Lex Sokolin: Explaining the Ethereum Merge - [Web3 Breakdowns, EP.38]

Sep 16, 2022

Ask episode

AI Snips

Chapters

Transcript

Episode notes

INSIGHT

How Proof‑Of‑Stake Secures Ethereum

Proof-of-stake secures a chain by requiring validators to lock native tokens as collateral rather than expend electricity on hardware.
Staking can increase network security per unit cost and makes participation more accessible to holders.

INSIGHT

Different Paths To Centralization

Both proof-of-work and proof-of-stake carry centralization risks but from different dynamics: hardware concentration versus token distribution.
Sokolin argues staking may trend toward greater decentralization over time as many holders can participate.

ADVICE

Prefer Native Staking Over Derivatives

Prefer direct staking from wallets when possible to avoid derivative and custodial counterparty risks.
Use liquid-staking tokens only after evaluating protocol and credit risks from providers like Lido or exchanges.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

This is Eric Golden and my guest today is Lex Sokolin. Lex is the Head Economist at ConsenSys, a major Ethereum development company that built MetaMask. Our conversation breaks down the Ethereum merge and its implications on the network and ecosystem. We discuss how the switch affects centralization, the crypto economics of inflation and deflation, and popular market narratives around the event. Please enjoy this conversation with Lex Sokolin.

For the full show notes, transcript, and links to mentioned content, check out the episode page here.

-----

Web3 Breakdowns is a property of Colossus, LLC. For more episodes of Web3 Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Show Notes

[00:02:08] - [First question] - The history leading up to the Ethereum merge

[00:06:00] - A high level overview of proof-of-work compared to proof-of-stake

[00:13:26] - Critical arguments he’s heard that have merit and are worth debating

[00:17:19] - How staking worked before the merge and how it’ll work afterwards and allow retail traders to participate more easily

[00:23:51] - Control of governance and decision making power when staking is outsourced

[00:28:49] - How far away we are from being able to stake directly from our wallets

[00:34:22] - Ways to think about and calculate the interest rate impact post-merge

[00:36:58] - Liquidity of staking and ease of access to deposit and withdraw tokens

[00:38:14] - An Ethereum fork and why so many participants are shorting Ethereum today

[00:43:49] - What would happen to unique and serialized NFTs in a network fork

[00:47:53] - How conversations have gone between him and institutional players about the coming changes to the network

[00:51:34] - What he’s most excited to see built in the next six months and six years

Learn more about your ad choices. Visit megaphone.fm/adchoices