Solana's resurgence, ETH's market performance is far below expectations, the exchange rate of ETH to Bitcoin continues to hit new lows, and the Ethereum Foundation address frequently sells ETH, with an annual expenditure budget of about US$100 million. Vitalik was forced to reveal that his annual salary is 182,000 Singapore dollars. Recently, the Ethereum Foundation has received unprecedented attention.

After 8 months, the Ethereum Foundation research team conducted the 12th AMA on the reddit forum, facing many questions. At 9:00 pm on September 5th, Beijing time, the Ethereum Foundation research team began to answer questions one after another, including the reasons for the increase in ETH's price, how long it will take for the Ethereum Foundation's funds to run out, blobs (EIP-4844), ZK and Rollup, etc.

BlockBeats screened and sorted the questions and answers and compiled them into a text. It should be noted that the core developers have their own opinions and speculations on certain topics. To avoid misinterpretation, please refer to the attached original post link.

What are the reasons for the increase in ETH's price? Does the Ethereum Foundation care about the price of ETH?

Q: What is the main logic for the increase in ETH in 2024?

Dankrad Feist：Ethereum is building a financial platform that will be the most neutral platform that can simultaneously: allow the issuance of financial assets, allow the trading of these assets, and allow the creation of new financial products such as derivatives based on these assets without permission.

This is a very valuable activity. The value captured from it may be through some kind of fee mechanism. I think Ethereum L1 will be the intersection of multiple sub-fields, and a lot of valuable activity will be generated through fees (assuming L1 scales enough). If this is not the best mechanism, there are other options, such as capturing value through data availability fees, ETH as the main medium of exchange, or using ETH as collateral (which is the riskiest option).

Anders Elowsson：ETH will increase in value when Ethereum promotes sustainable economic activities. By "sustainable" I mean activities that bring utility to the participating economic entities and ensure their long-term sustainability. In this case, the native ETH token will appreciate because: ETH is a trustless asset in the Ethereum ecosystem and is therefore worth holding and using as currency; payments for economic activities settled/secured by Ethereum are made in ETH and are burned, effectively distributing value to all ETH token holders.

Justin Drake：ETH is money  :)

Q: Does the Ethereum Foundation care about the continued growth of ETH prices? Why?

Dankrad Feist：The Ethereum Foundation has no opinion on this, as researchers we each have our own opinions.

Personally, I think it is best to focus on building an ecosystem on Ethereum that can generate value, and I believe that value capture will eventually happen naturally. This does not mean that I don't think about it, but it is a huge mistake to focus on value capture when value generation is not yet sufficient.

Anders Elowsson：The EF may not consider everything, but individual researchers do, and I suspect that quite a few people think that the appreciation of ETH is important. One obvious reason is that Ethereum is secured by staked ETH, so the price growth of ETH ensures economic security. Another reason is that ideally, money should maintain its value over time, and ETH is the best money in Ethereum. There is value in having reliable trustless money in a decentralized economy, and the value of ETH makes Ethereum a better platform for that.

Third, a significant portion of future investment in the Ethereum ecosystem is likely to be held in ETH. This also includes the (not particularly large) vault of EF. Fourth is a deeper thought, that the value accumulation of ETH is closely related to the success of Ethereum, as further discussed in the answer to the next question.

Justin Drake: I personally believe that the price growth of ETH is critical to the success of Ethereum. I believe that Ethereum cannot become the settlement layer of the "Internet of Value" without ETH becoming the de facto "programmable money for the Internet".

Monetary premiums will only be concentrated in one particular asset (considering the tens of trillions of dollars). This monetary premium is necessary to: support trillions of dollars in decentralized stablecoins ("economic bandwidth"); provide unquestionable security, even against nation-state attacks ("economic security"); and attract the attention of all major economic players ("economic significance").

Q: If, when the remaining roadmap is completed, the result is that various rollups are settled on Ethereum L1, there are a large number of decentralized applications on L2, user transaction fees are less than one cent, and the ecosystem is developing well, but the price of ETH has not increased significantly, does this mean that the Ethereum roadmap is a success?

Dankrad Feist:Again, I don’t speak for the Ethereum Foundation, I’m just expressing my personal opinions as a researcher.

When I build a startup, of course I hope to make money, but even if I end up making nothing, if it’s useful to my customers, I’ll still consider that a success.

Applying this idea to Ethereum, I’d consider that a success if we had a diverse ecosystem of rollups that were able to provide interesting applications to the world. But it would be an even greater success if that ecosystem also made the ETH asset more valuable.

Many people believe that a rollup-centric roadmap will undercut Ethereum’s fee revenue and MEV, and that rollups could end up being parasites. I don’t think that’s correct. The highest value transactions will still happen on Ethereum L1, and rollups will scale the entire ecosystem by providing users with a lot of room to trade. The relationship is symbiotic: Ethereum provides cheap data availability for rollups, and rollups make Ethereum L1 a natural hub for high-value transactions.

Anders Elowsson：In the long run, Ethereum's ability to facilitate sustainable economic activity is directly linked to ETH's price appreciation. If you design a system for sustainable economic activity, you are designing ETH's price growth. Vice versa, when designing ETH's appreciation, you must ensure that Ethereum facilitates sustainable economic activity.

In the short term, focusing only on "price growth" without considering its source may lead to long-term value reduction. I personally believe that the current roadmap is actually a "price growth roadmap" as well. If Ethereum succeeds but ETH does not have price growth, I will be surprised and even a little disappointed, but this may be an opportunity to buy ETH because the market will eventually realize this theory of price growth.

Justin Drake：I personally think that ETH's price growth comes down to money flow and monetary premium. For money flow, the key metric is total fees, not fees per transaction.

As I mentioned in my talk, the ultimate goal of Ethereum’s success is to reach 10 million transactions per second, which would still bring in billions of dollars in daily revenue even if the transaction fee was less than a cent. For example, $0.002 per transaction would bring in about $2 billion in daily revenue.

For the monetary premium, the key metric is the proportion of ETH used as collateral currency, such as supporting DeFi.

How long will it take for the Ethereum Foundation to run out of funds?

Q: How does the Ethereum Foundation ensure that the network remains neutral and does not require validators to censor certain specific transactions due to government pressure?

s0isp0ke: Over the past year, we (the Ethereum Foundation's "Robust Incentive Group" (RIG) and other researchers) have been working on enhancing the censorship resistance (CR) properties of the Ethereum network, mainly through iterative "Inclusion List" (IL) design.

In short, ILs allow decentralized validators to collectively force transactions to be included in the blocks of block builders. This effectively reduces the reliance on a small number of complex entities that may arbitrarily decide which transactions can be included in Ethereum blocks (for example, censoring transactions that interact with sanctioned addresses).

We have posted some related posts on ethresear.ch, the most recent proposal is "Fork Choice Enforced Inclusion Lists" (FOCIL): FOCIL Proposal. This scheme relies on multiple proposers to jointly create an inclusion list, in which transactions must be included in the block in order to be considered valid by validators. If you want to learn more or have other questions, please contact us!

Q: How long can the Ethereum Foundation's funds last? What is the response plan when the funds run out?

Justin Drake: Based on my limited personal understanding:

1. Financial reports similar to previous ones should be released soon.

2. The foundation spends about $100 million per year - see Aya's tweet.

3. The foundation's main Ethereum wallet currently holds about $650 million in ETH.

4. The foundation also has a portion of fiat currency reserves that will cover expenses for the next few years. (This is the part I know the least about. As Aya mentioned, ETH sales were temporarily suspended for regulatory reasons, so this part of the reserve was not replenished until recently.)

As a rough estimate, the foundation has about 10 years of funding reserves, but this period will change greatly with the fluctuations in the price of ETH.

Ethereum Layer 1 Related

Q: Once the Rollup-centric roadmap is completed, are there still plans to expand Ethereum's L1? If so, what expansion methods are currently considered?

Dankrad Feist:I do believe that expanding L1 execution should be a goal in parallel with building rollups. However, they are not necessarily in conflict:

1. Data availability can be expanded almost infinitely-the ultimate limit is the interest in Ethereum (i.e. how many people are seriously running full nodes and how many people are willing to record all data).

2. Execution will always be subject to some restrictions, and the ultimate restriction is the single-threaded restriction; currently, state access is the direct restriction for expanding L1 execution.

3. With zkEVM and parallelization, I still think we will see scaling L1 to 10-1000x its current capacity. Rollups will provide the rest to reach "world scale".

The good news is that all of this work is in progress - and thanks to the rollup-centric roadmap, many teams are working in parallel in a more decentralized way.

Justin Drake: The Ethereum Foundation's long-term sustainable plan is to use SNARKs to scale the EVM execution of the mainnet, which is essentially unlimited.

With live L1 EVM SNARKing, validators can verify low-cost SNARKs without having to re-execute EVM transactions. This will allow us to significantly increase the gas limit without increasing the burden on validators. All the heavy EVM execution work will be done outside of consensus by specialized nodes operated by entities such as searchers, builders, and explorers. The burden on users and consensus participants will become light, for example, they can run a node on a mobile phone or watch.

In addition to the vertical scaling benefits brought by significantly increasing the L1 EVM gas limit, there is also the opportunity to use EVM-in-EVM precompilation for arbitrary horizontal scaling, verifying EVM execution within the EVM at low cost. This precompilation will allow developers to programmatically launch new L1 EVM instances, thereby unlocking a supercharged version of execution sharding, where the number of shards is unlimited (rather than capped at 64 or 1024 shards) and a single shard is a programmable rollup (with programmable governance, sorting, gas), called a "native rollup".

Q: What are the main areas of research of the Ethereum Foundation in zk at present? What theoretical or practical applications are being explored?

George Kadianakis: Here are some zk projects related to L1, at different stages of research maturity:

Using STARKed hashed binary trees to achieve statelessness; using recursive SNARKs for large-scale recursive signature aggregation; improving the robustness of the network layer through zk anonymous credentials; using STARKs to implement post-quantum aggregatable signatures (instead of BLS); using ZK in single-secret leader election design; L1 execution using ZK and zkEVM (long term goal!)

In addition, the EF Cryptography team has a broad interest in ZK research. You can find some of this work on the crypto team website.

Antonio Sanso: In a recent statement released by Ethereum Research, the Cryptography Research team stressed the need for a deeper understanding of Verifiable Delay Functions (VDFs) before integrating them into Ethereum. The team does not currently recommend the use of VDFs in Ethereum, and notes that ongoing research and significant improvements are critical to a possible revision of this position in the future. For more details, see the full statement here.

Justin Drake: I'm really excited about the SNARKization of the L1 EVM. Huge progress has been made in the past few months. Uma from Succinct shared new data with me today: the cost of proving all L1 EVM blocks is now about $1 million per year, and significant optimizations are still being made. If this time next year, SNARKs will be available at this time, thanks to SNARK ASICs and all levels of the stack (compilers, arithmetic, proof systems, prover algorithms). Another exciting progress is that EF is accelerating zkEVM formal verification. This is an effort led by Alex Hicks and supported by a $20 million budget.

Blob (EIP-4844) Related

Q: What research areas are most researchers focusing on currently? Did blobs in EIP-4844 lead to findings or adjustments that changed the research direction?

Davide Crapis:We are doing more work around blob pricing, motivated by previous analysis and also by the observation that it is growing in importance as a resource with a market that is very different from other resources (most demand comes from “enterprise customers” that are less elastic in the short term, like L2). We have new research with some partners that will be published in a few weeks.

Q: Is there a problem with the existing blob base fee mechanism? Is there a situation where blob gas fees can become too high, which is unfavorable to L2?

Davide Crapis:The current mechanism does have room for improvement (see other questions about “blobs”). However, the situation you mention is not a cause for concern: remember that the cost of data on L1 is passed on to L2 users and becomes part of the L2 fee. Therefore, when data costs increase due to congestion, the demand for L2 transactions decreases, which puts downward pressure on the demand for blobs, which in turn reduces the price of blobs. Section 3 in the Arbitrum Nitro whitepaper is also a good resource for understanding L2 fee structures.

Dankrad Feist: If blob fees increase, Rollups will charge users more transaction fees. This will naturally lead to fewer transactions on L2, just like what is currently happening on Ethereum L1.

Q: If blobs usage is not reaching the target (e.g. 3 blobs per block), should the target be lowered to ensure the fee mechanism works correctly?

Davide Crapis: No. The mechanism is designed to price congestion, so it is normal for prices to be low if there is no congestion. However, demand is currently well below the target, which affects price discovery in the presence of congestion. Price discovery is very important in this case, and we should make the mechanism more efficient. In the short term, adjustments like increasing the minimum fee (but still keeping it very low!) or changing the update speed can help.

See the discussion here for details: EIP-4844 Fee Market Analysis; Latest proposal: EIP-7762 Increase the minimum base fee for each blob gas.

Dankrad Feist: Ethereum is currently creating a new market for rollups - the data availability market. Many alternatives (such as Celestia, Eigenlayer, Avail, etc.) want to grab market share from Ethereum. They can't compete on security, so they want to win on price.

Even with 3 blobs per block, the revenue generated would not significantly increase Ethereum’s protocol revenue. I think we should work on expanding this space as much as possible over the next few years without rushing to extract fee revenue from it.

I don’t think fees on blobs will be the best value capture mechanism for Ethereum anyway. The data availability market moves too fast - while Ethereum offers the best security, other “close enough” solutions can easily take over the market, making it less than ideal to extract value from it. Ethereum L1, as the natural financial hub in the ecosystem, will have the highest value transactions, which is the best price growth mechanism for ETH.

Justin Drake: Blobs won’t fail to hit the mark - we just have to be patient :) Induced demand takes time to show results. Another consideration is that some recent rollups (e.g. Base, Scroll, Taiko) have found ways to better utilize blobs. These rollup optimizations extend the timeline for blob price discovery, and for good reason.

Other

Q: What is the progress of the proposal for a solution to Ethereum over-issuance? Is it possible to adjust the staking ratio in a PID controller-like way instead of relying on a fixed issuance curve?

Davide Crapis: A controller is possible, but I think it is too complicated. We are able to express the demand curve and do not need to target a specific staking ratio value, but a range, so we should choose this simpler option. I discussed these two options in my CEE 2023 talk (the second option has been studied more since then): Ethereum Staking: Current State.

Justin Drake：Having a smarter issuance curve that tapers to zero at some soft cap (like 1/4, 1/3, or 1/2 of ETH is staked) is the clear right choice in my opinion. The main bottleneck is social coordination. We need someone smart and motivated to push this EIP to mainnet. This is a very high-impact task and I expect the community to fully support it.

Q: What are the new developments on historical data expiration (EIP-4444) and portal networks? What is the status of Multidimensional EIP-1559? What are the current MEV research directions? In addition, what resources (such as verkle.info) or recommended people to follow can help me stay informed of these developments?

Barnabé Monnot：Hi! Regarding the third question, I recommend you to check out this note prepared for an internal research meeting last month, which can help you learn more. For ePBS, we have started a tracker and are updating it with new material as questions arise.

More broadly, current MEV protocol research can be divided into two main directions. On one side are some relatively specific protocol upgrade proposals, such as ePBS and FOCIL (committee-based, multi-proposal style inclusion lists), which are under discussion. On the other side are larger directions, such as APS (broad concepts around execution notes/auctions) or Braid. I personally hope that specific work can provide guidance for more exploratory research.

Q: You are working on VDFs (Verifiable Delay Functions), can you share how you plan to use them? What improvements have you made to existing VDFs?

Antonio Sanso: Mary Maller discussed VDFs in her Devconnect talk, which can be viewed here. I also presented on related topics at the IC3 Winter Retreat 2024, event details can be found here.

Justin Drake: There are two aspects to VDFs: a) building production-grade VDFs as cryptographic primitives, and b) using that primitive in applications.

Let me start with b) Applications. The incentivized use case for VDFs on Ethereum L1 is to enhance RANDAO for unbiased randomness for leader election. IMO VDFs are the ultimate goal for L1 randomness, and remain a "splurge" item in Vitalik's roadmap. So far, there is no evidence that RANDAO is being abused, so VDF R&D has definitely been deprioritized relative to when I started down the rabbit hole a few years ago. Other L1 projects (e.g. inclusion lists, stake caps, SNARKifying L1) are more important.

Besides L1 leader election, another important use case for VDFs is lotteries. In my opinion, there is a low-hanging fruit to build a "world lottery" that is provably fair, worldwide, and commission-free. If you want to build this, PM me :) Another interesting VDF application that has emerged recently is facilitating simultaneous release of blocks in the context of multi-proposals. In an unexpected turn of events, Max Resnick became a VDF bull.

Now to a), which has proven to be much harder than I expected (years of work!), but there is light at the end of the tunnel. We now have a MinRoot VDF ASIC, which I believe can be used for lottery ticket production, although the theoretical MinRoot analysis does not show a practical attack on 256-bit MinRoot. We now need a team to do the integration work to verify MinRoot SNARK proofs on-chain (such as Nova or STARK proofs). This is easy for BN254 MinRoot, but Pasta curves require wrapper SNARKs. If you are interested in working on this integration, please PM me :).

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群：https://t.me/theblockbeats

Telegram 交流群：https://t.me/BlockBeats_App

Twitter 官方账号：https://twitter.com/BlockBeatsAsia