Bankless : a Guide to Vitalik's Ethereum Roadmap

The main topic is to provide a comprehensive overview of Ethereum's roadmap, their future plans for the next three to five years and their endgame.

Dencun upgrade (8:00)

EIP-4844 - Blob Transactions :

• It introduces "blobs" which are new data objects that will flow through the Ethereum network.
• This is a major part of Ethereum's data sharding roadmap to increase transaction throughput and scaling.

In simple terms, this upgrade lays the groundwork for Ethereum to process more data and transactions by introducing a new way to handle data across the network.

EIP-4788 - Beacon Chain Integration:

• This allows the Ethereum Virtual Machine (EVM) to directly access and validate data from the Beacon Chain, which handles consensus on the network.
• It reduces the need to rely on trusted third-party oracles for validating data like staking balances.
• Protocols like Lido, Rocket Pool, and projects involving "re-staking" will greatly benefit as they can trustlessly verify consensus data within their smart contracts.

This upgrade allows Ethereum smart contracts to securely read data from the core consensus mechanism, removing the need to trust external sources for certain types of blockchain data.

Ethereum roadmap (11:10)

• The Merge : transitioning Ethereum to proof-of-stake consensus, which was achieved in September 2022. However, further improvements to make the proof-of-stake mechanism more robust are still part of this "urge".
• The Surge : scaling Ethereum's data availability capabilities, which is crucial for enabling rollup scaling solutions that aim to increase transaction throughput and lower fees.
• The Scourge : this adresses implications of Maximum Extractable Value (MEV) and aims to mitigate the negative externalities associated with sophisticated actors profiting from transaction ordering.
• The Verge : Make verifying Ethereum blocks easy, even with complex MEV activity, by leveraging technologies like Verkle trees and zero-knowledge proofs. This enables ultra-light clients that are as trustless as full nodes.
• The Purge : Simplifying the Ethereum protocol by eliminating technical debt and historical baggage from previous upgrades, making the clients easier to understand and maintain.
• The Splurge : A miscellaneous category for various improvements that don't fit into the other "urges", such as tweaking the EIP-1559 fee market mechanism, account abstraction, and other research.

All these "urges" are happening in parallel, with some interdependencies, rather than being a strictly linear sequence of upgrades. They represent the different areas of focus in Ethereum's long-term evolution towards an increasingly scalable, secure, and simplified base layer.

The roadmap ecosystem (19:55)

The development work on the various "urges" is not done solely by the Ethereum Foundation (EF), but by the entire Ethereum ecosystem including core developers, client implementers, layer 2 solutions like rollups, and more.

It's described as a "team sport" where no single entity could accomplish the entire roadmap alone.

Anyone can get involved in this open and permissionless development process, this is why Ethereum's ecosystem looks organic in how it grows and evolves

Ethereum core values (23:25)

One of the key values driving the Ethereum roadmap is censorship resistance : ensuring the network cannot be censored or controlled by any single entity.

The roadmap prioritizes maintaining censorship resistance above all else, as censorship is described as a "black swan" event - not important until it suddenly becomes the most crucial thing when rights are infringed upon.

The Merge

Single Slot Finality (27:35)

Currently, there is a two-phase process for block finality where blocks are first produced but not immediately finalized, creating an intermediate state.

The goal is to achieve "single slot finality", where blocks are finalized as soon as they are produced, providing immediate settlement assurances.

This is important because transactions on an unfinalized block could be removed (reorged) from the canonical chain, undoing the settlement guarantees.

Max effective balance (31:25)

A key constraint preventing single slot finality currently is the large number of validators (925,000+) that need to vote/attest per slot, making verification impractical within the 12-second timeframe.

Max effective balance allows validator entities like exchanges to consolidate many (e.g. 10,000) 32 ETH validators into a single "super validator" with a higher effective balance (e.g. 320,000 ETH).

Instead of verifying 10,000 signatures, only one signature weighted by the super validator's total stake needs to be verified.

The minimum validator balance remains 32 ETH, so solo stakers can still participate. But the proposed upper limit is 2,048 ETH, allowing better representation of highly staked validator entities.

It allows solo stakers to compound rewards faster by re-staking at more granular levels instead of waiting for another 32 ETH chunk.

Benefits (35:40)

Currently, we need 2 epochs (2*32 blocks = 13 minutes) to finalize transactions.

With single slot finality, each new block produced is instantly finalized with the full economic security of 2/3 of all staked ether backing it.

This means within 12 seconds, you get maximum settlement assurance that your transaction is permanently entrenched in the chain history.

Layer 2s greatly benefit from this, as single slot finality prevents any possibility of reorgs disrupting Layer 2 transaction batches.

Drawbacks of Extremely High Staking (40:55)

Currently, new ETH is issued (created) as rewards to validators based on the amount of ETH staked.

This issuance rate increases with number of validators, but decreases over time. It decreases but never goes to zero, even if 100% of ether is staked.

But there are concerns if too high a percentage (e.g. 98%) of total ETH supply gets staked :

• Diluting ETH's properties as money and collateral in DeFi if all ether is locked up in staking.
• Centralization risks if a single liquid staking protocol controls most of the staked ETH.
• Rewards come only from MEV/restaking, distorting incentives away from the core protocol.

Potential solutions to address this problem :

• Adjusting the issuance curve so rewards diminish faster as stake percentage increases.
• Potentially allowing negative issuance (net ETH burn) at very high stake percentages.

This prevents excessive dilution and dependence on externalities like MEV over core protocol incentives.

Adjusting issuance aims to maintain Ethereum's core economic properties and decentralization as staking levels rise.

The Surge

The goal (50:35)

EIP-4844, shipping in the Denkun upgrade, introduces the primitive concept of "blobs" - new data objects that flow through the Ethereum network. It starts with just 3 blobs per block, providing a rudimentary increase in Data Availability capacity.

This lays the foundation for subsequent rounds of scaling up blob count and DA throughput.

The next step after EIP-4844 is peerDAS (Peer Data Availability Sampling), which allows nodes to share sampling of full blob columns rather than verifying all blobs.

peerDAS provides an interim ~3x increase in blob capacity over EIP-4844, without full sharding requirements.

From Proto-Danksharding to full Danksharding (53:50)

The ultimate goal is to achieve "full danksharding" which increases blob count dramatically (from 3 to 64) to support massive Data Availability (DA) needs.

This will involve nodes specializing in verifying only data availability for rollups. There is no formal EIP yet, but it represents the sci-fi endgame vision for DA scaling.

The general roadmap aims for roughly 3x increases in blob capacity each year through innovations like peerDAS and danksharding. This gradual, incremental approach balances scaling with preserving decentralization and security properties.

Data Availability Sampling & Self-Healing (58:00)

Data Availability Sampling allows nodes to sample just a tiny portion of the full data, rather than verifying everything.

By sampling, nodes can still cryptographically prove the entire data set is available with high assurance.

This "sharding" of data verification enables massive scaling of DA capacity.

Since nodes only have samples, there needs to be a way to reconstruct full data if portions are missing/censored.

So DA self-healing allows nodes to broadcast their samples and reconstruct the entire data set peer-to-peer if needed. This provides robust censorship resistance by preventing malicious nodes from withholding data.

The data availability market (1:01:40)

As DA needs grow, some rollups may temporarily use alternative specialized DA layers like Celestia for cheaper DA.

However, Ethereum aims to have the premium "blue chip sci-fi blob space" that is most secure and censorship-resistant.

Rollups can easily "lift and shift" back to Ethereum's DA when capacity allows, to get strongest guarantees.

Hence, there are "Rollup Improvement Proposals" (RIPs) governance process coordinating the rollup-centric roadmap. This allows faster iteration on layer 2 concepts like alternative EVMs, separate from Ethereum's core protocol governance.

Rollup Coordination (1:07:25)

Optimistic rollup fraud provers and ZK-EVMs are key to decentralizing security of rollup solutions leveraging Ethereum's DA.

Projects like Arbitrum, Polygon and others are working on shipping these to remove centralized security assumptions.

The Scourge

The goal (1:09:30)

Maximum Extractable Value (MEV) refers to the ability to extract value from the ordering and inclusion of transactions in blocks, which can lead to centralization due to the complexity and resources required to effectively capture MEV.

Currently, most Ethereum blocks are being built by a small set of centralized parties called "builders," typically high-frequency traders adept at extracting value through MEV techniques.

The overall goal of the "scourge" is to find ways for the Ethereum protocol to manage MEV effectively, preventing it from becoming a centralizing force that undermines the intended decentralization and permissionless nature of the network.

Inclusion lists (1:13:35)

Inclusion lists are being considered for inclusion in the upcoming "Electra" hard fork, after the "Deneb" upgrade.

The idea is to strike a balance where validators can ensure censorship resistance while still benefiting from the efficiency of specialized builders in extracting MEV.

Encrypted mempools (1:17:10)

Encrypted mempools aim to remove the informational advantage that block builders currently have by hiding the details of transactions from them.

Instead of seeing the full details of a transaction, builders will only see encrypted data (ciphertext) and have a binary choice : include the transaction or exclude it. This prevents builders from exploiting the information within transactions to gain an unfair advantage or extract additional profit.

A project called Suave, developed by Flashbots, is working on implementing encrypted mempools using trusted execution environments (TEEs), which are secure hardware enclaves where transactions can be decrypted and processed without exposing their contents.

The long-term vision is for Suave to act as a distributed block builder, where transactions are sent encrypted to Suave nodes, decrypted and processed within the TEEs, and then assembled into blocks without ever being fully exposed to the builders.

This approach is seen as preferable to alternatives like UniswapX, which attempt to solve MEV by moving trade execution off-chain, as it undermines the purpose of using a decentralized blockchain in the first place.

Enshrined Proposer-Builder Separation "ePBS" (1:22:00)

Proposer Builder Separation (PBS) is a mechanism that allows validators (proposers) to outsource the construction of blocks to specialized builders through an auction. Currently, this auction happens off-chain through software like MEVBoost.

The idea of Enshrined PBS (ePBS) is to bring this auction process into the Ethereum protocol itself.

By having the PBS auction on-chain, it creates an "MEV oracle" – a way to estimate the amount of MEV extracted in each block.

MEV Burn (1:22:00)

MEV Burn refers to the idea of burning the MEV extracted by builders, instead of allowing them to keep it.

MEV Burn serves two main purposes :

1. It redistributes the value back to ETH holders by increasing the scarcity of Ether.
2. It eliminates the highly variable and "lottery-like" nature of MEV rewards, providing more stable and predictable rewards for validators.

Without MEV Burn, validators (especially solo stakers) have a much lower chance of getting high-value MEV blocks, incentivizing them to join staking pools that can average out these rewards.

MEV Burn also enhances security by removing the incentive for validators to try to "reorg" (reorganize) the chain to capture high-value MEV blocks they may have missed.

The Verge

The goal (1:32:40)

Running a node and verifying blocks yourself is the entire purpose of blockchains like Ethereum. It ensures that no one is lying about the state of the blockchain, and it preserves decentralization and censorship resistance.

Making block verification easy is essential because if it becomes too expensive or resource-intensive to run a node, fewer people will do it. This increases the risk of collusion and centralization, where a small group could potentially lie about the blockchain's state.

Why run a node ? (1:35:00)

There is a distinction between verifying blocks (checking they are valid) and validating blocks (attesting to them as a validator with staked ETH). Anyone can verify blocks without being a validator.

Currently, most users rely on third-party services like Infura to verify blocks for them, which reintroduces a trust assumption. The goal is for users to be able to verify blocks themselves, even on devices like phones or watches.

Two key technologies to enable this :

1. Verkle Trees : allowing "stateless" clients without storing the full state
2. ZK-proofs : allowing efficient verification of execution with minimal data

Verkle Trees (1:41:50)

Merkle Trees are currently used in Ethereum to represent the state (account balances, contract data, etc.) in a compressed way. However, the proofs needed to verify state transitions are still quite large.

Verkle Trees are an upgrade that replaces Merkle Trees with a more advanced mathematical structure, allowing much shorter "proofs" that verify state transitions.

With Verkle Trees, a single "block witness" proof can efficiently prove the validity of all state changes in a block, without needing the full previous state.

Not having to store state removes a major bottleneck for running Ethereum nodes on devices like phones, watches or consumer hardware like Raspberry Pis.

SNARKs (1:51:30)

A zk-SNARK allows proving the validity of some computation without revealing the full details, and the proof can be verified very cheaply (hence "succinct").

Currently, most of validity rollups on Ethereum use zk-SNARKs to enable scaling by moving computation and storage off-chain while allowing cheap verification of validity on-chain.

The idea of "snarkifying everything" means eventually using zk-SNARKs for all aspects of Ethereum's layer 1 - execution, state accesses, signature verification etc.

This would involve enshrining a zk-Execution Virtual Machine (zkEVM) directly into Ethereum's layer 1. With a zkEVM at layer 1, Ethereum itself would benefit from ZK-proofs allowing cheap execution verification, greatly increasing the throughput and scalability of layer 1.

However, layer 2 solutions like Validity rollups would still exist on top, benefiting from the increased scalability of layer 1. Their scaling capabilities would be "compounded."

A zkEVM also enables recursive proofs - verifying an EVM execution inside the EVM itself using a zk-proof, making layer 2s more trustless and compatible with layer 1 upgrades.

The Purge

The goal (1:55:00)

With Verkle Trees solving the need to store the entire blockchain state, the purge focuses on eliminating the requirement to store the full history of all past transactions and blocks.

New nodes joining the network will no longer need to sync from the Genesis block by default. Instead, they can start verifying from the latest finalized block provided by the peer-to-peer network.

This simplifies the codebase for Ethereum clients, as they no longer need to account for all historical rule changes across previous hard forks.

Some trust assumptions (1:57:30)

Users with very old ETH balances from the start of Ethereum can still access and move those funds, but with some "trust assumptions."

To prove ownership of old funds, users would need to obtain and store a "Verkle proof" along with their seed phrase, serving as a compact representation of their historical balance.

This proof can be computed by the user if they have access to historical data, or obtained from trusted third-parties like block explorers or Infura.

The Splurge

A grab bag of improvements (2:03:00)

The "splurge" part of Ethereum's roadmap is described as a grab bag of additional improvements and features :

Multidimensional EIP-1559 : Currently, all transaction resources (compute, storage, etc.) are priced under a single "gas" unit. Multidimensional pricing will decouple these resources, pricing each independently based on its own supply and demand dynamics.

This prevents fees for one resource from being impacted by demand spikes for another.

Dynamically adjusting pricing curves : The pricing model can be adjusted so that the cost of censoring a transaction is much higher for builders, disincentivizing censorship.

This works by having builders "purchase" more block space when including high-fee transactions, increasing the opportunity cost of censorship.

EVM improvements : The plan includes various upgrades and additions to the Ethereum Virtual Machine (EVM) to enhance smart contract development capabilities, such as improved modular arithmetic operations.

Account Abstraction : This refers to making the ERC-4337 account abstraction standard a native part of Ethereum, allowing more flexible and capable account types beyond the current simple Externally Owned Accounts (EOAs).

What's next (2:10:00)

Preserving Decentralization and Censorship Resistance : This is considered the core value proposition of Ethereum and should be the guiding principle for all other decisions.

Scaling Ethereum's Data Availability (DA) Layer : There is a strong emphasis on continuing to scale Ethereum's DA layer, which supports rollups and layer 2 solutions. The goal is to make the DA layer robust enough to accommodate the growth of rollups without compromising decentralization.

Addressing Centralization Pressures : tackle various centralization pressures :

• Maximal Extractable Value (MEV)
• Liquid staking
• Core mechanics of Proof-of-Stake consensus

Settlement and Execution Split : The text highlights a clear distinction between Ethereum's role as a settlement layer (focused on censorship-resistant and decentralized transaction finality) and its role in providing execution capabilities (handled primarily by layer 2 rollups).

Ethereum's Community and Governance : The strength of Ethereum's community, with diverse teams contributing to the roadmap and development, is recognized as a valuable asset. Decentralized governance is also mentioned as an important aspect.

The Endgame

Endgame goals (2:15:00)

Convergence : The various approaches to scaling blockchains, including Ethereum's roadmap, are all converging towards a common endgame architecture defined by Vitalik Buterin - centralized block production, decentralized block validation, and strong anti-censorship protection.

Censorship Resistance : Preserving censorship resistance is the core priority for Ethereum, regardless of whether there is a single dominant rollup or multiple competing rollups.

The goal is to ensure that the execution layer (whether handled by rollups or the base layer itself) inherits Ethereum's censorship resistance guarantees.

Competition and Decentralization : If a single rollup becomes dominant, it would effectively become Ethereum's execution layer but still inherit the base layer's censorship resistance.

However, competition between multiple rollups helps maintain decentralization and prevents any single rollup from slacking or overcharging.

Path of Least Resistance : Ethereum's approach of starting with a decentralized and censorship-resistant base layer and then scaling horizontally (via rollups) is seen as the more straightforward path compared to other blockchains that may need to retroactively add censorship resistance and decentralization features after scaling vertically.

What could go wrong ? (2:21:00)

Centralization risks : there are concerns about centralization risks, particularly around MEV (Maximal Extractable Value) and liquid staking.

Mike warns that if 100% of Ethereum is staked through a single governance token controlled by a small group, it could create a difficult situation to get out of, as this centralized power could become entrenched.

Ossification (stagnation) risks : As the Ethereum ecosystem grows larger, coordinating and shipping new technology updates could become increasingly difficult due to various vested interests and the need for consensus among diverse stakeholders.

The risk is that the governance process becomes stagnant and unable to deliver the required scaling, low fees, and censorship resistance that Ethereum users expect.

Fallbacks and resilience : Dom emphasizes the importance of having fallback mechanisms in place to ensure Ethereum's resilience. For example, if too many validators go offline, the "inactivity leak" mechanism kicks in, allowing the blockchain to continue producing blocks without finality.

Similarly, if all block builders go out of business, Ethereum can fall back to locally built blocks. This modular design with multiple fallbacks provides a robust defense against potential failures.

Client diversity and social layer : Dom highlights the role of client diversity, where multiple clients can take over if one has a bug, and the importance of the "social layer" (the community) as the ultimate fallback.

ETH = the asset (2:24:45)

We need to distinguish the Ethereum Network and ETH which is the asset :

• Ethereum Network is a collaborative effort to create a censorship-resistant, blockchain-based computer.
• ETH is a byproduct of building the Ethereum network. If the network is successful and censorship-resistant, it will strengthen the properties of ETH as an asset.

Mike compares ETH to digital oil or a valuable commodity for the internet. It is useful for paying gas fees, pricing NFTs, and facilitating cross-border payments seamlessly. Its value stems from the network's security, censorship resistance, and strong property rights.

A strong network strengthens the asset, and a valuable asset further secures the network through staking, collateral, and demand for gas fees.

Time horizons (2:28:55)

The long-term roadmap discussed is not something that can be completed in months, but rather a multi-year or even multi-decade effort.

For many aspects of the roadmap, such as transitioning to vertical trees, the end goals are known, but the specific implementation details still need to be worked out carefully.

Mike believes that within the next 5 to 7 years, the majority of the big questions and decisions regarding Ethereum's core protocol should be answered and enshrined, as protocols tend to become very sticky and resistant to change once they gain widespread adoption.

Closing thoughts (2:31:35)

Even if we reach that famous endgame, the work on Ethereum may never truly be "finished", as new challenges and rabbit holes will likely continue to emerge.

Even if Mike and Dom could likely make more money working on other blockchain projects, they stayed in this "weird internet world computer project" for their own reasons :

• Mike stays for Community & technology. He's been "pilled by the community" and the welcoming, collaborative vibes as a major motivator, in addition to the excitement of working directly on the core Ethereum protocol itself.
• Dom stays for intellectual curiosity. The intellectual challenge and satisfaction of understanding how all the complex pieces of the Ethereum roadmap fit together is a driving force, describing it as the "infinite nerd snipe".