Max Resnick on Ethereum's Roadmap, Economics, and Alignment Taxes
Nov 30, 2024
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Max Resnick, an Ethereum researcher at ConsenSys, dives into the future of Ethereum's scalability and economics. He discusses the role of rollups and appchains, debating whether they hinder or help the ecosystem. A standout topic is 'alignment taxes,' a proposal aiming to equitably distribute security costs among apps based on their value extraction. Resnick also tackles the tension between composability and scalability, weighing the benefits of rollups against the potential fragmentation of Ethereum’s user experience.
The concept of alignment taxes proposes a model for sharing Ethereum's security costs among applications and rollups, promoting sustainability.
The tension between composability and scalability in Ethereum addresses the need for improved interoperability while managing fragmentation from rollups.
A shift to a multi-proposer architecture in Ethereum could enhance competition, reduce monopolistic behavior, and benefit decentralized applications and users alike.
Deep dives
Centralization Concerns Surrounding Solana
There is significant fear, uncertainty, and doubt (FUD) regarding the centralization of Solana, with critics suggesting it functions similarly to a centralized data center node. The discussion highlights specific vulnerabilities within Solana's infrastructure, particularly focusing on its main node located in Amsterdam. This centralization is contrasted with Ethereum, which comprises a more distributed network without relying on a singular data center. Emphasizing these differences aims to clarify misconceptions surrounding Solana's architecture and highlight the significance of decentralization in blockchain technology.
Ambitious Changes for Ethereum's Future
In a bid to enhance Ethereum's capabilities, there are proposals advocating for ambitious modifications that aim to propel the network forward. Current recommendations include increasing block capacity dramatically to manage more transactions and reducing slot times, which are essential for real-time trading activities. Long-term plans involve transitioning to a multiple proposer architecture that would decentralize transaction processing, potentially alleviating market power concentrated in a single proposer. These changes could unlock new opportunities for decentralized finance (DeFi), making Ethereum more competitive and responsive to user needs.
Market Power Implications for DApps
The current architecture of Ethereum, which allows only one proposer per block, poses a risk of monopolistic behavior where proposers can dictate transaction inclusion and order to their advantage. This could hinder the development and profitability of decentralized applications (DApps) as it generates inefficiencies and extracts value from users. By adopting a system with multiple concurrent proposers, the market power could be more evenly distributed, fostering healthier competition and innovation among DApps. This shift would enable DApps to leverage better pricing dynamics in their operations, ultimately benefiting users and developers alike.
The Future of Sequencing and Layer 2s
As the Ethereum ecosystem evolves, discussions surrounding sequencing methods and Layer 2 (L2) solutions are particularly pressing. Many existing L2s use a single sequencer approach, leading to competition that often favors centralization over decentralization. Innovations like the proposal builder separation are being tested in various L2 projects, including Arbitrum, aiming to enhance competition in transaction execution. By enabling multiple sequencers to operate simultaneously, the Ethereum network could foster a more equitable environment where transaction fees and service costs are reduced.
Enhancing the Economic Model of Ethereum
A new thesis suggests that Ethereum can improve its economic model by implementing alignment taxes designed to monetize its security offerings. This initiative revolves around the idea that applications reliant on Ethereum’s security should compensate the network proportionally, ensuring that ERC-20 tokens pay a fee for utilizing Ethereum's robustness. Such measures could balance the financial ecosystem, allowing for a more sustainable model where both Ethereum's security and the applications using it benefit mutually. This provides a path towards a more integrated future where the economic success of Ethereum directly correlates to its widespread use among DApps.
For today's episode, we’re diving into one of the most controversial conversations around Ethereum’s future—the decisions required to create a truly thriving onchain ecosystem.
Joined by Max Resnick, we raised key questions about the future of rollups, appchains, and Ethereum’s economic structure.
Are rollups helping Ethereum grow, or are they parasitic? Should apps like Uniswap stay on Ethereum L1, or is launching their own chain inevitable? How do we address the growing cost of security while keeping Ethereum accessible and composable for all?
Max answered each quite thoroughly.
A central theme was the idea of "alignment taxes"—a proposal to share Ethereum’s security costs across apps and rollups proportionally to the value they derive. This concept challenges how we think about onchain value and whether Ethereum can continue relying solely on staking rewards funded by ETH issuance.
Could this idea lead to a more sustainable and equitable ecosystem? Or does it risk driving activity to other chains with lower costs?
Another major focus was the tension between composability and scalability. Rollups have unlocked incredible potential, but they also create fragmentation. Asynchronous composability and interoperability are improving, but are they enough to match the seamless experience of keeping everything on one chain? Meanwhile, usecase-specific chains like Uniswap’s new chain raise questions about whether Ethereum is providing the tools apps need—or if apps are branching out to secure their own interests as L2s?
Finally, we dove into rollup economics and sequencing. Single-sequencer models have been criticized for being extractive and centralizing market power. The discussion explored how ideas like multiple proposers, deterministic ordering, and app-specific sequencing could create fairer systems for users and applications alike.
This is a must-watch conversation.
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