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    Empire

    The Reboot | Uncommon Core 2.0 with Hasu and Jon Charbonneau

    Mon Jul 17 2023
    CryptoBlockchainMEVRoll-upsDecentralizationGovernance

    Description

    The episode covers a wide range of topics in the crypto space, including the role of writing, understanding the workflow, research and synthesis for reports, MEV and infrastructure, challenges and roadmap for roll-ups, decentralization and governance in roll-ups, centralized and decentralized sequences, the role of governance, liquid staking, and roll-up governance and sequencers.

    Insights

    Writing as a Learning Tool

    Writing reports helps in learning and understanding complex topics effectively.

    Decentralization Challenges in Roll-ups

    Decentralizing the sequencer in roll-ups is difficult due to various factors such as monopolistic pricing and censorship resistance.

    Governance's Crucial Role in Roll-ups

    Governance plays a crucial role in ensuring the trustworthiness and effectiveness of roll-up systems.

    Liquid Staking and Delegating Validator Selection

    Liquid staking offers a potential solution for governance challenges in roll-ups by allowing delegation of validator selection.

    Interoperability and Shared Standards

    Enhanced interoperability and shared standards are important goals for the future of roll-ups.

    Chapters

    1. Introduction
    2. The Power of Writing in Crypto
    3. Understanding the Workflow in Crypto
    4. Research and Synthesis for Reports
    5. MEV, Roll-ups, and Infrastructure
    6. Challenges and Roadmap for Roll-ups
    7. Decentralization and Governance in Roll-ups
    8. Governance and Censorship Resistance in Roll-ups
    9. Centralized and Decentralized Sequences in Roll-ups
    10. The Role of Governance in Roll-ups
    11. Governance and Control in Roll-ups
    12. Liquid Staking and Roll-ups
    13. Roll-up Governance and Sequencers
    Summary
    Transcript

    Introduction

    00:00 - 07:11

    • The Uncommon Core podcast is back with new co-host Jon Charbonneau after a long hiatus
    • The focus of the podcast is exploring the technology and incentives behind public blockchains
    • The three main topics discussed are MEV, blockchain security, and roll-up solutions
    • Deep curiosity, intellectual honesty, and breaking down complex ideas are core values of the podcast
    • Jason and Jon's interests have shifted towards the infrastructure side of crypto
    • Jon spends a lot of time on Twitter for research and reading
    • Writing is an important part of Jon's information processing and understanding

    The Power of Writing in Crypto

    06:49 - 14:23

    • Writing reports improves their quality significantly
    • Writing helps in learning and understanding complex topics
    • AI may make writing less important, but John would still write every report the same way
    • Reading what AI writes won't help you learn as effectively as writing yourself
    • Writing notes and connecting ideas enhances brain plasticity
    • John joined crypto in March 2022 after being an obsessive hobbyist throughout 2021
    • Learning through writing allows for feedback loops, building a brand, and networking

    Understanding the Workflow in Crypto

    13:56 - 20:49

    • Understanding the workflow and process is more important than pre-existing technical knowledge
    • Focusing time and resources in the right places is key to success in crypto
    • The Ethereum report provided comprehensive information scattered across different sources
    • Outsiders can often see obvious gaps or blind spots in the crypto community's knowledge
    • Renewal of communities and fresh blood from outside bring new perspectives into crypto
    • The research process for articles involves extensive primary source research and diving deep

    Research and Synthesis for Reports

    20:23 - 27:09

    • Creating reports involves significant time researching and synthesizing information
    • Starting from scratch and looking up basic concepts is part of the process
    • Talking to people in the field adds depth and interest to reports
    • The speaker's workflow has become more efficient over time
    • Dedicating most of their time to a report for a week or two before moving on
    • The speaker was proud of a report on Ethereum recognized by Vitalik Buterin
    • Crypto infrastructure encompasses MEV/supply chain, new blockchains, scaling solutions, consensus, and security

    MEV, Roll-ups, and Infrastructure

    26:43 - 34:19

    • MEV/transaction supply chain and roll-ups are closely connected
    • Roll-ups need their sequencing needs met
    • Decentralizing leader election mechanism in roll-ups is a challenge
    • Flashbots is thinking about the best mechanism for roll-ups
    • Liquid-staking protocols dominate the staking area
    • Market dynamics of liquid staking have network effects
    • Best staking protocol should be decentralized and trustless
    • Infrastructure is important due to personal interest and innovation focus
    • Significant innovation has been happening on the infrastructure side

    Challenges and Roadmap for Roll-ups

    33:55 - 41:04

    • The need for a new consensus algorithm to make blockchain more scalable is discussed
    • Current blockchain applications have limitations with competitive decks, MEV, privacy, and routing
    • Solving MEV, roll-up staking, scalability, and security problems is crucial for high-quality applications
    • Roll-ups are at an early stage of decentralization, prioritizing control over contracts
    • Handing over control of contracts is seen as the most important aspect of decentralization
    • Discussions about contract upgradability and governance mechanisms in roll-ups are ongoing

    Decentralization and Governance in Roll-ups

    40:42 - 47:26

    • Governance and control in roll-ups require attention
    • Decentralizing the sequencer does not necessarily solve issues like monopolistic pricing or censorship resistance
    • Constraining the powers of sequencers is crucial, even if it means having one person in control
    • Roll-ups need to make different trade-offs on MEV compared to Ethereum
    • Decentralizing the sequencer in a completely permissionless way is difficult and may not be necessary
    • Governance should have the power to remove malicious sequencers
    • Trustworthy sequencers can be selected by governance, with private mempools and no front-running

    Governance and Censorship Resistance in Roll-ups

    47:05 - 54:14

    • Governance should have the power to remove malicious actors in roll-ups
    • Roll-ups inherit censorship resistance from Ethereum
    • Trusted operators can be used in roll-ups during the interim period
    • Different chains have different requirements and goals
    • Privacy and front-running protection are difficult on Ethereum
    • Cosmos chains have their own validators and governance with the ability to slash misbehaving validators
    • Roll-ups are decentralized because they post data and proofs to Ethereum
    • Roll-ups can choose a more centralized approach if it provides benefits
    • Having an opt-out option is crucial for user control in roll-up systems
    • Both decentralized and centralized approaches have a place in the endgame of roll-ups

    Centralized and Decentralized Sequences in Roll-ups

    53:53 - 1:00:16

    • Both centralized and decentralized sequences have a place in the roll-up ecosystem
    • Centralized sequences provide good user experience and build network effects
    • Users can leave a roll-up if they have the option to opt out and retain control
    • Decentralized social media platforms are harder to bootstrap due to network transfer limitations
    • A clear opt-out option keeps operators in check and prevents monopolistic behavior
    • Having a PBS auction is important to express preferences and avoid problems with ordering
    • Trusted mempools can keep user orders private while allowing bidding for block positions
    • Governance should have more power in selecting trusted operators for sequencers
    • Proof of stake without delegation tends to centralize power, while proof of governance allows intentional selection of operators

    The Role of Governance in Roll-ups

    59:50 - 1:05:58

    • Governance plays a crucial role in roll-ups
    • Outsourcing governance to optimism is an interesting concept
    • Figuring out roll-up governance is a difficult problem
    • The vision behind the super chain is enhanced interoperability and shared standards
    • Shared validity sequencing would tie multiple chains together
    • Different applications will have different needs for interoperation between roll-ups
    • Designing roll-ups differently from Ethereum makes sense
    • Opinionated governance will likely be important for roll-ups

    Governance and Control in Roll-ups

    1:05:51 - 1:13:07

    • Governance is important for stewardship of smart contracts and control over updates
    • Decentralization and governance intersect in roll-ups
    • Roll-ups have a smart contract that controls a significant amount of money
    • Contract governance holds power and drives decisions in roll-up land
    • Liquid-seeking protocols face challenges in marrying immutability, security, and decentralized governance
    • There is overlap between the roadmaps of Lido and roll-ups

    Liquid Staking and Roll-ups

    1:12:47 - 1:19:05

    • Liquid staking could be interesting for roll-ups as a way to delegate validator selection
    • Governance in roll-ups can be challenging, and liquid staking offers a potential solution
    • The argument that liquid staking would be the end game for roll-ups is not convincing
    • Roll-ups already inherit decentralization from Ethereum
    • For chains aiming to become settlement layers, governance becomes more important than sequence selection
    • Different layer two solutions have different plans and may not coordinate on implementing pre-compiles

    Roll-up Governance and Sequencers

    1:18:47 - 1:22:00

    • The governance of roll-up systems is more important than the number of sequencers
    • Outsourcing governance to optimism is an interesting concept
    • Figuring out roll-up governance is a difficult problem
    • The vision behind the super chain is enhanced interoperability and shared standards
    • Shared validity sequencing would tie multiple chains together
    • Different applications will have different needs for interoperation between roll-ups
    • Designing roll-ups differently from Ethereum makes sense
    • Opinionated governance will likely be important for roll-ups
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