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Ethereum Must Move Faster or Risk Losing Its Edge Says Starkware Founder | Markets Outlook
00:22:54
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- [00:00]
A
The biggest thing is like, you know, will Ethereum maintain its edge? Right. You know, I often look at things like web browsers and the dominance of them in history. So at any given point in time, it may seem that, you know, whoever is the most used and most common is like, you know, going to be there forever. But there are these tectonic shifts that take place once in a while and they take a very long time to come about, but then they do happen.
- [00:33]
B
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- [01:10]
A
Thank you for having me here, Jen. Always a pleasure.
- [01:14]
B
Always a pleasure. We're talking about Ethereum, Ethereum going through a lot of changes, a lot of chatter about it. And so I want to just start off by just getting your initial reaction, hearing where you are. When you see Vitalik's plan for the future of Ethereum, what are your initial thoughts?
- [01:32]
A
I'm a big admirer of Vitalik. He's one of the smartest, you know, leaders of crypto out there. So always interesting to hear what he has to say. If anything, I would like to see more of his involvement in the leadership of, or at least more external and public involvement in the stewardship of Ethereum. I think the plan overall is very good, very ambitious. It is needed. It is timely overall. Love it. You know, there are a few things that one would hope would be done just a little bit differently. But you know, overall this is a great plan and suggestion and I support it.
- [02:16]
B
I want to talk about some of those things in just a second. But for, for folks who have, who are newer to the space than, than you, I want to start here. What do we need to know about e Ethereum and the beginnings of Ethereum to understand where we are today and where Ethereum needs to go to continue to sustain, I guess, that first mover advantage that it has.
- [02:39]
A
Yeah, so Ethereum has a great advantage in being the very first, you know, smart contract general platform and the platform in which most of the activity is rooted on and that's a huge moat, which is really great. But the technology, there are a number of things that need to. Just like any first generation platform, computers always evolve and there's more to do. So definitely things like scale, better privacy, better foundations for good ux, of course, quantum resistance, all of these things are things that this, this bold program tries to tackle.
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B
You just started by saying there are a few things that you would like to see done differently. When we look at the new roadmap for Ethereum. What are those things?
- [03:31]
A
I hope it would have been a little bit faster and like you know, just the, the timeline talks about I think three to four years and you know, plan for three to four years usually gets delayed. So maybe more prioritization and a faster timeline would be good. Another thing, so there are a lot of elements there that are things we already implemented on StarkNet, recursive Starks, a new lean virtual machine that would be stark friendly. All of that is stuff that already exists on starknet. So I think that borrowing from that or using a lot of it is open source and that could really help move things faster. So I would say the pace of things is something that I would like to see more and maybe more, you know, working with ecosystem to get it done. But overall like, you know, this is something that is very much needed and you know, I support this plan generally
- [04:34]
B
if speed isn't addressed, if the timeline remains the same up to five years, I think it is what's at risk.
- [04:43]
A
Well, the biggest thing is like, you know, will Ethereum maintain its edge? Right. You know, I often look at things like web browsers and the dominance of them in history. So at any given point in time it may seem that, you know, whoever is the most used and most common is like, you know, going to be there forever. But there are these tectonic shifts that take place once in a while and they take a very long time to come about, but then they do happen. So like the biggest concern is that something just will something more modern better will overcome Ethereum, even though it's hard to see right now. But even if that's not the case, just you know, five years is a very long time and we need stuff now, right? If we want to change the way the world economy works and have freedom of financial innovation, which is something that, you know, Ethereum pioneered, then, then we need the infrastructure to support that today. Maybe one more risk is just that some centralized corporate chains are just going to come and just be the sort of new Rails for tradfi and for the traditional system. And that's certainly not my vision, it's not Vitalik's vision, it's not Satoshi's vision. So time is of the essence.
- [06:04]
B
We touched a little bit on this at the beginning of our conversation, but I want to lay it out very clearly for our audience. What does Ethereum need to do to maintain that edge we spoke about?
- [06:18]
A
It needs to move fast. There needs to be transparency as to how decisions are made. Road, road. Plans are made from someone on the outside, a little bit like myself. It seems like there's this opaque, you know, body that, that once in a while makes plans and announces them and you know, you need more, I think collaboration, bringing in more of the core teams. So I'd say those two things just speed and then, you know, clearer transparency on governance and how strategy is decided upon.
- [06:56]
B
And do you think that progress is good? Progress is being made towards some of
- [07:01]
A
those milestones, technological milestones? It's too early to say. I hope so. On the governance and speed, I don't know. The jury is still out so I mean, as I said, I would like to see Vitalik more clearly involved at the leadership or I would like the structures and processes of governance and how plans are made to be a little bit more fleshed out so everyone can participate and see. So I don't know, it's a bit too early to say. I mean the plan itself I think is really great. It's implementation, it's the timeline, you know, how decisions are going to be made that, that the jury is still out. Right? There were a bit of turmoil, there was a bit of turmoil in the Ethereum Foundation. You know, things aren't completely settled yet. So I don't know exactly like, you know, what, what governance looks like today.
- [07:54]
B
We're going to take a quick break. When we come back, blockchain based versions of SpaceX drove record trading activity for tokenized equities during June plus more with Eli Ben Sasson this episode is brought to you by RealFi most stablecoins leave capital sitting still. RealFi is different. It connects on chain capital to real world markets like US Treasuries, money market funds and private credit. Real transparency, real impact. RealFi launching August 2026 join the waitlist at RealFi Co LEDN has introduced their lowest rates ever. The larger the loan, the lower the rate and they come with LEDN's gold standard protection. Your Bitcoin remains custodied and is never lent out. Interest auto top up LTV alerts and partial repayments to keep you in control. Repay whenever you want with zero penalties or monthly payments. Leden's perfect track record speaks for itself. Don't choose between a great rate and the safety of your bitcoin. Get both at Len. Check out your rate at Leden IO Every second Thousands of trades move through crypto markets, but few firms are focused on making those markets more efficient than JPEG Trading. JPEG Trading is a global proprietary trading firm operating across cryptocurrency and decentralized finance markets markets specializing in high frequency trading across blockchain based assets. Through quantitative research, advanced trading systems and deep market expertise, the firm helps provide liquidity across the digital asset ecosystem. Learn more and follow along at JPEG Trading on X that's JPEG Trading on X this is brand new Rails, our weekly look at the biggest trends, opportunities and developments in tokenization. It's brought to you by Real Fi. Most stablecoins leave capital sitting still. Realfi is different. A smarter stablecoin backed by real world assets like US treasuries, money market funds and private credit. Launching August 2026. Join the waitlist at RealFiCo. All right, let's take a look at tokenized equities. They saw record trading activity in June as investors rushed into blockchain based versions of SpaceX following the company's blockbuster IPO. According to CoinDesk Data's latest stablecoins and Tokenization Assets report on chain trading, volume jumped 145% from May to $3.86 billion. Backpack securities SPCX token led the way, generating $1.08 billion in on chain trading volume. X stock's version followed with $852 million. I caught up with Backpack CEO Armani Ferrante. Here's what he had to say.
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C
It was way more successful than I think we could have dreamed of. I think all of the credit goes to not just our team but but the entire Solana Defi ecosystem. We built our tokenized stock offering for the assets to be able to freely move between traditional finance and between Solana Defi really at the speed of a token. So as this inventory builds up, as liquidity gets better and better, we're going to go symbol by symbol to build really a global capital market for securities on chain and natively in the brokerage itself. And so as this grows the, you know, liquidity will continue to come in and you really kind of are going to have this global marketplace where you have access to securities 24. 7 because really that's what blockchains are all about.
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B
That's a wrap for brand new Rails. We'll see you next week to continue exploring how blockchain technology is reshaping capital markets, liquidity and investment opportunities. Let's get back to our conversation with Ellie Now. Ellie, I want to talk to you about the part of the plan that puts recursive Starks at the center of how Ethereum verifies its itself. For our audience who's watching, just talk us through what that means and what could change day to day moving forward.
- [11:29]
A
What people would feel is just much higher throughput, better UX maybe if you want to see what it feels like as a user, you can just go on starknet because recursive Starks have been in production there for the past, I don't know, three, four years. So you get like very good scale, low latency, a lot of efficiency. You get privacy. That's what it feels from the outside. And then for those developing it really I'm guessing that if Ethereum is going to move to a new virtual machine, a new programming language, so it really depends what that programming language is going to be. I obviously recommend, I think the smartest thing would be to take Cairo, which has been in production and develop that's the language on which these recursive Starks are built inside starknet. And then you would get a rust like programming environment that's very safe and ergonomic. If it looks a little bit more like Ethereum and evm, then it would be an older generation language would be a little bit more hard to work with and lower scale and efficiency. So but it would feel, well it really depends on what kind of virtual machine is at the core of the new thing. But the Starks themselves, they would just feel, you know, you wouldn't notice them if you're not really deep in the infrastructure developer, they're sort of just wrapping things around and making them safe and scalable.
- [13:01]
B
I want to talk about quantum readiness now. We talk a lot about the, the risks in the Bitcoin ecosystem when quantum computers are here and able to, to break some of the systems that have been built. What are the risks to Ethereum? And when we talk about timeline, is the timeline for quantum readiness one that you think is effective?
- [13:27]
A
So the risk right now is exactly the same risk because both in Ethereum and in Bitcoin, if tomorrow there's a quantum computer, then pretty much, you know, all or almost enough tokens can be just, you know, seized and taken or stolen that, that, you know, all value would basically drop to Zero. Ethereum has an advantage that there is some governance mechanism that, you know, I was saying that I would like it to be a little bit more transparent but it's, you know, way better than what we have in, in Bitcoin. So there's at least a plan with the timeline, right? Bitcoin doesn't have that, so things are a little bit better. But there is a lot of work to be done and my concern is that the timeline may not be aggressive enough to meet the challenge of the quantum threat. So yeah, I think the only way to think about it is to be really, really worried and very proactive. We just earlier this week announced our own quantum readiness plan for, for StarkNet and step one of it, which was replacing certain hashes with quantum safe hashes, was already deployed in production yesterday. So when I talk about the need for urgency, it needs to be like, yeah, I would like to see that sped up quite a bit.
- [14:50]
B
I am listening to you and I gotta say I think our audience might feel the same way. It feels like it's not sounding good. Things, some things need to change for Ethereum to maintain that edge that you and I have been talking about. And I want you to level set for us. I mean, what happens to Ethereum as a whole, as an ecosystem if some of these changes aren't made? And from what, you know, when it comes to the developers working in the Ethereum ecosystem, are they willing to accept making some of these changes? Do you think Vitalik is willing to amend the plan to address some of these concerns that have been outlined here by you, but also other people in the Ethereum ecosystem?
- [15:30]
A
Well, I won't speak for Vitalik, you know, you should ask him. I think the threat is very big. That like the thing is that with every advance on Quantum, like more of the investors and retail users and everyone is going to say wait a second, should I, you know, reduce my exposure to these technologies? And over time, I mean they've already started doing this, but it will accelerate depending on, you know, we don't know what the future holds for quantum computers but that's, that's my concern. So you want to be very, very vigilant and very proactive about that. I think, you know, I would like to see more agility and as I said many times in the past, I think the way to move faster is to rely on more on the really great resources that are in the larger Ethereum ecosystem. I mean, you know, we offered our help in hand many times in the past, willing to do so again. I'm sure we're not the only ones. There's enough stuff out there to be used. You know, things don't need to be reinvented and rebuilt from scratch. Just, I mean, sort of, you know, not built here kind of mentality. I don't think is we have time for that. But again, I'm not, you know, I can't. I'm not going to speak for the greater Ethereum economy and ecosystem.
- [16:59]
B
You were one of the founding members or founding scientists of zcash. Zcash, obviously prioritizing privacy. I know that part of Ethereum's plan is to also prioritize privacy. I want to talk a little bit about the privacy narrative. It's been a big one over the past, let's say, year. Do you think when it. When it comes to privacy, ecosystems like Ethereum and zcash can converge, or are they really kind of competing?
- [17:29]
A
I don't see them converging. I think, yeah, there are these like separate communities. I mean, they. There's a lot of respect. You know, I'm from the zcash founders. I have a lot of respect for Ethereum. I love it. I think it's great. Right. Starcore, the second company I co founded, is settling on and scaling Ethereum. So I think converging is a bit too much to think about. And it's like, technologically it would be very, very hard for that to happen. I don't think that is necessary. You have bridges today. You could have these separate ecosystems. Yeah. So I don't think Converge is in the cards, at least the way I see it. But that's fine.
- [18:17]
B
Converge is maybe the wrong word. I guess what I want to know from you is do you think there's going to be one winner to take it? All right. There are all these different ecosystems competing on privacy. Right now we have Midnight, we have zcash. We have privacy solutions for different chains. And I know that they all work kind of differently. Do you see them all coexisting in the future or is there going to be one real privacy winner?
- [18:42]
A
I think that in most things there will be one thing that becomes the gold standard and then everything else sort of adapts to it, but. But it will be like this exponential sort of decrease. So the largest thing would capture whatever 90% of the volume, and then the next one would be, let's say, 1/10 of that and another one. 1/10 of that. We see this like in defi protocols and chains and variety of things. Yeah. And there are a bunch of solutions out there. You mentioned a few. I mean Starknet has strk20, which is our version of privacy that we think is the right mix of usability and composability and compliance. But there are many, many other variants out there. And yeah, time will tell, you know, which version exactly is, but I think there will be some sort of standard that a lot of others are going to be adapting. I just, you know, the jury is out there on like what the standard will look like.
- [19:42]
B
And the last thing I'm going to ask you before we let you go is when you think about the future you're building towards, what, what does that future look like and what milestones do you want to hit?
- [19:54]
A
I would say it's a durable freedom economy, which means first of all durability means it must be quantum safe, it must be built on things that are formally verified, it must have great scale, it must have privacy in a sort of usable and smooth UX kind of way. But then what it serves is really, it's, it's about like a rebalance of power and bringing back more true ownership to you and me. You know, the whole, this big movement that started with Satoshi's words that the goal of, of Bitcoin is to allow any two parties to transact with no third party intermediary. That is the big grand vision of, of all of crypto, right? It is if you want to think. A good way to think about it is you want to take the peer to peer nature of the pre computer world where people would just transact, you know, moving bills and coins and you know, gold and you know, dollar bills and then getting goods and services in a very peer to peer manner. You want to put that on top of the global digital economy. Now what we have today is we have a very efficient global economy, but everything you and I do economically just passes through a very small number of centralized entities that are making our life harder and harder. So we would like to move back to the days where if you and I transacted we would just transfer again, bills and coins, no third party. And we want that on top of the digital infrastructure, that is the Internet. That is the future I imagine.
- [21:40]
B
I guess my follow up question for you there is we've seen a lot of the intermediaries start to participate in different crypto ecosystems and in different ways. Is there a role for them that maybe looks different than the role they're playing now? Or do these intermediaries need to completely fail for us to achieve that future vision?
- [21:57]
A
There is a role, but What I hope for and I'm building towards, is a world in which it is not that crypto just serves the existing infrastructure. It is a world in which crypto has room for them, but their room is a bit more like it used to be before the digital era. Right, where banks and financial institutions were important but. But they weren't all controlling and ruling and surveilling and monitoring everything we're doing right. They were offering services to a very peer to peer distributed economic world. That's the role that I envision them being placed back in.
- [22:42]
B
Ellie, thanks so much for joining me on Markets Outlook today. It was a pleasure having you on.
- [22:46]
A
Thank you, Jen. Thank you for having me here.