An Introduction to EIPs with Tim Beiko from the Ethereum FoundationApr 30, 2021
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HOST: Hey, everybody. Welcome back to The Unstoppable Podcast. I am your house Diana Chen and I’m joined today by my cohost Matthew Gould, cofounder and CEO at Unstoppable Domains and our guest Tim Beiko. He is the chair of All Core Devs at the Ethereum Foundation. We’re really excited to talk to him more about Ethereum and the EIPs. He is really deep in the weed on that. So we’re going to do a deep dive into the EIPs Ethereum Improvement Proposals and learn more about some of those. So, welcome Tim. Thanks so much for being here.
TIM BEIKO: Thanks so having me.
HOST: Great. So to start off--I’m just curious to hear about your crypto-journey. How did you end up getting into blockchain? Because I know you came from more of a VC and startup, you know, entrepreneurial journey. So at what point did you get exposed to blockchain and you got interested and now you went down the rabbit hole and now you’re kind of deep in the weeds?
TIM BEIKO: Yeah I first heard about blockchain from a friend of mine who was always into these kind of weird schemes. And, you know, Bitcoin was one of them. But other things he was into was--I think this was like 2013/2014. He was, like, buying money--the currency from I believe, like, Iraq because the US was invading and the currency was going down, and you could only buy if physically. So he was buying, you know, actual physical Iraqi Dinars on eBay and thinking it would go up. That never worked out, but then another one--and it seemed like very complicated to do. But then another one of his, like, weird schemes was Bitcoin at the time. He got me interested in that. I mean I got, you know, interested in it in 2013/2014. There wasn’t a ton outside of Bitcoin in crypto. So just then kind of a hobby and then, you know, I think around 2016/2017, Ethereum started becoming a bit more known and I first kind of really dug into the rabbit hole when the DAO happened. Now the hack, but the project. So the project got announced. You know? That seemed really interesting. It seemed like Ethereum went from being this weird thing to something that had traction, that had, you know, some big projects building on it. So I got interested then and it was kind of a very excited moment to dive down the rabbit hole where, you know, then the DAO obviously got hacked and that caused a ton of issues and led to the fork. And then, you know, it kind of died down a little bit after--actually not for a year or two and stayed a slight interest of mine. And in, like, late 2016, early 2017, we started having another round of these projects fundraising on Ethereum, so kind of the first ICOs. And then very quickly in 2017, the amount of ICOs just like overwhelmed the platform. So to me that showed like there was enough demand for Ethereum that it probably wouldn’t completely go away. Like people will find things to build on that. And it also showed how kind of brittle the protocol was at that point where I remember--I think it was the status ICO, like, basically froze the chain for a few days because processing the transactions. And that made me want to work on it fulltime and at the protocol level to try to find ways where we can improve that. So late 2017 or 2018--I forget--I joined ConsenSys to work on their protocol team there and did that for two and a half years. So I was working on their Ethereum client called Hyperledger Besu, which got me pretty involved with the protocol work. And then after doing that for two and a half years, an opportunity came up when Hudson Jameson who was the chair of All Core Devs, which is the kind of big meeting where all the Ethereum client developers go ever two weeks. After doing it for five years, Hudson wanted to step aside and do something new. And, yeah, I was kind of at the right spot there and decided it would be really valuable to take it over.
MATTHEW GOULD: That just shows how much opportunity there is in the crypto-space. Right? If you’re--the space is just growing so fast that if you’re in the right place in the right time and you show interest and you get involved, you’d be surprised what opportunities open up. You actually mentioned a couple things there that I want to touch on for the people listening. Back in 2017--I think 2017 was that last really big investment cycle for crypto. That’s when a lot of new people got into the space and a lot of new money came on. And this is typical. Right? These investment cycles--they happen in all these new markets. And then you have a lot of new things that happened. And you mentioned a couple there that I thought were pretty interesting. So one of them is the original DAO--and that stands for Decentralized Autonomous Organization I believe. And I think the one you’re talking about--it was done by the same guys that did Slock.it. I don't remember the whole history there. But let’s--you’re coming from a VC side. That actually makes a lot of sense. The DAO was a way for people to coordinate different projects that they wanted to fund if I remember correctly. Can you maybe talk a little bit about the original DAO because think--DAOs are everywhere now.
TIM BEIKO: Yeah, for sure. My background was general in tech. So I was a PM at an AI startup before that and then I had my own startup. So I--yeah--just kind of non-blockchain technology. And then what the DAO was--it was basically this decentralized VC fund where people could, like, buy tokens in it and then your tokens were, you know, the share--a share that you could use to vote on an investment and people would--or projects would come and basically request an investment from the DAO, which is like not too dissimilar to what MolochDAO does now although they don’t take investment. It’s more grants. But it’s kind of a similar concept. And then Slock.it--the project you mentioned--they were doing kind of a decentralized lock for, like, if you had to lock, you could pay with ether to lock or unlock it. So they were one of the original projects that wanted to be funded by this VC fund. Yeah. So the--yeah.
MATTHEW GOULD: And I would say I think it’s just super interesting. So the original DAO, which is referred to as just--it’s just called--I don't remember if they had a special name for it. But it was just the DAO. It eventually became an SEC case and they actually used that to kind of establish some of the rules around what you should or should not be doing at least here in the U.S. and that’s just how early that was. Like it was way--and what people were trying to do is they were trying to use these blockchains to coordinate working together on the Internet. And they just wanted to say, like, hey, we want to--like we want to be able to get together and have several of these projects get funding so that they can build all these cool new tech on the blockchain. And it was the first attempt and it was just all smart contracts. So it was definitely brand new for the space. And then at the same time--then you had the Status ICO, which is just another ICO. And Status is now one of the largest wallets in Ethereum. They’re a pretty big Ethereum-based company. An so many people wanted to participate as the whole blockchain kind of collapsed I think because of the way that the ICO was designed. And, yeah, there was definitely the growing pains back in 2017. So you got on the right place and then moved on to Core Devs. So other than just diving in and becoming one of the people running the Ethereum Foundation, how would you advise others to learn about blockchain today? If they’re coming out and they wanted to learn more, where would you tell them to go to get their reading so that they could become more informed?
TIM BEIKO: So I guess the biggest difference today is how big, you know, not only Ethereum, but blockchain has grown. I mean I struggle to keep up with everything just happening on Ethereum and I pay only superficial attention to projects out of that. And there’s more, you know, ten if not a hundred times more projects now. I think the first thing is, like, finding something that actually aligns with your interests. So even before working on blockchain, a lot of the products I worked on were kind of highly technical products and that’s always something I’ve enjoyed to do. And this is why kind of the protocol layer is what I thought was appealing on Ethereum even though there was plenty of opportunities at the application layer. That was just a fit for me and that’s kind of where I end up spending my time. So I think today the space is just so broad that you can definitely find something that, you know, hooks your attention. And then there--from there I think it’s just getting involved in the community. Right? Like every single project has an online community somewhere that you can get involved in, and every project usually has too many things to do and not enough people to do them. So trying to find some low-hanging fruits where you can help and also trying to identify, you know, like the gaps in your skillset. So, for example, one thing--even though it’s not a major part of my job now is I wanted to learn, you know, to write solidity and to be able to deploy smart contracts and whatnot. And I’m by no means kind of proficient smart contract engineer, but I’m able to write solidity code, understand how it works, and that’s like a skill I had to acquire when I started working on Ethereum. But I think I--you don’t know that in advance, like, before you start actually involving yourself in the community and tinkering and seeing, you know, - - I’m missing. So luckily--I think for pretty much any skill you want to learn on blockchain, there are free tutorials and there’s, you know, resources that are pretty easily accessible.
MATTHEW GOULD: I’ll give a quite shoutout to CryptoZombies. If people are out there--
TIM BEIKO: That’s what I did. Yes.
MATTHEW GOULD: Well, that’s exact--that’s how I wrote my first smart contracts as well. So you’re not the only one. So CryptoZombies is out there for people--aspiring developers--I would suggest is a good place to go check out in order to learn a little bit more about smart contract.
HOST: I have a quick question too. For listeners listening who maybe aren’t technical--they’re not coders. They’re not engineers. Is there any opportunity for non-technical people to get involved in the community? Maybe somebody that comes from a marketing background or has a sales skillset. Are there opportunities for them to get involved?
TIM BEIKO: So I think for sure. Like there--like I said there’s more and more projects and the higher up the start the projects are--like applications being built on Ethereum are, you know, not traditional tech applications but they are applications that need to reach users, that need to explain their value proposition, that need marketing, that need UX design, that need business development because they need to sign deals with partners and whatnot. So I think all the traditional skillsets from tech are definitely very needed. I do find that, you know, even though you don't need to be like an engineer or whatnot, a lot of these products are kind of technical in nature. And technical doesn’t always mean code. Right? You look at DeFi and these projects are very technically complex from like a finance perspective. Right? So I think as someone who is doing--whether it’s UX or business development or marketing for those--having at least a high level understanding of, you know, how the project works is really valuable and not being put off by the fact that there are some technical components. But for sure there is demand for those skillsets.
HOST: Yeah. For sure. We’ve talked about this on the podcast in the past, but I think one of the biggest challenges to having mass adoption of this technology is challenges with UX and lack of education. And I think that’s where, you know, the marketers come in and maybe the non-technical people come in to translate all of this into English. And I’m wondering since--you know? Obviously, you mentioned there’s so many projects and there’s so much to learn about Ethereum that’s constantly developing but at a very high level. And, you know, to somebody who is maybe new to the space, how would you explain what Ethereum is especially to somebody who maybe still sees Ethereum as the same as Bitcoin as the same as, you know, Dogecoin just as a cryptocurrency?
TIM BEIKO: Sure. So the biggest difference between Ethereum and Bitcoin is that Bitcoin allows you to send a receive, you know, transactions, which are transfers of cryptocurrency. So Bit coin on the Bitcoin network and Dogecoin is Doge on the Dogecoin network. Ethereum is kind of the same infrastructure but instead of only sending and receiving tokens, you can--every transaction can represent arbitrary computation. So that means you can, you know, create the NFT. That means you can vote in a DAO. And it gives much more flexibility for people who want to build applications to basically build whatever they want that’s running on Ethereum. And what’s nice is these applications running on Ethereum have kind of native money built into it because you have the Ether token on Ethereum. And to me this--the thing that made this most concrete was actually programing solidity. So when you program solidity, you know, like, Ether is just a primitive hype that you can use as part of your program. Whereas if you program any other type of application that needs to deal with money, then you need, you know, you need to integrate Stripe or PayPal or some other way to deal with money and it’s not as easily something you can just manipulate within your program. I think this is the biggest difference, you know, between Ethereum and Bitcoin or Dogecoin.
MATTHEW GOULD: And also Proof-of-stake coming up. Right? So we’re on our, we’re on our way to Proof-of-stake this year, which I think--the two big innovations of Ethereum have been generalized code and smart contracts and then the other big one is Proof-of-stake. So I’d actually love to get your take on that. What are your thoughts on Proof-of-stake coming to Ethereum and, you know, why are you excited about it?
TIM BEIKO: Yeah, for sure. So I think just at a high level the difference between Proof-of-work and Proof-of-stake. So Proof-of-work, you secure your blockchain by having computers who run computations and because you run so many of them you would need more computers that run more computation from an enemy to kind of reverse the transactions that are happening or censor the transactions that are happening. And on Proof-of-stake, instead what you do is--you don't have people run all these computers to prove which chain is solid. You have them put up a bunch of money and say, you know, almost I’m betting that this is the valid chain and if I’m wrong you can take my money. And this is obviously much better because you don’t need to run all of these computers. So it’s better, you know, for the environment. It makes kind of all the system live on the Internet. But one of the big challenges with Proof-of-stake is that it’s very hard to get a lot of different people to participate in it. What’s nice with Proof-of-work is anybody who has a computer can kind of turn it on and participate and it’s not actually hard to add more participants to the network. Whereas in Proof-of-stake because everything kind of happens on the blockchain, there’s a real limit to, like, how can you efficiently get, you know, tens of thousands, hundreds of thousands, or millions of participants to participate just because of the overhead of calculating and going through all of their votes and dealing with issues if they happen. And this is where I think Ethereum kind of stands out from other even Proof-of-stake blockchains where Ethereum, you know, has been talking about going to Proof-of-stake since 2015 and if you look at other blockchains today, other blockchains already have Proof-of-stake. So the question is, like, well, why can’t Ethereum just do it. Right? And the big reason is that Ethereum really wanted to ensure that we could get a very high number of people participating in the consensus even though we moved to Proof-of-stake. And this is very different from most other Proof-of-stake consensus algorithms. So just to give you an idea in terms of numbers, I think right now there’s about 100,000 validators on the Ethereum Proof-of-stake network and last time I checked I think the second biggest Proof-of-stake network has like less than a thousand. So we have about a thousand times more validators, which makes the system much more decentralized than the second kind of highest one. And that’s really where all the research and energy went into from crypto-graphic research all the way to just the engineering to make it work.
MATTHEW GOULD: Yes. Well, I was a big fan of Proof-of-stake early on for Ethereum mostly because it just made a lot of intuitive sense to me that you would want to have a proofing mechanism that was so much more environmentally friendly. That was big selling point for me early on because I always thought that blockchains were going to be global scale and then you see how much power that some of these blockchains consume--the consume the amount of power of a small country and when you move to Proof-of-stake all of a sudden the amount of energy usage is 1/1000th, right, what you would need to do for a Proof-of-work chain, which has been big. Sorry. Did you want to add something there?
TIM BEIKO: Yeah. No. So I a hundred percent agree with that. I do think Proof-of-work has benefits. I’m actually quite happy that Ethereum will have gone through both. Right? Like we’re going to have had like five or six years of Proof-of-work before Proof-of-stake. And one of the things that’s nice with Proof-of-work is because the miners costs are not denominated in cryptocurrency. Right? They’re denominated in dollars or whatever their local currency is. They tend to have to sell their earnings to cover those costs. So if you’re running like a mining factory, you know, in Canada, in need to pay my bills in Canadian dollars. So even though I get Ether as a money reward, I don’t need to sell it to pay my bills. And that’s where it’s kind of a natural distribution of the coins. So obviously, you know, the miners have now put a smaller percentage of the total coins and over time that kind of broadens how many people are part of the network. And I think Proof-of-stake has a bit less of that property because obviously the stakers are free to sell their stake, but they don’t have kind of high-fixed costs that forced them to do so. So I think it’s really nice that Ethereum got to a spot where we did have, like, these five years of Proof-of-work and we got to kind of distribute the supply of Ether a bit more broadly before just moving to Proof-of-stake. And luckily--I mean we had those Proof-of-work years before. It was kind of a global scale thing. So the environmental impact is, you know, somewhat limited compared to what it would be in five years. But I do think--yeah. There are some nice properties of Proof-of-work and it's really valuable for Ethereum to have gone through both stages.
MATTHEW GOULD: And then you mentioned something there, which is, you know, measuring the security and the decentralization amount that you have on a Proof-of-stake network. I’m actually just kind of curious. How does the Ethereum Foundation measure this level of decentralization or think about it? Do you guys talk about that internally and how do you guys kind of approach that problem? Like you were saying earlier there’s a million people on Eth and maybe only a thousand on some of these other ones.
TIM BEIKO: So I’m not--I wasn’t super involved in the Proof-of-stake design. So, you know, I didn't contribute too much to how it got done. But I think one thing that’s been really important as part of the design is being okay with validators not having perfect uptime. The numbers might be slightly off here, but as I understand it you should be profitable validating on Ethereum if you’re up more than--I believe it was 70 percent of the time, which is really kind of lax requirement. And that means that, you know, you can actually run a validator from your home computer and assuming you have a decent Internet connection, you know, you should be able to maintain 70 percent uptime and far above that. Whereas a lot of these, I guess, more centralized system, they’ll expect their validators to have something--say, you know, like, 99 percent or 99.9 percent uptime. And if you’re not profitable unless you’re basically online all the time, the what you’re asking people to do is to become like DevOps engineers. Right? And to set up, you know, high availability machines and whatnot. And this is something that just will exclude a lot of people from staking just because of the high technical barrier to entry. So I think keeping kind of the uptime required fairly low has been a very valuable design choice and another very good design choice is that the penalties you get in Ethereum are proportional to how many people do the same wrong thing as you at the same time. So that means that if you just go online yourself and, you know, you miss a vote because you were offline, your penalty is much lower than if everybody is on AWS and AWS goes down and then they all miss a boat. Then everybody will get penalized higher. So that also kind of incentivizes you to set up your own machine rather than just hosting it on the cloud because, you know, you’re kind of decorrelated from others. So I think--you know? Those are just two examples. But throughout the process there’s been a lot of thought about what are things that we can do that will make it more accessible for a lot of people to join.
HOST: Awesome, awesome. Well, Tim, I want to talk to you a little bit more about the Ethereum Foundation. So you started at the beginning of the year. You’re now the chair of the All Core Devs at the Ethereum Foundation. For listeners who aren’t familiar with what the Ethereum Foundation is, can you talk a little bit about that? It’s a non-profit but it’s not really a non-profit in the traditional sense because it’s bigger--it’s part of this bigger Ethereum ecosystem. So there’s a lot going on here. So talk a little bit more about what the Ethereum Foundation is and then what is All Core Devs.
TIM BEIKO: Sure. So the Ethereum Foundation is a non-profit that is kind of invested in the growth and success of the Ethereum ecosystem. We do a lot of things from, I think, more and more community coordination as the community grows--just kind of, yeah, herding cats to a lot of R&D on Ethereum and engineering work on Ethereum. And then, you know, some outreach but I think that’s a very minor part of what we do. And I think as Ethereum grows the foundation is really looking for ways to support external projects in Ethereum and, you know, whether that’s giving them bootstrapping grants so that they can actually start until they’re profitable or initiatives like matching the donation rounds in Bitcoin where the community can kind of decide where funds go. Yeah. I think the foundation as it grows kind of realizes, you know, it clearly cannot do everything for Ethereum and it’s more about how do we support, how do we support teams that are building out Ethereum. And so one aspect of that is All Core Devs. So All Core Devs is kind of this long-running developer call that I think started in 2015 where the different client implementations on Ethereum kind of talked together and discussed issues. And one thing that’s I guess worth noting about Ethereum that’s kind of different from Bitcoin is Bitcoin only has one kind of official software that you run if you want to run a Bitcoin node and everybody downloads the same one. Ethereum actually has four both on Ethereum One and Ethereum Two, so eight total--we call them clients--that you can run and they all run the Ethereum protocol. And this gives us kind of an additional layer of decentralization where if there’s a bug with one of the implementations than we have, you know, backup ones that we can use. And All Core Devs is the meeting where we do the coordination across all those implementations on the Ethereum One side. So there’s like a similar meeting on the Ethereum Two side and now we even have a third one where we get both sides to talk to together as the merge is approaching. But that’s the gist of it.
HOST: Got it. And real quick side note, you mentioned herding cats earlier. Are the Ethereum Cat Herders part of the Ethereum Foundation?
TIM BEIKO: No, so Ethereum Cat Herders--that’s a really good question--is a group that came together I think two or three years ago to do just better project management on Ethereum. So it’s a lot of people who help with different initiatives at the protocol level. I think, you know, easiest kind of entry there is they take all the notes for all these community calls and provide for transcripts. So this is a really good opportunity for people who want to join the ecosystem to kind of get paid small bounties to, you know, sit there for two hours and learn and kind of write a transcript for some of these calls. And they do other stuff like, for example, hosting Q&As with some of the people working on changes to Ethereum, doing kind of community sentiment gathering and what not. So they’re kind of this independent group that’s helping with project management.
HOST: Okay. Got it. I just wanted to know because we had Pooja Ranjan on the last episode.
TIM BEIKO: Yes. Pooja is great.
HOST: Yeah. She was great.
TIM BEIKO: Yeah.
HOST: Okay. So you mention All Core Devs. This is obviously for developers and people who are really deep into the space. Is there any opportunity for quote, unquote, normal people out there to get involved either with Ethereum Foundation or with the larger Ethereum community and if so how can they get involved?
TIM BEIKO: Sure. So with All Core Devs specifically or just with Ethereum?
HOST: I guess not really with All Core Devs…
TIM BEIKO: Okay.
HOST: Because that’s probably more just for developers and…
TIM BEIKO: Yeah.
HOST: So with Ethereum Foundation more broadly or even within the bigger Ethereum community.
TIM BEIKO: Sure. So I guess, you know, the first place I would start is actually the Ethereum.org website. It’s quite good and it gives you a really good overview of the different parts of the community. And, you know, from there you can quickly navigate to what parts your interested in. I think, you know, the main way that kind of people get involved with the Ethereum Foundation. It’s usually via grants. You know? Because they have a project that they want to work on and they need some funding. And there--I think it’s called Ethereum Ecosystem Support program, ESP, and they have a Twitter account, which I think is ESP, underscore, Ethereum. Something like that. And they have a public forum if you want to submit a grant. You have a project you’d like to build on Ethereum, we can definitely help you there. And also just to put a quit note on All Core Devs. Even though these are kind of developer calls, they’re all public and they’re all, you know, both live streamed and have transcripts for it. And they aren’t just attended by the client developer. So they are also attended by the people who want to propose changes to the protocol. So obviously, you know, the technical bar to do that is non-trivial. But if you do have like a change you want to bring to Ethereum, you don't need to be part of the Ethereum Foundation or to know people at the Ethereum Foundation. We have GitHub page which kind of explains, you know, what the process is to get your idea considered and to have feedback on it. But you definitely don’t need to be part of the Ethereum Foundation or know people at the Ethereum Foundation for that to happen.
HOST: Got it. And then last thing before we dive into the EIPs--I promise we’ll get there--is what are some of the exciting things happening in the Ethereum community in the next year and then--you know? Really looking forward, where do you see Ethereum being in ten years?
TIM BEIKO: Wow. Big question. So I mean, you know, in terms of exciting things, I think we’ve seen over the past year that’ll it keep going forward. It’s really DeFi and NFTs. So DeFi stands for decentralized finance. And this is basically recreating the equivalent of a whole financial system on Ethereum. So we started out with, you know, having decentralized exchanges where you can swap one token for another directly on Ethereum without having an account at Coinbase or Binance or stuff like that. Then there were earlier projects like MakerDAO, which allowed you to convert your Ether to a stable coin directly on chain if you wanted to have less volatility. And now there’s just this massive ecosystem of every financial product you can think of--insurance derivative, you know, personalized trading strategies, setting up your own strategy and getting people to invest in that, which is kind of all bundle under DeFi and that’s just been growing at an exponential pace and shows no signs of slowing. So that’s one big area on Ethereum and then the other big one that everybody is talking about is NFTs, which stands for non-fungible tokens. And this is basically the idea that you can issue an asset on Ethereum that represents something unique off chain. And that’s shown to have been like really, really popular amongst artists where they can issue kind of, you know, first additions or limited-edition versions of their art on Ethereum and get paid for that. And what’s, you know, we’re only kind of scratching the surface there. But one thing that is really exciting is that it allows artists to sell things directly to their fans and also to, like, their most eager fans where a lot of the business models around the arts right now have to do with like what will your average fan pay. Right? Like how much will the average person pay for, like, you know, a Spotify subscription of a book or something like that. Whereas with an NFT if you actually only sell kind of, you know, one copy and then everybody else can obviously consume the artwork for free, then you--it’s more about what is the person--what is your most engaged fan willing to pay and for a lot of artists that can really change how they approach their business as an artist. So those are two really big ones right now. I think, you know, overtime, like, in the next five to ten years some projects I’m really excited about are things that start to go beyond just mimicking finance on Ethereum. But creating really like new infrastructure that can be used to set up kind of--almost an entire alternative, like, Internet or kind of Internet nation. And there’s--you know? There’s like the basic infrastructure. So you have Unstoppable Domains but Ethereum has ENS, which is like a name--domain name register on chain, which allows you to abstract all these complicated crypto-addresses and just send funds directly to an address and that all lives in Ethereum. We’ve seen more and more projects experimenting with just how do we fund public goods in the community. So Bitcoin I mentioned earlier is running experiments with something called quadratic funding where if you have, you know, an organization like the Ethereum Foundation who wants to donate money, but isn’t sure which projects, there’s like innovative techniques around--you can use both the number of the people and how much they donate to figure out, you know, which projects should you give how much money to. And it’s kind of--yeah. I think seeing these experiments when bringing both parts of, like, traditional Internet infrastructure and kind of new advances in economics or game theory and trying those on the network. Yeah. That’s what I’m really excited about. It’s very hard to predict what will come out of it just, like, five years ago we couldn't really predict DeFi. But, yeah, I’m excited to see what happens.
HOST: For sure. Yeah. I know I always ask this question. I’m, like, it’s an impossible question to answer because things are moving so fast from literally like day-to-day that how can you predict…
TIM BEIKO: Yeah.
HOST: What’s going to happen in five to ten years, but I just think it’ll be interesting and maybe it’ll be fun one day to look back on this podcast episode and hear the predictions and see how close or how far off we were.
TIM BEIKO: Sure.
HOST: So I want to move into talking about EIPs because I know that’s what you spend most of your time working on. So for listeners who are maybe new to the space, maybe start by explaining what an EIP is.
TIM BEIKO: Sure. Oh, go ahead.
MATTHEW GOULD: Or maybe why. Right? Like why we have the EIP process like and, and it’s all about improving Ethereum. Right?
TIM BEIKO: Yeah. So EIP literally stands for Ethereum Improvement Proposal. It’s actually copied from BIP, which stands for Bitcoin Improvement Proposal, which is copied from PIP, which stands from Python Improvement Proposals. So it’s a pretty--I guess you would say at this point common standard. And the goal is how to propose changes to a protocol that’s used by a lot of different people. Right? And this is the same whether you think about Ethereum or the Python programing language. You know? You have great idea. What’s like the formal method to propose that idea to the community and potentially get it adopted by the entire platform? And that’s really what PIPs are about. There’s a bunch of sub-categories of EIPs, which kind of depend on which part of Ethereum you’re changing. So, for example, if you have an EIP that’s really focused on applications, it will be treated differently than an EIP that’s focused on the consensus layer. But I guess at a very high level there’s really kind off two big categories. The first is what’s called a core EIP and a core EIP changes basically the rules of the blockchain. So that means that for this EIP, all of those nodes on the network have to agree to the new rules at the same time exactly. Otherwise, we have a split in the network. And then every other EIP--what’s nice is they’re kind of optional. Right? So you don't have to force them and nobody is obligated to use them. So an example of this is, for example, ERC20 is an EIP and ERC20 is this token standard that we use on Ethereum to issue a new token. So it just gives you the basic framework. If you want to launch a token on Ethereum, you know, these are the basis functions that it needs. It needs a way to transfer it. It needs a way to create it and whatnot. And nobody forces you to use it, but if you do use the standard then it makes it much easier for exchanges, for example, to integrate your token because they know exactly how it’ll work. Right? They just need to basically add the name for your token and, you know, I’m sure they do a bunch more than that. But they don’t have to redesign kind of a whole custom integration. They can just know, look, this is how we do it.
Another example of an EIP that, you know, is nice but not everybody has to use is something like Fast Sync. So Fast Sync is how, you know, nodes sync up. If you’re a new node on the network and you want to get all the way to the latest block, you can either sync every single block since the history of the network, but that’s quite long. So we have this alternate protocol called Fast Sync and, you know, nobody is obligated to use it or to implement it but the more people use it, you know, it gives them the benefit that instead of taking, you know, six weeks to sync their node, it takes them something like two days. Right? But again it’s up to them. I spend most of my time on these core EIPs and so these are the ones where we basically bundle them together, have network upgrades, or hard forks and we really have to make sure that everybody has implemented them the exact same way, that every potential error is handled the exact same day before it gets deployed to the network and this is why, you know, sometimes you hear there’s like a network upgrade coming at this block. We have one coming up I think on April 14th on Ethereum called Berlin. So that means that, you know, we have these features that we’re adding and as of this block on April 14th, all of the clients and all of the nodes on the network will support them. And if, you know, they don’t activate it, then they just get removed from the network. Yeah. So that’s it at a high level. We have--it’s like this formal process where you can describe change to the network. There’s a bunch of different categories and the two kind of high level categories that matter is whether or not it affects the consensus and everybody needs to do it at the same time or not. And then people can just do it whenever they want if they benefit from it.
HOST: Got it. So am I correct in thinking that anybody that has something to propose can submit an EIP and then once that goes through then who, who reviews it? Is that what All Core Devs does? They’re in charge of reviewing and, like, quote, unquote, judging it I guess to decide if it passes or not.
TIM BEIKO: Yeah. That’s a good question. So, again, this really depends on if it’s core or non-core. But, yes, anybody can submit an EIP. Basically, there’s a GitHub repository with instructions. There’s like a template. You just make a copy of the template, fill in the blanks with your idea, and then open a full request against the GitHub repository. And as long as you fill out the template and it’s roughly like coherent it will get merged. There’s no kind of editorial control at that point. Then you do have an EIP. Once you have it, it will--the full request number becomes the number. So you’ll have, like, EIP1234 or something. This is again where it depends if it’s a core EIP or a not a core EIP. If it's not a core EIP, you basically need to find people in the people in the community who are affected by it and get their feedback on it. Right? So, for example, if it’s a token standard you’ll want to talk with applications and potential exchanges and wallets. And then there’s different stages. So the first stage is draft, which is like you’re just working on it. Then review is you’re asking people in the community to come have a look and there’s a forum where, you know, they all kind of get posted and some people, you know, like, major projects say Metamask - - kind of keep an eye on that forum. And then once you feel you’ve had enough feedback on your idea and you think it’s pretty ready, there’s a final stage called Last Call, and this actually sends an RSS notification to people who have subscribed. So you might get like a financial set of review. And then your EIP is basically done. If you’re coming for something that at the core protocol, it’s a bit different. And the reason why it’s different is because, you know, you’re kind of going to force this change on everybody. So core devs will review it. Typically the way it goes is, you know, somebody has an idea. They’ll typically have like a prototype or, you know, some indication that there’s like really high demand for this, and then they’ll bring it to the core developers.
The first thing the core developers do is look at it through the lens of network security. And I would say 80 to 90 percent of EIPs that come up have like some kind of--not flaw but like potential issue in them that it could affect network security and the average EIP conversation goes, like, hey, I have a good idea. Yes, but have you thought about this attack vector and then, no, and then the person go work on it, you know, for a year or two because it’s actually hard to come up with something that doesn’t suffer these weaknesses. And then I think, you know, there’s two--like assuming you have something that’s safe and that’s technically sound, there’s kind of two paths. Right? One is like is it controversial or not. For something that is not controversial then generally it will just be included in the next hard fork. You know? if we see that there’s demand for it, it’s safe, it’s been implemented, it’s been tested, you know, there’s no major objections, then we’ll include it. I think the things that are controversial are always the hard ones. And there core developer have to make the decision, you know, is this something that we feel there’s enough demand in the community to include or not. Right? And every time you include something controversial, core developers can really choose if people will upgrade their nodes. Right? Like we can’t force all of the projects to upgrade their nodes and even less so today with all of DeFi. You know? DeFi has to choose which applications they want their chains to run on, where do they want their Oracles to point towards and whatnot. So core developers need to feel like, you know, if something is controversial it’s--it needs to have at least enough potential value to pull in that it’s worth kind of moving that headache over to the community to figure out. And there’s no hard--yeah. There’s no kind of hard rule about where that line is.
MATTHEW GOULD: Well, speaking of controversy, there’s one EIP that I know a lot of people are interested in that’s stirred a little bit of controversy recently and that’s actually EIP 1559, which has to do--well, which has to do with transaction fees and also I guess how mining rewards are done in some cases. So I know that you’ve been supporting this and this one has been around for, like, two years. So it’s not like a new thing like you were saying, but it’s making its way through. So if you don't mind how about you tell us about this one because this was--it gets talked about in the Ethereum community and it has to do with how, you know, how users will interact with the chain. And I’m sure people would love to hear how this is going to impact them this next yar.
TIM BEIKO: Of course. Yeah. So to give some background, 1559 got started two years--probably three years ago now. There was a first development team that worked on it. They dame to All Core Devs. All Core Devs said good idea but there’s a ton of security issues here. So then they started, you know, working on those. At some point. ConsenSys took over. So I was part of the team that took over 1559. And we basically spent a year of development work trying to address the various security issues that All Core Devs had pointed out, successfully addressing them. And, yeah, maybe it’s sort of kind of getting an overview of what the EIP does. On a high level, it’s about how do you pay for transactions to be included on Ethereum. Right now we have what’s called the first price auction where everybody submits a bid with their transaction, which is your gas price, and the highest bids get included on Ethereum. And this is really a bad system because ideally what you’d want is you want--you don’t want to pay the highest price. You want to pay just over the second highest price. Right? And if you think about how, say, like, Facebook and Google run their auctions when they auction ads this is what they’ll do. So if everybody bids for ad space and, like, I bid $10, you bid $5, and somebody else bid $3, I win but Facebook will charge me $5 or $5.01 because all of the X’s between like the first highest bid and the second highest bid is like money that, you know, I shouldn't have paid. I just like overpaid for that. And ideally Ethereum could use a system like that. But would be systems is they require a trusted third party to look at all the bids and actually sort them and say this is the highest, this is the second highest. And because blockchains are kind of built around the idea that you don't want to rely on a trusted third party, we can’t have like this simple fix to our first price system on Ethereum. So what we do instead with 1559 is instead of having all of these bids come in with transactions, we just say in the protocol this is the minimum price you should pay for a transaction. And if you don't want to pay that price, fine, you know, just don't submit your transaction. And if you pay that price, you know, we can guarantee you that like your transaction will be valid in this block. And so you go from kind of implicitly estimating how much you should pay to just having it being written write there in the protocol - - and I guess to put some numbers on it, like, a few weeks ago I was still looking at Etherscan at random blocks. Sometimes you’ll see, like, a four to, you know, six, seven times different in a single block of how many people paid. Like somebody might have paid 30 gwei and somebody might have paid like 300 gwei and they’re included in the same block on the network. And, you know, that kind of makes no sense. It’s almost like you’re going to the gas station, and the different pumps have different prices, but you’re all kind of getting your gas at the same time. Like a transaction that’s included, you know, like the 80th versus the 70th in a block shouldn't pay like a wildly different price. And this is really what 1559 aims to fix.
In order to be able to have this minimum price in the protocol, we need to be able to gauge what’s the supply and demand for block space. Right? Because this is--our minimum price will be, you know, the amount of transactions we want on the protocol and what’s, like, the maximum we could get people to pay for that. The challenge with doing that is right now on Ethereum all of the blocks are always full. So because the blocks are always full, you know, our demand is always, like, 100 percent, and it’s hard to do good estimates if your demand is always the same. So with 1559 we’re going to allow blocks to be all the way up to 200 percent full compared to the current gas limit. And when blocks will be more than 100 percent full, we’ll just start raising the minimum price and if they’re less than 100 percent full we’ll start lowering it. So this is the way by which you can kind of gauge how much demand there is to actually use Ethereum and as there’s more demand, we’ll just raise the price and if there’s less we’ll lower the price. One other thing that is nice about that is because blocks can always be up to 200 percent full, it means if they’re not--so if they’re kind on an average at 100 percent--if you’re sending a transaction, there’s always kind of an extra 100 percent capacity in the next block to include you. So for most users most of the times and there’s, you know, there’s some exceptions to it here. But for most users most of the time it will be much more easy to know this is how much I need to pay to be included in, like, the next two blocks. Next block can sometimes be tricky because of propagation and whatnot. But, like, if you want to be included in, like, under a minute, it will be really easy to calculate this is how much you need to pay. And this is, like, a huge UX improvement. I’m sure you’ve both lived this where, like, you send a transaction, you know, through Metamask and then Etherscan tells you one minute and then you refresh and it’s, like, two and a half minutes, and then you refresh and it’s, like, five minutes and then you’re, like, speeding it up and like overpaying. So the goal is to kind of eliminate all of that, you know, kind of annoyance in dealing with that. The part--I guess this is where the miners come in. If we want to, like, properly estimate the demand for transaction fees--or sorry--transactions on Ethereum, we can’t send the transaction fee to miners because miners would then have an incentive to fill the blocks up with their own transactions, raise the minimum price for everybody else, and then they get the transaction fees back from their transactions. So it’s kind of costless to them. So the solution to that problem is to burn part of the transaction. And this is where kind of things get controversial around, you know, miners--especially recently--have been receiving these transaction fees and some of them are upset that they won't be receiving them anymore, and we can kind of dive into the details about that. But at a high level that’s how 1559 works.
MATTHEW GOULD: Well, I would say, like, anyone is going to be a little upset if they’re making less money. But I do think that miners are making more money--maybe ten times more money this year than they did last year just given the price that Ethereum is so much higher. But, yeah…
TIM BEIKO: So--yeah. Yeah.
MATTHEW GOULD: I fully understand - - .
TIM BEIKO: There’s a lot of caveats there. Yeah.
MATTHEW GOULD: Well, I fully understand where they’re coming from, and I do think it’s definitely having a discussion around. But, yeah, I mean everyone is going to get a little upset if they get less money. Would it be fair to say 1559 is one of the largest economic changes to the Ethereum system in the last couple of years?
TIM BEIKO: So I’m probably biased because I work on it. But I think after kind of the beacon chain, it’s probably the second largest change, period, we’ve done. Not only from the--because obviously it changes the economics, but it also changes, you know, what’s a transaction, what’s a block, how do we deal with the transaction pool, how do we--basically, how kind of every part of the stack operates. So I’d say, yeah, it’s a very big change.
MATTHEW GOULD: Well, thanks for taking the time to walk us through there on the EIPs. Before we move on, I just want to ask are there any other maybe smaller EIPs that you’re personally excited about or that you would like for people to check out because you think it shows how the blockchain can keep improving?
TIM BEIKO: Yeah. So there’s one that’s been getting a lot of attention right now. I think it’s 3074, which basically is a new approach to do sponsored transactions. So they get the application to pay the gas for the user and to do things like remove the need to have two transactions when you want to use an ERC20 in an app. So to remove the need to have like both and an approve and a send. So it’s an EIP that would kind of greatly simplify the--or add a lot of flexibility to how applications can actually interact with their users, and kind of take on the complexity for them, which is super valuable as we’re onboarding new people to the space. It’s being actively discussed right now. So, yeah, if you search for 3074, it’s very definitely interesting.
MATTHEW GOULD: Well, we’ll check it out. Yeah. Unstoppable Domains actually processes transactions on behalf of users and that’s because our NFT token has a send for buy function where the user can sign something and then we can pay for the transaction or them on the backend. And a lot of applications have done what Unstoppable has done, which is build that into their smart contracts. But it would be great to have that on a protocol level because as an application I can say we use it thousands of times per week. Right? So it’s super useful to add something like that into the protocol.
TIM BEIKO: Yeah. Check it out.
MATTHEW GOULD: Will do. Will do. Thanks. All right. Well, I think we’re getting to the end here. Diana, I’m going to pass it over to you for our last section here.
HOST: So we always end every podcast episode with a segment that we call Explain Your Tweet, and this is where I go through your Twitter account, Tim, and dig up some tweets that are maybe cryptic or interesting or funny and give you a chance to explain it. So in the interest of time, I’m just going to pull out one tweet today. Most of your tweets I will say are about EIP 1559 or other EIPs or All Core Devs meetings. So, listeners, if you’re interested in this stuff definitely follow Tim. He--I think you summarize every call--All Core Devs call or, you know, you post some sort of brief summary about it so users can, you know, if they miss a meeting or something they can kind of get caught up on your Twitter account. But one tweet that I did want to pull out is--this is from March 19th. You retweeted somebody that said, wow, it is awesome that we are obsessed with crypto and don't hate our jobs even though we work crazy hours. I think it also very important that we don’t idolize people who do this. And you said huge plus one to this. If we want crypto to grow we need to make it appealing to talented folks who don't just--who just want to do good work, get paid, have a life and not become degens. So, yeah, I think this a hot button topic right now because of this, you know, peak that we’re at with crypto and it’s--like people say crypto never sleeps and like you said too, like, people in the crypto space are obsessed with it and it doesn’t feel like--I think I saw somebody else tweet recently, like, there are two groups of people that work 100 hours a week, the first group is junior investor bankers and they know and the second group is crypto-folks and they don’t know it. So, I mean, yeah, we truly do enjoy it. But what do you have to say about that and maybe to people who are in the space or people who are thinking of getting into it?
TIM BEIKO: Yeah. I think it’s extremely important that we have--that we make the space appealing to people who don't want to work 100 hours a week. And I think the people we end up seeing on Twitter or on podcasts are kind of the tip of the iceberg. But like the amount of developers who actually work on, you know, client teams and applications and whatnot is much larger then the amount of them who also tweet and, you know, work 100 hours a week. And, frankly, without all the people kind of doing the work there are no applications. There is no, you know, clients and whatnot. And as we scale, you know, we need to get more and more people to contribute to these projects and we needed it to be okay for them to just be a jog. Right? Yeah. So it’s something that I’m really in favor of and I think some of the most talented people I’ve worked with personally in this space have also been people who just, you know, don't want to spend their day on Twitter or, like, 100 hours a week reading about all the new DeFI projects, but want to be very great engineers, do their job, and that’s it. And I think, you know, not to say that there’s anything wrong with people who want to do more. We see a ton of those and it’s really valuable. But we absolutely need to make the space for both.
MATTHEW GOULD: As crypto, as crypto becomes more mainstream, we’re going to have more mainstream people working on crypto to. And people don't need to wear themselves out or degen or yolo on everything in the crypto space in order to be a part of the crypto economy. So I appreciate that as someone myself like--you know? I love crypto but I also have a life and finding balance is a great way in order to really make an impact. So Tim it’s been great having you on here. Thanks for going over all these--some of these, you know, inside baseball things with Ethereum. Thanks for talking about EIPs and letting people know where therapy can go check those out and contribute. And it’s been a pleasure.
TIM BEIKO: Thank you so much for having me. This has been great.
HOST: Last thing, Tim. Before you go let people know where they can find you if they want to connect with you personally and then also you mentioned earlier Ethereum.org is the website for the Ethereum Foundation. For people listening who are brand new to the space, what are the initial cool things that they can do on Ethereum.org to get involved in the community if they’re brand new.
TIM BEIKO: Yeah. I guess one clarification. Ethereum.org is the website for all of Ethereum. It’s not the Ethereum Foundation. I think the website is actually quite good. If you’re developer, if you’re not developer, if you’re a business, it kind of guides into different ways. So I’d say just go to Ethereum.org, find something that appeals to you, and the website is basically made as a series of links to community resources. So it’ll definitely get you to something you’ll find interesting. Where can people find me? Twitter is the bet place. I’m @timbeiko, T-I-M, B-E-I-K-O. You can just tweet to me and I’ll respond.
HOST: Awesome. We’ll include all that in the show notes as well to make it easy for people to click through. Thanks again, Tim, so much. I really appreciate you taking the time to explain all of this to us today. Thank you, listeners, for tuning and we’ll be back again soon with another episode of The Unstoppable Podcast.