After 7 years of research and development, the Merge is just around the corner. A crowning achievement, the Merge will finally transition Ethereum from Proof-of-work (PoW) to Proof-of-stake (PoS).
I encourage everyone to listen to the whole episode, but I wanted to take this opportunity to pull out what I believe are the key messages to take away from the conversation between two industry giants.
The transition to PoS wasn’t immediately obvious. As Vitalik put it, even if the idea can be scary as if it’s a pond filled with sharks, once you figure the sharks out, you at least know what you’re going up against, which makes it possible to deal with the problem.
Scientists and engineers are equally needed. Incredible researchers, like Vitalik, do the tough work of pushing the envelope on what’s possible, but it’s up to the builders to then take the baton, commercialize the products, and bring the technology to millions of users.
Good times create centralized projects. Bull markets tilt the scale from principles to expediency until a bear market tilts them back. The reality is that principles aren’t just principles, they result in decisions that keep projects secure and mindsets that keep builders building.
Decentralization is vital low in the stack. If the foundational layer breaks or is corrupted, everything built on top of it breaks as well.
Ethereum is more robust and decentralized on PoS. Anyone can spin up an Ethereum validator anywhere in the world with much less capital and technical skills compared to mining. All you need is a computer with an internet connection.
Ethereum will continue decentralizing its infrastructure operations. Proposer-Builder Separation will take away a validator’s ability to express a preference over the contents of the blocks they create, making censorship at the block level impossible.
OFAC took its first action involving DeFi. The recent Tornado Cash action is the first time OFAC has sanctioned a technology (smart contract) and it has raised questions with many groups (CoinCenter, EFF, CCI, etc.) about whether this was an overstep of OFAC’s authority.
Coinbase prioritizes and supports decentralization for Ethereum’s base layer. As mentioned earlier, decentralization is vital low in the stack, and there’s nothing lower than Ethereum’s base layer. In the hypothetical scenario where Coinbase is forced to censor, we would rather wind down our staking operation to preserve the integrity of the overall network.
Privacy is solvable. We can solve swaths of the challenges with privacy through technological solutions that enable user privacy while minimizing privacy for criminals.
We need to build the future we want to see. You need to make “stuff!” It doesn’t just magically appear. Decentralized identity must be created, it won’t spawn into being just because crypto becomes successful.
Values and culture must be cultivated. Whether the community is centralized or decentralized, it’s crucial for leaders to set and encourage cultural alignment around a set of values. Without cultivation, undesirable characteristics may rise and cause community fragmentation.
Crypto is global. The world is moving towards a global mindset and crypto is already there. One way in which Coinbase is adopting this mindset is by supporting global apps like Coinbase Wallet.
There are still unsolved problems. The best currency, building the “freedom stack,” e-charter cities, VR, climate change, and so on must be decided upon and created.
There’s still a lot more to build and it’s important we continue working together to build the future of crypto, grow the entire ecosystem, and remain eternally optimistic and collaborative.
Sep 22, 2022,
2 min read time
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