(Please note the following is not a verbatim transcript.)
Arthur: Do you see a role for enterprise solutions in Polkadot?
Fredrik: Integrating enterprise blockchains with public blockchains is an important goal of Polkadot. For example, a private education organization chain that stores personal certificates can share the knowledge of the status of whether someone holds the certificate or not without explicitly sharing the certificate itself. This can be done via zero-knowledge proofs (ZKPs).
Arthur: What should we expect from Starkware and ZKPs?
Eli: The notion of privacy through ZKPs is now better-understood through the likes of ZCash. The next step is scalability through STARKs. Verifying the correctness of computation via STARKs scales exponentially faster than conducting the verification naively. When there are thousands or millions of transactions that need to be verified by a third party, STARKs can be used with ZKPs or even without ZKPs (if privacy is not a concern.) Privacy is not black or white, or all or nothing. One can tune to various grades of regulated privacy by selecting different sets of information that can be revealed to different sets of parties. Starkware will focus on “scalability through proofs” as the next frontier.
Arthur: Can you comment about next generation protocols?
Emin: I also want to point out a misconception in the blockchain space with this all or nothing mentality. For example, many developers have the notion of one coin matches with only one script which exists in one blockchain where this one coin can do one thing and one thing alone. I believe that we will see the end of such misconception as protocols like Ava will be supporting multiple scripting languages. We will see different features that can be mixed and matched into one coin. On Ava, one can easily define a new coin that understands the Bitcoin scripting language to use a Bitcoin wallet and also be able to use ring signatures or ZKPs, etc.
Arthur: Can you talk about next generation of key management solutions?Nicolas: Comparing with the web-era, blockchain allows people to own their own secret keys and gives people the opportunity to think about what does it mean to have this ownership. All of the new protocols are bringing different aspects that could potentially affect key management. Today we know how to store a simple private key for a simple blockchain via basic signature validation. The innovations will demand different requirements for key management; for example, a layer of trusted computing with highly intensive computational power and RAMs would be required for ZKPs. The next generation key management system will need to take into consideration mixed current security concerns such as key recovery, tokenization, storage sizes, and UX.
Arthur: What do you see as characteristics of next-generation protocols?
Emin: When we read Satoshi’s white paper, everyone saw this dream. And this dream, while carried us thus far, is technically many magnitudes away from being the reality. For proof of work, we can’t get young people to be excited about a technology that would melt the polar ice caps. The use of electricity also leaks values out of the store of value system. The property of a sound system should be able to scale, to be green, and be quiescent when there is nothing to do.
Emin: In the past ten years, we have mostly seen the re-parameterization of Satoshi’s idea into copycat coins. Most recently, we have seen some experiments with other protocols, but they tend to be fragile. We need a robust solution that provides the ability for everyone to participate. Throughout our history, all of the problems that we encounter have to do with figuring out what people want and how to give it to them. That is the governance problem. Coins that figure out the point of operations that makes most people happy, allow people to express their wishes, and keep their community united will have an edge. I am not sure if our solution is the only solution, but it is certainly one of them. There might be many other techniques that look at the same problem, and I welcome them all. I think we will see many new entrances and many players with great ideas this coming year.
Arthur: PegaSys uses Proof of Authority and is it related to Parity’s Proof of Authority?
Ben: One of the key goals for PegaSys is to support for enterprise deployments. In the long term, there will be convergence and enterprise will deploy on Ethereum 2 or something like it. However, in the meantime, the enterprises do not want to run Proof of Work nodes, and they want TPS in the orders of thousands and ten-thousands per second. To achieve that, the alternative consensus mechanism chosen for PegaSys is an improved version of Istanbul BFT(IBFT), a version of Proof of Authority that was developed by Amis Labs. There are a number of Proof of Authority protocols, Parity uses Aura, and the Ethereum Foundation Geth implements Clique.
Fredrik: I just want to add that I agree the tech we have today is nowhere we want it to be. A big part of Polkadot is to support any blockchain that anyone wants to build. The problem with our space is that once you create a blockchain, you need to have security around it. If it’s a proof-of-work chain, you will need miners. If it’s a proof-of-stake chain, you will need people to put out economic stakes. That is not easy as you will need to build a community around everything. In reality, everyone except the three or four top blockchains are easily attackable. The point of Polkadot is to provide this share of security pool, and hopefully, we can build a strong enough pool that anyone that builds a new chain and connects to Polkadot can get all that security for free from day one.
Arthur: Can you talk about the industry roadmap in the next two years?
Ben: Regarding Ethereum 2, there is always the balance between doing the most amazing new research and being very conservative not to break the existing values and users. Ethereum is working on protocols that are somewhat understood and well-tested, such as Proof of Stake and Sharding. Within two years, Ethereum will be delivering the new technology in stages: 1) Beacon Chain: foundation and coordination layer for the rest of the system. It runs proof of stake, and it provides security for sharding. The Testnet will be March next year. 2) Sharded system, which will follow later.
Emin: Regarding how will the competition shake out in our space in the next two years. Many people might see that we are building a platform coin that competes with XYZ. I see no conflict and no competition. Both the market and design space is so big that we will all naturally find out niches. The last thing I want to do is to go out and have a head-on competition with a community this vibrant and this strong. In fact, I do feel I am part of this community as well. I think the entire space will either rise together or sink together. There will be some communities that isolate themselves and inward-oriented and they will eventually self-eliminating themselves. The ones that are open and aggressive in looking for new use cases will attract new people and hopefully develop the new technology that we are all looking forward to.
Fredrik: Our bet is always the opposite of ‘one coin to rule them all.’ We bet on the audience all here to build stuff that is valuable, and we provide the security and other things to support you all.
Nicolas: The value of blockchain is to stay as transparent as possible. People want security, and once you have something that is secure, people will look for aesthetics and usability. The idea is to find some new property to the key management system such as new notification and new UX, etc. In my opinion, the perfect key management system should be agnostic of what people want to do. It can be changeling especially if we deal with a new cryptography system as we will need to take into consideration of security and performance. Crypto is moving very fast, and we have to find a way to cope with that and protect our users.
Eli: Starkware did not do an ICO or token because we have this fundamental technology that we hope to be deployed into as many platforms as possible to form a profitable business. I encourage projects with significant technologies to do the same or morph your technologies such that it can add substantial values to each deployment.
Fredrik: Parity raised a small funding round, and we are a contractor to Polkadot and Web3 foundation, and that is how we are sustaining ourselves. We are building open source code, and everyone can access it. We are a very flat decentralized organization.
Eli: For projects that are planning on doing an ICO, leveraging from my experience from ZCash, I would remind the projects to structure the founders’ reward carefully with vesting period, as it is more sensible from the economics of what you are trying to create.
Ben: Consensys’ funding model is called “find yourself a billionaire.” As a venture production studio, we churn out development tools, infrastructure projects, and education to simply support the ecosystem. Without the ecosystem, we have nothing.
Emin: No advice from the business side but focus on finding yourself like-minded people and go at it. Build stuff first is how our group distinguishes ourselves in academics and you can also distinguish yourself by building first.
Nicolas: I like the old VC model as Ledger is a hardware company and turning into an operating system company. For us, a good VC has been valuable in growing their network, and this is something one cannot easily get from an ICO.
Arthur: are there projects are not getting the attention it deserves?
Emin: Dapps, NFTs, DEXs
Ben: DFinity, PoC is easy but production has a long way to go
Thanks to Arthur’s excellent work in moderating this panel. Many excellent points were covered in 45 minutes. As Arthur perfectly summed it up, this was a dream panel. At Binance Labs, we hope to continue our support for more exchange of ideas and perspectives in the blockchain community.