Bitcoin, Ethereum, and EigenLayer – A Play in Three Acts

The pursuing is simply a impermanent station from John deVadoss, the Co-founder of InterWork Alliance.

Act One: From a Crisis, A New Institution Emerges

On July 30, 2008, the United States Housing and Economic Recovery Act, intended to code the subprime owe situation (which had precipitated the past ongoing Global Financial Crisis), was formally signed. Two weeks later, connected Monday, August 18, 2008, the domain bitcoin.org was registered.

By November 2008, Quantitative Easing was successful action, and the United States Federal Reserve had started buying mortgage-backed securities. In January 2009, the codification for Bitcoin was released arsenic open-source, and by March 2009, the Federal Reserve held adjacent to 2 trillion US dollars of slope debt, mortgage-backed securities, and Treasury notes.

Suppose the extremity was to beta-test integer currency astatine standard towards disintermediating secondary and tertiary fiscal institutions by straight linking citizens and a cardinal bank. In that case, Bitcoin has been a spectacular success, heralding the upcoming epoch of CBDCs. If the extremity were to marque the communal antheral conversant with integer currencies and their usage, Bitcoin would person succeeded remarkably.

A revolutionary breakthrough erstwhile it was released, Bitcoin is galore things to galore people: a virtual currency, a caller benignant of money, a store of value, and the committedness of freedom. But, much than anything, Bitcoin is simply a caller monetary instauration for the integer age. Bitcoin has demonstrated that integer monetary institutions are the future; it has done its occupation by moving the goalposts from wherefore to when.

Some spot successful Bitcoin and its pseudonymous creator(s), a Robin Hood-type legend, a Zorro-like hero, oregon a populist protagonist lasting up against the system. It is not for maine to deconstruct the thematic illusions, but arsenic the aged adage goes, the information is bound to marque you grin erstwhile it arrives.

Act Two: The Rise of a Monolith and its Discontents

Bitcoin begat Ethereum, a 21st-century exertion level to rival immoderate of Silicon Valley’s alleged enterprise-grade, global-scale platforms. And the Ethereum squad did it each successful the open, connected with a unit of mostly unpaid developers spanning clip zones and governmental and geo-political boundaries, agelong earlier moving from location was a thing, shepherded by the genius of their founders and halfway developers.

Why Ethereum? Contrary to fashionable perception, Bitcoin is much than an application; it is much than the postulation of method capabilities that comprise the web and surely much than a token. It is an institution, a self-governing institution. But it is not a platform. Bitcoin, erstwhile it was released, had a level of scripting extensibility, but it was not yet acceptable to alteration developers to physique caller instances connected apical of it.

Ethereum, with its imaginativeness of being the world’s computer, acceptable retired to make the definitive decentralized level abstraction, a blockchain with built-in Turing-complete programming support, allowing developers to constitute astute contracts and to make decentralized protocols, services, and applications. And by immoderate measure, the Ethereum task has been stunningly successful.

Programmable money, fiat-backed stablecoins, and the digitization of real-world assets are but immoderate of however Ethereum has reshaped the satellite of monetary policy. Lending/borrowing platforms, prediction markets, and security are immoderate of the fiscal domains successful which Ethereum has helped rewrite the rules for historically highly intermediated products.

As a effect of its bonzer success, scaling has turned retired to beryllium a captious contented for the Ethereum project; it is worthy noting that its scalability issues effect from the project’s prioritization of decentralization and information implicit scale. Scaling enhancements are anticipated to code web congestion and trim transaction costs; Ethereum’s state interest occupation has been a recurring theme.

There are 2 superior ways to standard the Ethereum network: on-chain and off-chain. On-chain refers to enhancements to the basal furniture and modifications to the network. Off-chain refers to the usage of a abstracted network(s) (so-called Layer 2) to process transactions; Layer 2 networks whitethorn take to stress standard implicit decentralization and information arsenic they tin payment from the basal network’s strengths successful these areas.

Now, present is wherever things became precise interesting. The alleged “on-chain” proponents look to beryllium reluctant to fto go, portion the “off-chain” exponents look to beryllium anxious to innovate. This is the classical saga of a maturing platform: however overmuch escaped coupling? How overmuch composability? And connected the different side, however overmuch to enshrine on-chain earlier it becomes a nett detractor for innovation?

For evident reasons, Ethereum does not privation to extremity up chiefly arsenic a reconciliation ledger for different Layer 2 networks and roll-ups, but astatine the aforesaid time, a monolithic attack imposes limits connected a level and its ecosystem and impacts a platform’s quality to proceed to turn its developer base. Things came to a caput erstwhile Ethereum did its Merge update to Proof of Stake from Proof of Work.

Trust is present a facet of staking and not mining anymore; was the worth present much successful the tokens and with the stakers? Or did it inactive prevarication successful the underlying capabilities? And for however long? Could they beryllium swapped retired with newer, much innovative capabilities? And this leads to Act Three.

Act Three: A New Economic Platform Advances

Ethereum begets EigenLayer, a first-of-a-kind economical platform.

In retrospect, it whitethorn look linear, but it was genius, a first-class paradigm shift. The satellite whitethorn not beryllium antithetic with a alteration of paradigm, but the developer present works successful a antithetic satellite arsenic they say, with a caller intelligence model. We volition look backmost and spot a chiseled translation betwixt decentralized applications successful the Pre-EigenLayer epoch and those successful the Post-EigenLayer era.

And it was the Merge, with the displacement to PoS that enabled EigenLayer to reframe the decentralized exertion model; PoW has nary conception of antagonistic incentives, but with PoS, portion validators whitethorn gain rewards, their involvement whitethorn besides beryllium slashed for misbehavior. With the advent of PoS, EigenLayer is capable to programmatically bootstrap and standard Ethereum’s spot exemplary to warrant economical information for a big of caller protocols and services.

Developers tin unafraid their services without the request to make their validators, oregon to motorboat tokens, etc. The committedness of escaped coupling tin present beryllium extended to economical abstractions by creating markets for decentralized trust. A fascinating three-act play frankincense far, it remains to beryllium seen what enactment 4 portends.

John deVadoss is simply a co-founder of the InterWork Alliance, and helium serves arsenic connected the Governing Board of the Global Blockchain Business Council.

The station Bitcoin, Ethereum, and EigenLayer – A Play successful Three Acts appeared archetypal connected CryptoSlate.