In his latest blog post, Ethereum (ETH) co founder Vitalik Buterin discussed “what excites us in the Ethereum application ecosystem,” including features related to money, identity, stable coins, decentralization – and voting.
He started Stating that there are very few ideas today that are completely illiterate, this has led to a change in perspective for him: “My enthusiasm for Ethereum is no longer based on the potential for undiscovered unknowns, but rather in certain categories of applications. who are already proving themselves, and only getting stronger.”
1. Money
in poor countries
Buterin said “cryptocurrency often steps in as a lifeline” in countries where links to global financial systems are limited and hyperinflation is constant.
after ethereum SicknessTransactions on the blockchain are “significantly more rapid”, and the chain is more stable. This makes it safe to accept transactions after fewer confirmations.
Furthermore, Buterin once again expressed his optimism and enthusiasm for scaling techniques like ZK Rollup. Additionally, social recovery and multisig wallets are becoming more practical, he said.
“It will take years for these trends to materialize as the technology develops, but progress is already being made,” Buterin said.
Also, the ftx The collapse reminded everyone that “even the most trustworthy-looking centralized services may not be trustworthy.”
in rich countries
The more extreme use cases related to surviving high inflation and basic financial activities do not apply in wealthier countries – but crypto has significant value here nonetheless. For one, it is “much more convenient than traditional banking,” Buterin said.
There is also the notion of crypto as private money in the era of transition to a ‘cashless society’ – a transition that is being used by governments to increase financial surveillance.
“Cryptocurrencies are the only thing currently being developed that can realistically combine the benefits of digitization with cash-like respect for individual privacy,” he said.
stable coins
stable coins They were developed due to the volatility of cryptoassets, among other factors, and are popular among more practical crypto users. However, Buterin argues that,
“There is one reality that is not compatible with cyberpunk values: the stablecoins that are most successful today are centralized, mostly USDC, USDT, and BSD.”
Per Buterin, the stablecoin design space is divided into three categories:
- centralized stablecoins (as mentioned above),
- DAO-governed real-world-asset backed stable coins (eg markerDAO‘s Midwife,
- and governance-minimized crypto-backed stablecoins (RAI, LUSD).
Decentralized Autonomous Organization (dao)-governed real-world asset (RWA)-backed stable coins, “could be a happy medium if they can be made to work well,” Buterin argued. They will combine sufficient robustness, censorship resistance, scale, and economic practicality to meet the needs of large numbers of real-world crypto users.
That said, making it work will require strong issuers as well as real-world legal work to develop resilience-oriented DAO governance engineering.
2. Decentralized Finance (DeFi)
DeFi The co-founder of Ethereum said it was “honorable but limited,” and over time it “turned into somewhat of an over-capitalized monster, dependent on unsustainable forms of yield farming.” Now, however, it has begun “setting down” to a stable medium, with a focus on improving security and a few particularly valuable applications.
While decentralized stablecoins are “and probably will be forever,” the most important DeFi products, Buterin mentioned a few others:
- Prediction Markets: These probably won’t make a “huge multibillion-dollar splash” but will continue to grow, becoming more useful over time;
- Other synthetic assets: The stablecoin formula can be replicated for other real-world assets, including major stock indexes and real estate;
- Layers to efficiently trade between other assets: If there are assets that people want to access, there will be value in a layer that makes it easy for users to trade between them.
3. Identity Ecosystem
When we talk about “identity”, it can include many things, such as name, basic authentication, verification, and proof of identity.
Attempting to create a centralized platform to achieve these functions “from scratch,” Buterin argued, would not work:
“What will more likely work is an organic approach, with multiple projects working on specific tasks that are individually valuable, and adding greater interactivity over time.”
“And that is exactly what happened,” Buterin said, providing examples of the Ethereum Name Service (ENS), Sign With Ethereum (SIWE), Proof of Humanity (PoH), Proof of Attendance Protocols (POAPs), and Soulbound Tokens. . sbt).
Each of these applications is individually useful. But what makes them really powerful is how well they synergize with each other, he wrote.
That said, there are further issues. Scaling is one, which can be solved “with Rollup and maybe Validium,” Buterin wrote. But the biggest future challenge for this ecosystem is privacy – it must be “deliberately worked out for each application.”
4. DAO
Buterin noted a distinction when it comes to the term “decentralized,” which he said is sometimes used to refer to:
- A governance structure is decentralized if its decisions depend on decisions made by a large group of participants.
- The implementation of a governance structure is decentralized if it is built on a decentralized structure such as a blockchain and is not dependent on any single nation-state legal system.
One way to think about the distinction is that a decentralized governance structure protects against inside attackers, and a decentralized implementation protects against outside attackers, he said.
Buterin offered three “principles of decentralization”.
decentralization for strength
If the manufacturer is taken as an example, if there were no safeguards when it came into the hands of the regime mkr Theoretically, someone could buy half the MKR, Buterin said, using it to manipulate price predictions and steal a large portion of the collateral.
For decentralized stablecoins to work in the long run, there needs to be innovation in decentralized governance that doesn’t have these kinds of loopholes, he said, adding that possible directions include:
- a kind of non-financial governance, or a bicameral hybrid where decisions need to be passed not only by token holders but also by some other class of user;
- Intentional friction, so that certain types of decisions take effect only after delays long enough to allow users to see that something is going wrong and escape the system.
decentralization for efficiency
A decentralized governance structure is valuable because it can incorporate opinions from diverse voices at different scales, Buterin said, and a decentralized implementation is valuable because it can be more efficient and less costly than traditional legal-system-based approaches. Could
“It implies a different style of decentralization,” he said. Whereas decentralized governance for robustness emphasizes a large number of decision-makers to ensure alignment with a pre-determined goal, making deliberate pivot difficult, decentralized governance for efficiency seeks to act quickly and when needed. Has the ability to pivot, “but tries to make decisions away from the top so that the organization doesn’t become a rote bureaucracy.”
Decentralization for Interoperability
Buterin concluded that it would be both easier and safer “for on-chain things to interact with other on-chain things” than for them to interact with off-chain systems that would require a bridge layer — which can be attacked.
5. Hybrid Applications
It is this last point that Buterin discussed, who said that many applications are not fully on-chain, but they still take advantage of blockchain and other systems to improve their trust models.
As an “excellent example” he cited voting, which essentially requires censorship resistance, auditability, and the highest assurance of privacy. system like MACIThe blockchain, he said, effectively combines ZK-SNARKs and a limited centralized layer for scalability and coercion resistance.
While it will take a long time for countries and voters to get comfortable with the security assurances of electronic voting, whether using blockchain or not, “this kind of technology could very soon be valuable in two other places,” Buterin said. . These are:
- increasing the assurance of voting processes that already happen electronically today (eg social media votes, elections, petitions);
- Creating new forms of voting that allow citizens or members of groups to respond quickly, and involve a high degree of assurance in them from the outset.
Beyond voting, there is a “whole area of potential “auditable centralized services” that may be well served by some form of hybrid off-chain Validium architecture,” Buterin argued, such as:
- proof of solvency for exchanges;
- government registries;
- corporate accounting;
- Play;
- supply chain applications;
- Tracking Access Authorization.
Although many of the aforementioned applications are being built as we speak, many see only limited use due to the limitations of the current technology: blockchains are not scalable, transactions take a long time to be reliably included on the chain. , Wallet users need to choose between less convenience and less security, as well as the “ghost of privacy issues”.
That said, “these are all problems that can be solved, and there’s a strong drive to solve them,” while it’s relevant to be deliberate about the application ecosystem, Buterin concluded.
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learn more:
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