 Okay, up next we have Eric Wall. I'm pretty excited to hear his talk You know first heard of Eric when he was the altcoin slayer in 2017 by taking apart a lot of the outlandish claims made by some altcoins And I am pretty excited about social slashing as a feature that allows us to help keep this space Decentralized and Eric's really been a leader on this. So I'm really excited to welcome him to the stage. Welcome Eric If we allow censorship of user transactions on the network Then we basically failed This is the hill that I'm willing to die on If we start allowing users to be censored on Ethereum then this whole thing doesn't make sense And I will be leaving the ecosystem And I think there are a lot of people that think the same thing Powerful words by Ethereum developer Marius van der Veeden By the way, do you know that 50% of transactions actually 50% of the blocks in Ethereum right now are being censored? They're OFAC compliant. Who here in this audience recognizes this image? Can I see a raise of hands? What if I say the name Shaolin fry? Does that ring a bell? Okay, there are very few hands This is one of the most important symbols in bitcoins history and it tells a story that I think that every Crypto person cryptocurrency person should know so let me tell you a little story So it's winter in 2017 the end of February Bitcoin is trading at around $1,000 and for the first time in bitcoins history the blocks are full the mempool is full There are rumors that there's transaction totaling 900,000 bitcoins stuck in the transaction queue now there is an upgrade. There's a code that's Dormant in the code base that has that includes a solution to this problem segregated witness has been Deployed on the network, but it hasn't been activated so this is a soft fork style upgrade and it's configured to activate after 95% of the Bitcoin mining hash rate signals their support for the upgrade That's it's the same upgrade process that the last three soft fork has used For the last couple of years But this time the upgrade isn't getting support We've been stuck in this deadlock situation and we're not getting anywhere We know that with 51% hash rate we can break the deadlock like the miners can do it if they want to But we're not even close to 51% So we're in a deadlock Then out of nowhere comes this Unknown relatively unknown developer and posts an email on the Bitcoin developer mailing list Where he explains that you know this Signaling methodology that we're using it's a misinterpretation the soft fork rules are actually always enforced by the notes Not the miners So what what this felt like by the way, this is called a user activated soft fork This is an important phrase to remember So what this felt like is basically like Imagine that you're a baby and you're drowning in a very shallow pool And then your mother reaches in her arm and teaches you that actually you're not drowning You can just stand up you just use your legs your head will be above the above the water So we call it the the independence day in Bitcoin. It's the It's the day where bit corners took a front seat in In the car that's driving the upgrades And you can argue that bit coiners weren't really sovereign users when they believed that they were at the behest of miners will the will of miners to Determine which upgrades make it into the protocol. So this is really important Really important event in Bitcoin's history and this is a bit cliche this image But really what I think happened is that We create these structures these governance structures in blockchains Where we believe that those governance structures that we create are the only ways that we can Change the network, but many times. They're just there out of convenience. There's the only thing that is in control Is the market you can create new rules and if you get the market to follow you then you can set new rules You don't have to abide by these structures that were created for ourselves So we did this in Bitcoin. We were successful at it so the the One thing to recall though here is that right before this software got activated by the users Setting an activation date in their note software the miners actually fell in line So the miners did What we wanted them to because we forced them forced their hand by showing them that if they don't abide then Then we'll just implement the software ourselves and they have to create Blocks that abide by those validity rules So the actual the actual outcome matrix and the situation was rather complex. I don't want to brush over user activated softwares and then say that they're like a super simple thing. They're actually Quite complex and you can run into scenarios where there's chain splits and there's replay attacks between those forks So it's something that you got to implement with care and you got to be strategic about it but the overall like take away the conclusion from this is that Block producers are merely merely servants of the protocol and we don't ultimately have to abide by how they act. So this story has this sort of Cinderella quality or like a David and Goliath quality to it where the little man stands up against the big corporations And it's something that really galvanized the Bitcoin community and I think that it this time That we see this type of galvanization happening also in the Ethereum community because the Ethereum protocol is facing a threat That is perhaps much bigger than the one that Bitcoin faced So let's go back in history and talk about the three greatest threats in my opinion that has faced the Ethereum protocol So June 2016 the Dow hack. This is what this was when Ethereum's immutability came at risk And then September the same year the Scharingheide DDoS attacks. This is when Ethereum's availability The uptime of Ethereum came under stress And then we have just the two months ago in August I don't know exactly what to call this event, but I've decided to call it the the OFAC OFAC and This is when the neutrality of Ethereum came at risk Now just a quick recap you remember this of course in August The Treasury Department puts contract addresses to tornado cash on the OFAC sanctions list and on the 10th of August Alexei Pertsev gets jailed and What happened then was that this this avalanche of compliance that started to threat the Ethereum network where we would see front ends Implementing wallet screening Which is fine. It's just the front ends, right? If the front ends decide to censor users. That's that's okay, right? but So we saw for example Anthony Sasano and Justin Sun by the way shout out to shout out to David Hoffman who's actually suing the Treasury Department Yeah He was also one of those guys that got his wallet dusted and is also was also unable to use OFAC because of that But it didn't stop there like we found out a couple days later that flash bots Were censoring transactions that had been doing it for quite some time also So we now feel like the the news around our neck is Getting tighter and tighter now. We even see censorship happening at the block building level and then the sort of death knell the Worst possible thing is when we see that even the base layer validator so the block producers So this is ether mine be I think it's the largest it was the largest mining pool in Ethereum even they refuse to implement Sorry, they refuse to include Tornado cash transactions because of their interpretation of of the OFAC law And this is the worst possible thing that can happen right when our validators are afraid to include transactions because the US government doesn't want them to And amidst this we had this now infamous tweet by Brian Armstrong where so Coinbase Was at this point in time Going to be the largest single largest validator on the Ethereum network after the merge and he puts out this tweet where it says well Hopefully, it's obvious, but we're gonna follow the law, which is fine But it's not super great to have your largest validator basically saying that we're Kind of feels like they also feel like they might may have to comply with OFAC So with the merge we sort of went from this situation where we had Hashrate from all over the globe connecting to these mining pools and now after the merge we had this situation where the largest largest block producers are Single companies in Regulated jurisdictions like Coinbase, Kraken and Binance and if you look at how many blocks they make for an epoch each epoch has 32 blocks Coinbase makes six Binance makes one Kraken makes three that's 10 10 11 in total. That's actually enough to create serious damage And censor the Ethereum network if they if they wanted to So I saw the I saw these images looking at the the the live stream for this event Where two paths are being described and we have proof of work here on the left-hand side Censorship centralization, but it's I mean I'll be the first one to Admit, I don't know how you guys feel but the the transition to proof of stake Did bring I mean it did bring us closer to having the neutrality of the platform endangered and I used to think that like Crypto Ethereum Bitcoin, it's this amazing movie that we get to watch from a front row seat But at this moment I felt like I wanted I wanted to scream at the screen Because we always used to say like this is a this is a blog post by Vitalik from years ago we used to say that the Harder to it harder to detect attacks like censorship a coalition centering if that happens We can coordinate a minor minority user activated soft work Which in which the attackers funds are once again largely destroyed So this is always this was always the plan that we would do this in this type of situation Patrick McCurry has this beautiful imagery where he describes What Vitalik is really getting at is that in the Ethereum protocol you can selectively target specific validators and punish them Individually based on their actions, and we do have a track record of what they're doing, right? So in proof of stake you can there's the the actions that they do are actually attributable because They got to put their signatures on specific blocks when they're attesting you don't have that quality and proof of work So it so in proof of stake you actually have a superpower We have a mechanism that allows us to selectively target specific validators And if we can detect that they are engaging in a censorship attack on the network We can coordinate Software that punishes punishes those specific validators Individually, and we don't have to blow up the entire network which we have to do in proof of work If you want to change the proof of work function for example So I gotta I gotta mention this I feel like I have to talk about this There's you've seen I think the most of you've probably seen this graphic Where 50% of the blocks in Ethereum are currently OFAC compliant Is this a problem? Yeah, I think it's a big problem So what should we do like should we slash every single validator who's registered with an OFAC compliant MEV boost relay I Feel like we have to separate between two separate issues here. So One thing that's very important to remember is what is the reason that flashbots exists? So there's censorship in the network can happen in two different levels Well, actually three there's there's more levels, but the two main ones is in the block construction process and Then also at the validator level the current censorship that we're seeing in the network is in this red box here in the MEV boost portion so You have to remember what was to what was the reason that flashbots exist? Well, it's because what if in Ethereum? There's only one validator. That's really really good at extracting MEV If there's only one validator that's really really good at extracting MEV They are going to be able to provide much higher staking yields than anyone else and Then you're gonna see so let's imagine that's Coinbase for example Let's make imagine that Coinbase is really good at this Well, then you get a much higher yield if you delegate your stake to Coinbase versus for example staking on your own This is why flashbots exist. It's because they're allowing any validator to Mine to to make blocks as if they were flashbots if you as if they had access to flashbots MEV extraction techniques So what flashbots is doing is allowing? Validators to not have to redelegate their stake to someone else, but still be able to mine these very profitable blocks So they're preserving validator level decentralization in the system now it's come at an awful cost, right? It's come at the cost that they that they are now all fact compliant and they're building these Blocks that everyone's using they're relaying these blocks and this is a terrible thing But it's at least we have the at least we have the opportunity here that Validators can use other relays and there are technical ways that we can So basically before the merge flashbots only used to create a portion of the blocks So we can go back to such a model. We can use PBS. We can use inclusion lists We can use partial block auctions and we can go back to a model. There are technical solutions to this specific problem Which we're in now where flashbots are creating these entire blocks and if flashbots is centering Centering that that also then applies to the validator But at least we're in a situation where validators can use other relays and we can implement these technical solutions that force MEV builders to include certain transactions So there's a solution to that Whereas if all the stake was centralized in coin-based hands and they start to centering well, that's a much worse problem, right? So this is why I'm not going out on Twitter and saying let's slash all the all the validators that's using flashbots Well, what I think we got to do is we got to explore these technical solutions to reduce the impact that The MEV relays and the MEV builders has there's a way for us to dig ourselves out of the hole That we're currently in so let's talk about the the the more pernicious problem here, which is what if the validators so even if even if we Have a bunch of different relays that all create very profitable blocks and the validators can't validators can choose between those blocks But what if the validators themselves? They want to censor the network. They think that it's their mission to make sure that Ethereum is OFAC compliant so What you have to recognize here is that there's two different ways that the validator can think about this and there's two different forms of censorship So the first one is that you basically just filter transactions that the transactions that you include you make sure that no OFAC compliance get into the chain In this situation even if 99.9% of the validators Do this as long as one validator in the system does not do this that transaction still gets in so This is bad. I mean 50% of the blocks in Ethereum being OFAC compliant is not a good thing And we have to monitor that monitor that and maybe we got to do something serious if it reaches 90% But it's There's one attack that is much much worse, which I call a censorship attack Which is where validators refuse to attest to blocks other validators blocks if they include such transactions So this is a this would result in a system-wide in System-wide censorship if validators decided to do this And I think this is the one that we should treat equally as if it was a double spend on the network If we see anyone doing reorg style censorship in the network that results in system-wide censorship And that's what we really really got to charge our Laser Laser-eyed sharks for right. This is this is the most pernicious attack I still don't think that it's a great thing that 50% of the blocks and it's it's a rising figure like two weeks ago It was 20% 30% now it's 50% so we have to monitor that and we can't let that number go too far But I'm sort of willing to Like maybe there's different punishments for these two attacks like the first one. That's more benign in nature Maybe you can Create a hard fork that only allows those validators to unsteak their ether and basically exit the network And it'll take them a couple of weeks take they'll take them a couple months It's the red one here the latter one the second one that is the one that we should treat equally as if it was Double-spending by the way, why I'm saying this when I'm when I'm saying this I recognize that you know, I'm arbitrarily coming up with rules for slashing in ethereum and this shouldn't be something that's arbitrary This is something that should be a policy that we all agree on But we have to start somewhere we have to come up with some sort of policy I think that validators want to know like what is actually a slashable offense in this network a slashable offense in this network So what we can do now is we can start to formulate the policy We need to get together as a community. We need to See how we feel so we can understand like what's what different routes are most likely to get System-wide consensus So it doesn't make so much sense for me to say this is what we should do in this situation This is what we should do in that situation, but the overarching element here is that we need to come up with some sort of policy so that validators understand what are the different punishments so for example when when Coinbase or any other validator in the system thinks about double-spending for example They don't need to think about okay. What what happens if I doubles, but they know they know the punishment And that's something that now we this requires a social element, but we need to give them sort of similar Deterrence so that they know what the punishment is Now we have bought ourselves some time and I think it's so this is the chief legal officer of Coinbase that Says that their current interpretation of the OFAC laws that there's nothing that compels them to apply any form of censorship on the base layer This is good but I don't think that it should be up to the interpretation of Single company or a couple of companies whether or not we have censorship in the network We need to make the decision matrix for them look similar to what it does in the double-spending case Like there is no choice here. Like if you double-spend you lose your stick. You're no longer on the network That's how it needs to that's that's how it needs to be for censorship also So where are we currently with us? So In August I made a poll where I basically asked the Ethereum community to the extent that I could so what do we do in The situation where you know a theorem is basically being censored Do we allow that to happen or do we slash we burn the stakes of the validators that are Making this happen on the Ethereum network and it seems like currently the Sort of you know the Twitter pulse is not a great thing to to assess this Which is why I actually think that I want to be able to speak with you guys I want to be able to meet you in this conference here and ask you what do you think that people think About this issue and you and you're gonna tell me well all of my friends think that's things that we should slash System-wide censorship attacks rear-side censorship attacks, but we maybe should come to that We maybe should do something different if it's just you know transaction filtering So this is a discussion that needs to happen in Ethereum So that we can get a better grasp of what what is actually what is the consensus view on this? so Ryan Sean Adams voted in this poll and he gave us this great logo for this result so the the Answer here to to slash the validators Got the symbol the black flag instead of waving a white flag you wave a black flag Which means if there's censorship in Ethereum we slash those motherfuckers So what is the black flag movement the black flag movement is sort of a just a movement of people that declare that they Would be willing to go as far as to support a manual fork of The protocol that removes the stake of validators that engages intent in attempts to achieve system-wide censorship Now a lot of people get iffy around this low like I don't want to slash Coinbase because they have retail users And it's ultimately their balances that would get slashed, but if you think about it When if Coinbase double spends they get slashed So there's not that there like it shouldn't really be an ethical question We slash them when they double spend we slash them when they censor that's not a controversial statement Of course, it's more if in this situation because we're doing it in a more arbitrarily way We don't have codified rules that execute this in an automated fashion So we need to be a bit more humble about it sure But the ethical element to it should be sort of clear that we don't allow double spends. We don't allow censorship So this is controversial yeah for sure and This is one of the reasons that we can't expect I don't think that you can sort of rely on your Traditional leaders in Ethereum to be the primary spokespersons for this because Imagine Vitalik saying you know, we're gonna slash this validate we're gonna slash that validator Then we're just back to you know Everyone criticizing us and saying the overlords of Ethereum decides who gets to keep their stake or not like we don't so this has To be in its nature It was the same thing in Bitcoin the Bitcoin core developers did not actually support the user activated soft fork they took a backseat They took a back row seat in this discussion and allowed it to be a community driven initiative So it's really us. It's really comes down to us to push for for this type of social slashing fork if that happens because we cannot rely on our traditional leaders to do that because It just needs to be grassroots in order for it to be authentic Now if you're still like on the fence about this like one thing that I want you to remember is that not even swift Not even swift applies OFAC regulations on the messages that are passed in their in their in their on their network because they recognize that so swift Is a cross-jurisdictional messaging system for banks if you if you have to abide by every single jurisdiction's OFAC laws and regulations you cannot have a cross-jurisdictional Messaging layer. So this is a you just can't you can't comply with every single jurisdiction at the same time Which is why you can't have Network-level censorship for a global system. It just doesn't work It's not even swift does this and I don't think that ethereum should be any worse than swift There's just one last thing that I want to say here about this this image here. It's This image was generated by him by by stable diffusion. So there's GPUs that has rendered this image and Those GPUs are actually repurposed ethereum miners. So those are ethereum miners that Used to secure ethereum are now actually they're actually in this room with us helping me tell this story So they're still with us By the way, I just have a gig to give a shout out to Nick Carter who? Helped me create this image. So he's not on Twitter anymore, but he's still still also with us Actually that was that was the end of my talk. So thank you very much I think we have some time for questions Thanks for the great talk Eric really appreciated that What do you think the risk is today for people to ignore the OFAC guidance? I mean they could tell the ISPs to cut off our internet internet connection Have you thought through other possibilities of what the governments may try to do if we don't comply with the request Hello, yeah, so I'm not an expert on that topic We've seen we've seen that Coinbase doesn't see it as their role to do anything on the validator level To comply with OFAC so they don't currently interpret the Law of the OFAC law that they have to apply any network level censorship So I think you know, it's a little bit weird that flash bots thinks that they have to do it I can't really speak to that on the application side. It gets more iffy I think that for applications I think that like DeFi applications maybe should not have like there shouldn't be like incorporated in the US Maybe if they want to but actually there's another way that you can like if as long as you allow the smart contracts to run an Ethereum Anyone can build a front end to that, right? So that's a way that you can sort of get around that issue of You can have DeFi working and then you can have other Entities create the front end to those smart contracts, but I don't have a great answer to your question because it's not my area of expertise Thank you. Hi Eric First of all, let me congratulate you for the great job that you did Debunking that the hex cam. I remember that video The Richard Harding interview amazing. I'm a professor or myself here in Colombia at the main University It's it's called the University at National de Colombia So I do a job that is similar But trying to debunk scams people loves scams here in Colombia So it's hard sometimes, but anyway, my question is I don't know if you remember a few months ago that some transactions were censored For Venezuelan users through MetaMask and that's before the you know the proof of stake Ethereum system So is is the same as you as you mentioned in your presentation? Yes, I think that I recall this also and so My stance there is basically so private companies What type of censorship that they apply to their business is? Really up to them as long as it doesn't happen on the network level because you can still use another wallet like you can import your seed From export your seed from MetaMask into another wallet and access those funds and move them around even if you're Venezuelan Everything that happens on the front ends at the application layer Especially things that are like off-chain is is like it's bad that companies do that and we should try to get them to adopt the more open Approach, but ultimately it's like network level censorship That's really the thing that we need to need to focus on because someone can always build another wall It's someone that can always build another MetaMask That's the only answer that I have to that question. Okay. Thank you Last question real quick. Thank you Eric. Thank you for bringing this excellent to DevCon What's the obstacle of bringing this censorship resistant to the protocol level? What would be the obstacle of especially on the validator related? Yeah, that's a that's a great question and there is a whole body of research that tries to in an automated fashion detect censorship and Implement like slashing attacks slashing responses in an automated fashion. I would say that the current To my understanding I'm not an expert in that either but to my current understanding There are partial solutions. There are partial solutions that are still on the On the on the whiteboard There's nothing we should probably expect that even even these partial solutions will take a couple of years before we might see them Integrated in the protocol level. So social slashing remains the primary defense mechanism for now It might be such that we have automated ways Which would be much better, right? Because then it would be codified automated. No subjectivity. No arbitrariness. So that's the goal, right? So that's an open research area We might see advancements in that area that come under way But currently we still have to rely on this social element Where we are currently right now. That's it. Yes. Let's thank Eric Thank you seriously for your leadership on this issue Absolutely, I think we might look back in future years as this being the most important talk at this DevCon You know, I think the all of the Ethereum community is grateful that you that you're leading on this Or hopefully not and you know because people get the idea and don't censor because they know they're gonna get slashed we'll see