to call you the 11 to 19 minus
3/7 miners whatever they are you are
paying an immense cost there was a very
recent study that was issued just maybe
last week that looked at the
environmental the externalized costs of
mining and they found that for every one
dollar of Bitcoin value created there
was an external cost of forty nine cents
of health and climate damage in the US
and 37 cents in China so this is not
something we can stand behind this
anybody with the conscience should be
able to say look this is really really
bad we should not stand for this
and when it comes to the security or
what's going on the security of the coin
is being secured by an investment in
mining rigs that is a cool equivalent to
about two to three percent of the market
cap of the coin okay
so if I keep in mind that a mining rig
is some kind of a stake it's the stake
in that hash function somebody decides
that I would rather mobilize my capital
and and turn it into this format which
is this mining rig and and the amount of
money that went into that is is only two
to three percent of the sum total that's
tiny that is not much at all and that
those rigs do not are not specific to a
coin for example if you own a Bitcoin
mining rig today you could take that rig
use it to attack
what every other coin that shares bsv
crash bsv rewrite their China as well as
much as you like and then after you've
completely screwed over BS Li you could
go back to your Bitcoin mining
unaffected you simply gave up the
opportunity cost of mining on BTC but
you did not lose your stake that your
hardware was usable afterwards now
compare that to proof of stake where an
attack a successful attack will burn the
cash that you put into the system and
compare that again to proof of stake
systems where we see upwards of 60 to
70% of the coins stake in the system the
security the amount of money you would
have to burn to attack is much much
higher than proof-of-work systems I hope
these points are somehow sort of make
the point that that you know the
narrative that you get from the Bitcoin
loudmouths is essentially just a whole
bunch of security theater a whole bunch
of decentralization theater so what can
we do well so to sort of think about
what one could do one has to understand
where we are today and one has to
understand one's options when we talk
about well ok let's ditch proof of work
that sounds like a sensible thing to do
why we are all people with consciences
but how are we going to do that well we
have until recently we had just one
choice because of the particular history
this is what we had this area of
distributed systems has been around for
about 45 years and for the first 35 of
those years we were always in this
framework that we call the classical
framework the two people who came up
with that framework Leslie Lamport
and Barbara Liskov independently
received touring awards they're
brilliant and within that framework
hundreds maybe thousands of different
consensus protocols have been proposed
we knew about all these protocols 10
years ago in 2009 Satoshi knew about
those protocols he looked at them and he
said these protocols are no good they're
very very fragile they don't lend
themselves to an open permissionless
system and that's why he came up with
his Nakamoto consensus protocol which
showed the world what was
what what one can do with bft systems we
showed the world what the coin could do
what the permissionless coin could look
like so it was a fascinating
proof-of-concept but we are now
beginning to see its shortcomings it is
not as decentralized as it could be
there is natural monopolistic effects
where one miner becomes dominant over
time and the amount of energy going into
it is enormous and so on and so forth
now what can we do we can go back to the
70s the 80s the 90s and dust up old
papers and put new lipstick on on old
ideas to try to make them look prettier
and okay again and try to fold them in
to our current context no matter what we
do around that topic we will find that
those protocols are incredibly fragile
we knew this at that time we knew this
ten years ago we know it now if you talk
to various different people who talk to
blades and here for example about his
expectations of e - oh he will tell you
that he fully expects consensus failures
and that's not that's because of of the
fact that these protocols are very very
fragile something interesting happened
last year there was a new protocol
family launched its called Avalanche and
it works differently from the others it
is not based on voting it is not based
on a single round or just a few rounds
was based on repeated rounds of sampled
sampling an audience and that gives us
an incredible incredibly different set
of of properties and I want to talk
about that and what I really wanted to
talk to you about today is something we
built using that protocol it's called a
theorem and it's a test net for
aetherium okay so you can use it today
and I'll show you maybe I was trying to
show you a video we came up with a
school logo it's alpha plus aetherium
and you combine the two and you've got a
theory and and at the core of it lies a
very simple idea okay the idea is to
take the the Avalanche consensus
protocol and to adapt it for use with
aetherium and just like you have
multiple test nests for aetherium
there's the runs
this is that we can also have the a
theorem test net that people could use
now the properties of this test net are
interesting it is very very very fast
these protocols are incredibly fast
we're getting three thousand decisions
per second on the a theorem test net on
the linear chain that we built it's
totally ordered we're getting higher
numbers you might have some of you might
have heard me talk about avalanche we
have much higher numbers for avalanche
but that's a different kind of a system
that has partial order and asset
management and so forth that's a
different different thing this is a
little slower because we're creating a
totally order chain and yet it's three
thousand decisions per second now by the
time you put it through the EVM that
goes down drastically and the numbers
that we're seeing today are about 200
transactions per second but that's due
to our view the current EVM design that
we're using which we stole entirely from
get so it's not only high throughput I
think the a lot of this game turns out
to be centered around TPS numbers TPS
numbers are incredibly easy to fake and
if you want to sort of look for an
example of this ask as the header hash
graph people for a demo so the thing
that's really important is finality and
I suspect that most people have not seen
just how awesome these systems can be
when they when they operate with quic
finality so the avalanche family gives
us finality I can't give us finality in
less than a second range that's our
target on our current test net we're
getting 90 milliseconds super fast and
the most important feature of this
protocol is that it can incorporate any
number of participants so if you want to
add a thousand more people to directly
participate in the protocol it can
absorb those thousands this is something
that nobody else can say Libre for
example is a classical protocol it's
using the fastest known classical
protocol designed by my student by the
way who now works another and they're
getting they're targeting a hundred
validators that's the best they can do
more than a hundred then the N squared
starts to bite them so the
further calls work differently and they
can accommodate as I said thousands to
millions of participants you and I and
all of those existing nodes that I
counted before that we looked at before
they can be part of the network they can
help the network make decisions they can
help secure the network law enforcement
can send a hundred subpoenas in the same
day no problem they cannot send 25,000
subpoenas to all 25,000 of us and and
finally the implementation that we have
is byte by byte compatible with the EVM
so everything that we know we can just
take and run on top of this new
infrastructure so the plan here or the
idea here is the spoon etherium over to
over to the oven network and so some of
you might not have heard the word spoon
before a spoon is a fork that's friendly
I'll talk about why this is friendly and
why this is good in a second and that
creates a theorem for us in doing so we
plan to of course preserve all balances
okay and in doing so we plan to preserve
all community tooling so things like
solidity meta mask remix all layer two
solutions they should continue to work
untouched I'll talk about the slight
exceptions and the things we discovered
along this path in a second but the core
idea is to preserve everything that we
know to do except move it to move it but
give you a platform where you can do it
much much much faster not move just just
give you an additional alternative so
some things that there's a lot of noise
out there so it's been about a year and
there's been some some discussion around
this I want to make sure that everybody
understands the basics we're talking
about a totally ordered chain you know
as I mentioned before avalanche builds a
partially ordered dag but within the dag
we create an actual straight-up in a
regular chain that looks exactly like
the current blockchain today it's
asynchronous there are no baked in
assumptions related to timing or
delivery of message of message latencies
okay so it's robust it tolerates
imprecise membership in network views so
I could think that the network consists
of this many people you could
think that consist of that many people
that's not exactly the same that would
be catastrophic if we were using a
classical protocol for avalanche it's no
big deal
that's totally normal it'll work
beautifully even in the present presence
of differing views it's secure
unlike most other protocols you could
actually tweak or parameterize avalanche
of the Avalanche protocol to the core
protocol underneath to withstand attacks
that are greater than 51% of the stake
now the protocol won't necessarily make
progress we cannot guarantee liveness in
the presence of such a big attacker but
it can guarantee safety in the presence
of such a big attacker this is
unprecedented
it is a gracefully degrading protocol so
classical protocols typically I think
you've heard of italic talk about three
F plus one or you might have heard other
people talk about the one-third cutoff
there typically are our what what
happens with them is they can handle
attackers as big as one-third of the
network 33% and if the attacker is
slightly bigger than that then he is
guaranteed to win okay so that's an
interesting property with this new
family of protocols the the greater the
the degradation is graceful if we gear
up the network for an attacker size of
33% and the attacker mobilizes 40% of
the stake in the network to attack the
network I think this is incredibly
likely but suppose it happened he
doesn't get to win immediately and again
this is unprecedented what happens is
sure because he's bigger than we
anticipated it's because he's bigger
than we what we what we geared the
network for we can no longer make the
usual security guarantees the the
probability of a safety failure is not
going to be once every 20,000 years but
it also doesn't mean that he wins
immediately instead what it means is he
might have to he might be able to create
a safety violation not in 20,000 years
you know in the time that's a little
quicker maybe in 5000 years or 2,000
years and that's a very nice situation
to be in because one your assumptions
violated your system doesn't just keel
over so I was going to do a demo but I
think what I'm gonna do well I can show
you pieces of this demo let's see so I
don't know what what there is look at
all these demos look the same and they
look kind of bad so you can see are we
hearing it we're not hearing call and
talk so in essence what you get to see
here is on the Left we have a block
Explorer and on the right we have a
screen where your terminal where he's
going to issue 2000 transactions and and
that's my ether wallet that everybody
knows and loves it took me five minutes
to set it up with a drop-down so once
you have the drop down you can say look
I'm gonna I'm going to issue some
transactions don't send them to the the
regular main etherium Network send them
to the a theory em test net so I don't
know what's going on with this with this
demo stuff is happening okay now maybe
it is moving alright because we can't
hear the volume or the sound we can't
really tell what's gonna happen and I
can't forward this fast forward through
this because I don't have a keyboard on
up here
so what should happen is you should see
an enormous flurry of activity as soon
as the issues as transactions you know
what I'm going to do instead of staring
at an empty screen where nothing happens
for a while and then things just kind of
float by I'm gonna let you imagine that
this thing goes really really fast okay
so please bear with me
it really does go very very fast and
I'll give it maybe two more seconds oh
yeah okay so um yeah what we were
planning to do for this audience was was
set up a lottery okay so we have this
lottery contract and you can see that
you know just for testing purposes we
ended up putting 11,000 registrations
there we're gonna ignore those and so as
of this moment it's going to be checked
pointed and you can just connect to this
network and and send any message
to this contract okay and you just
register your public key will do a
drawing and this will distribute some
swag to everybody and that's calling the
talking in the background and you know
what I'm gonna do I'm gonna all right
he's gonna issue is two thousand
transactions all right Colin please okay
now you can see just how fast this thing
is and it's kind of amazing to watch it
grow and you're super freaking happy I'm
gonna skip this okay so we decided to do
this two weeks ago and much of my time
was spent not on technical stuff but on
talking to people and saying look this
is all very friendly we want to make
sure that nobody's upset about what
we're about to do it's a test net and
and so forth it's very early for us
there are no no denial of service
protections okay we do have the gas
logic in there but we're not using it so
if any one of you decides to Dass us you
can and so please don't okay it doesn't
really demonstrate much the fact that
you can das a test net okay big whoop so
but you know it's a fun thing to play
with and so my proposal to the community
is that we put up this test net make
this test net available for you and we
play around with it that's really the
entirety of the proposal on the table as
of now but we are also thinking about
creating a spoon so as what's the spoon
again we're going to identify a height
in the future at which we're going to
duplicate the state of the chain at that
height okay so that means all of the
balances are preserved
so everybody who holds eath they now
hold that much ether Navas
okay eat on a theory and all of the
contracts that are deployed on east
today are going to be deployed also on
eath on a theory so this gives us a very
very fast Network and scalable one right
now that's a wonderful situation to be
in there are lots of other groups
working on making aetherium fast you
know about aetherium - you heard about
Vlad CVC casper work I'm sure there are
others out there so it's wonderful to be
in a community with so many people
trying to make the infrastructure better
this new infrastructure we're offering
is completely optional
we're not asking anybody to burn their
main net coins you don't have to buy
into this thing you just get it all okay
and there's no lock-in and you don't
have to change any piece of software we
don't have to go and talk to anybody
there is no permissioning step involved
it's just out there you just add a
different interface a different RTC
endpoint and all you're off to the races
it does not compete with each - OH it in
fact takes the pressure off of each tool
because there is now at least a test
network initially and perhaps sometimes
soon a real network that actually works
and works at scale and as there are EVM
improvements we can incorporate them now
we're not EVM people we're not going to
be making those improvements ourselves
that's still the dot of the the domain
of the etherium foundation we are simply
giving a new layer one that the very
very lowest layer and we're relying on
the etherion foundation for the
development of the EVM itself that's I
think the core intellectual sort of
thrust of this this endeavor here
I mean demonstrates as I said that it's
possible for easter scale today and and
it preserves everything that's at least
to me quintessentially aetherium so all
balances all contracts all tooling and
of course all of the colourful shorts
and so forth they all remain aetherium
it's just that one layer gets a little
faster so spoons are nice and the one of
the things that they help us do is
identify future problems currently
brewing on chain one of the main things
we discovered immediately is there the
the tooling itself is not currently
geared for blocks that are lightning
fast so we're getting block times that
are about 90 milliseconds the tooling
assumes that you're getting at most one
block per second so that's a bit of an
issue that we have to keep in mind
because that might no longer be true
we're also identifying a bunch of smart
contracts that assume a certain block
interval somewhere between 12 to 15
seconds between blocks that's no longer
going to be true
now even no matter what happens with the
switch the pls those contracts will have
to be rewritten and if they cannot be
rewritten they will be broken so keep
that in mind because this is coming and
this is a good way your test net is a
good way to
explore these problems before they
happen much more importantly and the
thing that I'm most excited about is
that a theorem would help bring more
people into the infrastructure we are
all cut out unless you own some mining
rigs and I'm sure some of you do
we're cut out from the infrastructure
we're not participating all of that
diversity at the network layer is not
reflected during consensus we have no
voice only the miners get to produce the
blockchain and now we can all
participate that's an interesting
situation to begin
there's no cabal formation because
there's no committee selection it's not
like this protocol is going to be sub
selecting a small group it's not like a
OS where we vote on each other and us 21
people are in and then we vote on the
next person to come in etc there is none
of that happening everyone gets to come
in and participate because of the way
the efficient way that this protocol can
work so some people might object to this
I worry a lot about this because you
know I did right I've been there for the
the Dow fork I've been there for the
Bitcoin cash fork I've been there for
the bsv fork and so forth one thing to
keep in mind one of the things that they
might object to is hey this eighth on a
theorem is not the same as you and
that's true but this is not a zero-sum
game that is we can create excess value
for everyone
the fact that we're now introducing
something else should or the fact that
we're showing to the world that it can
actually scale should indeed make
everybody - all the boats go up and it's
much better than a burn or a lock or an
explicit transfer let's see there are
existing miners that made an investment
in mining rigs they won I think very
vociferously be against any push like
this and I don't know what to say to
them but there was very clear guidance
from everybody that mining was going to
end for aetherium at some point so so
they took a big risk so I expect them to
be vocally against this idea but I do
know but then again they took that risk
on their own despite the the guidance of
the counter and there might be people
out there with ego tied up in particular
solution strategies again I don't know
what to do about that except to say that
the etherion community distinguishes
itself the
and why I'm here why I love this coming
to you so much it's because of its
devotion to scientific study that if any
any group of people are going to look at
the merits of different solutions and
pick accordingly it's this community so
let's do it that way let's do it on the
principled manner
why just based on what happened
yesterday there were there's this whole
issue about airdrops and tax obligations
and so forth this kind of spoon is
explicitly mentioned in that guidance as
a non tax reportable event so it's not
like you suddenly have a tax obligation
there are some other boneheaded things
that are in that guidance but at least
those those things don't affect this
particular idea so then there's the
final thing that I want to talk about
which is why are we doing this right so
there will be people who sort of are
suspicious of my motivations here I
don't know what to do about that I think
all of you know me I've been around for
long enough but let me try to enunciate
sort of how what kind of a person I am
and what kind of thing we're trying to
do here I am here and I've done
everything I ever did to make the space
better to a fault and I'm proud of my
record on this many the applications
demand high scale right now we do need a
solution and we do need to show to the
world that this area can overtake Wall
Street and move it to a better
foundation it can overtake governments
and move them to a better foundation and
most importantly can overtake
corporations and business logic and make
them trustworthy again well so where is
that well it's not in Bitcoin I assure
you of that at three to five
transactions per second and at the
moment with 20 TPS or so it's not any
Theory m1o this is one path forward of
course I want to demonstrate and test my
implementation our implementation of
avalanche underneath and so that is one
of the key motivators for us I want the
creativity of this community coming in
and checking the protocol implementation
that we have is it there's a great way
to shake out any issues we might have
and I want to see it with the whole set
of things that I've ever been deployed
on only theorem that's a very rich set
of applications I want to see those and
see you see whether or not we can
support them and of course I want to
create awareness for the underlying our
technology so you guys should all come
and check it
this stuff is super fast maybe use it
just for this and then you go away maybe
you don't touch it that's ok too but
maybe some of you will stay and check
out the other other features that we
have we have a bunch I'm not going to go
into them here but it's a cool platform
so if you're interested this is the the
link this is the link a theory about
network there's a very long write-up on
how to configure my ether wallet to
point to it
we've also configured meta mask it's
just you don't have to change any
binaries you don't have to trust any of
us as trustless technology from the
ground up you just add you know one RPC
endpoint and you're off to the races
using this test net so with that thank
you very very much but thank you all for
coming to talk
[Applause]
you