Solana's resurgence, ETH's market performance is far from expected, ETH's Exchange Rate against Bitcoin continues to hit new lows, coupled with frequent dumping of ETH by ETH Foundation, with an annual expenditure budget of about 100 million US dollars, Vitalik was forced to reveal a salary of 182,000 new coins. Recently, the unprecedented attention received by the ETH Foundation.

After 8 months, the Ethereum Foundation research team conducted the 12th AMA on the Reddit forum, addressing many questions. At 9 pm on September 5th, Beijing time, the Ethereum Foundation research team began to answer questions one after another, including reasons for the pump in ETH's price, how long the Ethereum Foundation's funds will last, blob (EIP-4844), ZK, and Rollup.

BlockBeats has selected and compiled the Q&A, and translated it into text. It should be noted that the core developers have their own views and speculations on certain topics, so please refer to the accompanying original post link to avoid misinterpretation.

What are the pump reasons for the price of ETH? Does the Ethereum Foundation care about the price of ETH?

Q: What is the main logic behind ETH pump in 2024?

Dankrad Feist: Ethereum is building a financial platform that will be the most neutral platform that can simultaneously: allow the issuance of financial assets, allow the trading of these assets, and allow the creation of new financial products based on these assets without permission, such as Derivatives.

This is a very valuable activity. The value may be obtained through some kind of fee mechanism. I believe that Ethereum L1 will be the intersection of multiple sub-domains, and a large amount of valuable activities will be generated through fees (assuming L1's scalability is sufficient). If this is not the best mechanism, there are other options, such as obtaining value through data availability fees, using ETH as the primary medium of exchange, or using ETH as Collateral (this is the riskiest option).

Anders Elowsson: When Ethereum facilitates sustainable economic activities, ETH will appreciate. By 'sustainable,' I mean activities that bring utility to participating economic entities and ensure their long-term continuity. In this case, the native ETH token will appreciate because ETH is a trustless asset within the Ethereum ecosystem, making it worthwhile to hold and use as a currency. Economic activities facilitated by Ethereum settlement/guarantee are paid in ETH and subsequently burned, effectively distributing value to all ETH token holders.

Justin Drake: ETH is money :)

Q: Does the ETH Foundation care about the continuous rise in ETH prices? Why?

Dankrad Feist: The Ethereum Foundation has no opinion on this, as researchers, we each have our own views.

Personally, I believe it is best to focus on building a value-generating ecosystem on the ETH platform. I believe value capture will naturally occur in due course. This does not mean that I am not considering it, but focusing on value capture before sufficient value generation is a huge mistake.

Anders Elowsson: EF may not consider everything, but individual researchers do, and I suspect that quite a few people consider the appreciation of ETH to be important. One obvious reason is that the security of the economy is ensured by staked ETH, and thus the rise in the price of ETH ensures economic security. Another reason is that ideally, a currency should maintain its value over time, and ETH is the best currency in the ETH ecosystem. Having a reliable and trustless currency in a decentralized economy is valuable, and the value of ETH makes the ETH ecosystem a better platform.

Third, a significant portion of future investments in the Ethereum ecosystem may be held in the form of ETH, including the not particularly large treasury of the EF. Fourth is a deeper consideration, that the accumulation of value in ETH is closely related to the success of Ethereum, as further discussed in the answer to the next question.

Justin Drake: Personally, I believe that the rise in the price of ETH is crucial for the success of Ethereum. I believe that if ETH does not become the de facto 'Programmability currency' of the internet, Ethereum cannot become the settlement layer of the 'Value Internet'.

Currency premiums will only be concentrated in a particular type of asset (considering tens of trillions of US dollars). This currency premium is necessary for the following aspects: support tens of trillions of US dollars of Decentralization stable coins ("economic bandwidth"); provide unquestionable security, and even resist attacks at the national level ("economic security"); attract the attention of all major economic participants ("economic significance").

Q: If, upon completing the remaining roadmap, various rollups settle on Ethereum L1, there are numerous Decentralization applications on L2, and the transaction fees are less than one cent, the ecosystem is developing well, but the price of ETH does not rise significantly, does this mean the success of the Ethereum roadmap?

**Dankrad Feist：**Once again, I would like to emphasize that I do not speak on behalf of the Ethereum Foundation. I am simply expressing my personal views as a researcher.

When I start a startup, of course I hope to make money, but even if I end up with nothing, I still consider it a success if it is useful to my customers.

Apply this idea to the Ether square, if we have a diverse rollups ecosystem, it can provide interesting applications to the world, I would consider this a success. But if this ecosystem can also make ETH assets more valuable, that will be an even greater success.

Many people believe that the roadmap centered around rollups will weaken the fee income and MEV of Ethereum, and ultimately rollups may become parasites. I don't think that's correct. The highest value transactions will still occur on the Ethereum L1, while rollups will expand the entire ecosystem by providing a large amount of transaction space for users. This relationship is symbiotic: Ethereum L1 provides cheap data availability for rollups, and rollups make Ethereum L1 a natural hub for high-value transactions.

Anders Elowsson: In the long run, Ethereum facilitates sustainable economic activity and has a direct correlation with the rise of ETH's value. If a sustainable economic activity system is designed, the rise of ETH's price should be taken into account. Conversely, when designing ETH's appreciation, it is necessary to ensure that Ethereum promotes sustainable economic activity.

In the short term, if only follow 'price rise' without considering its source, it may lead to a long-term decrease in value. Personally, I think the current roadmap is actually a 'price rise roadmap' as well. If Ethereum succeeds, but ETH does not rise in price, I would be surprised and even a little disappointed, but this may be an opportunity to buy ETH, because the market will eventually realize the theory of this price rise.

Justin Drake: Personally, I believe that the rise in the price of ETH can be attributed to capital flow and currency premium. For capital flow, the key indicator is the total cost, not the cost per transaction.

As I mentioned in my speech, the ultimate goal of Ethereum's success is to achieve 10 million transactions per second, which can generate billions of dollars in revenue even if each transaction costs less than one cent. For example, a transaction of 0.002 dollars can bring in about 2 billion dollars in daily revenue.

The key indicator for currency premium is the usage ratio of ETH as collateral currency, for example support Decentralized Finance.

How long will it take for the ETH Foundation's funds to be depleted?

Q: How does the Ethereum Foundation ensure that the network remains neutral and prevent validators from being pressured by governments to review specific transactions?

**s0isp0ke：**In the past year, we (the Resilient Incentive Group (RIG) of the ETH Foundation and other researchers) have been working on enhancing the censorship resistance (CR) characteristics of the ETH network, mainly through iterative 'Inclusion List' (IL) design.

In short, ILs allow validators of Decentralization to collectively force transactions to be included in the Block builder's Block. This effectively reduces reliance on a few complex entities, which may arbitrarily decide which transactions can be included in the ETH Block (for example, transactions involving reviewed and sanctioned Addresses).

We have posted some relevant posts on ethresear.ch, and the latest proposal is 'fork choice enforced inclusion list' (FOCIL): FOCIL proposal. This proposal relies on multiple proposers to jointly create an inclusion list, where transactions must be included in the Block to be considered valid by validators. If you want to learn more or have any other questions, please feel free to contact us!

Q: How long can the funds of the Ethereum Foundation support? What are the contingency plans when the funds are depleted?

Justin Drake: From my limited personal understanding:

1. Similar to the previous financial report, it should be released soon.

2. The foundation spends about 100 million dollars a year - see Aya's tweet.

3. Currently, the foundation's main Ethereum Wallet holds approximately $650 million worth of ETH.

4. The foundation also has a portion of Fiat Currency reserves, enough to cover the expenses for the next few years. (This is the part I know the least about. As Aya mentioned, due to regulatory reasons, the sale of ETH was temporarily suspended, so this part of the reserves has only recently been replenished.)

Roughly estimated, the foundation has approximately 10 years of funding reserves, but this period will vary greatly with the Fluctuation of ETH prices.

ETH layer one related

Q: Once the Rollup-centric roadmap is completed, are there still plans to expand Ethereum's L1? If so, what are the currently considered expansion methods?

Dankrad Feist: I do believe that scaling L1 execution should be a goal, parallel to building aggregation. However, they are not necessarily conflicting:

1. Data availability can be almost infinitely scalable - the ultimate limitation is the interest in Ethereum (i.e., how many people are running full nodes seriously and how many people are willing to record all data).

2. Execution always encounters some limitations, and the ultimate limitation is the single-thread limitation; currently, state access is the direct limitation of expanding L1 execution.

3. Through zkEVM and parallelization, I still believe we will see L1 expanded to 10-1000 times its current capacity. Rollups will provide the remaining parts to achieve "global scale".

The good news is that all of these efforts are underway - and thanks to the roadmap centered around aggregation, many teams are working in a more decentralized way in parallel.

**Justin Drake：**The Ethereum Foundation's long-term sustainable plan is to use SNARK to extend the EVM execution of the Mainnet, which is basically unlimited.

Through real-time L1 EVM SNARKing, validators can verify low-cost SNARKs without having to re-execute EVM transactions. This will allow us to significantly increase the Gas limit without adding to the burden of validators. All heavy EVM execution work will be done outside of Consensus by specialized Nodes operated by entities such as searchers, builders, and adventurers. The burden on users and Consensus participants will become very light, for example, they can run Nodes on their mobile phones or watches.

In addition to the vertical scaling benefits brought by significantly increasing the L1 EVM gas limit, there is also an opportunity to use EVM-in-EVM precompiles for arbitrary horizontal scaling, allowing for low-cost validation of EVM executions within EVM. This precompile will allow developers to programmatically launch new L1 EVM instances, unlocking a boosted version of Sharding for execution, where the number of Shards is infinite (rather than limited to 64 or 1024), and a single Shard is a Programmability rollup (with Programmability governance, ordering, gas), called the "native rollup".

Q: What are the main areas of research in zk by the ETH Foundation? What are the explorations in terms of theory or practical applications?

George Kadianakis: Here are some zk projects related to L1, at different stages of research maturity:

Using STARKed hash tree to achieve statelessness; using recursive SNARKs for large-scale recursive signature aggregation; enhancing the robustness of the Network Layer through zk anonymous credentials; using STARKs to achieve post-quantum aggregatable signatures (instead of BLS); providing privacy in single secret leader election design using ZK; L1 execution using ZK and zkEVM (long-term goal!)

In addition, the EF cryptography team has a wide interest in ZK research. You can find some of their work on the cryptography team's website.

Antonio Sanso: In a recent statement from the Ethereum Foundation, the cryptography research team emphasized the need for a deeper understanding of verifiable latency functions (VDFs) before integrating them into Ethereum. The team currently does not recommend the use of VDFs in Ethereum and highlights that ongoing research and significant improvements are crucial for potentially revising this position in the future. For more detailed information, please refer to the full statement here.

Justin Drake: I'm very excited about the SNARKification of L1 EVM. There has been tremendous progress in the past few months. Succinct's Uma shared new data with me today: the cost of proving all L1 EVM blocks is now about $1 million per year, and there are still significant optimizations underway. If by this time next year, thanks to SNARK ASICs and stack-level improvements (compiler, arithmetic, proof system, prover algorithm), the cost could be reduced to 01928374656574839201. Another exciting development is that EF is accelerating the zkEVM Formal Verification. This work is led by Alex Hicks and has a budget support of $20 million.

Blob(EIP-4844) Related

Q: What research areas are most researchers primarily following? Have the blobs in EIP-4844 brought about any discoveries or adjustments in research directions?

Davide Crapis: We are doing more work around blob pricing, driven by previous analysis and the increasing importance of it as a resource, as well as the observation that its market is very different from other resources (most of the demand comes from 'enterprise clients' with relatively low elasticity in the short term, such as L2). We have conducted new research with some partners, and the results will be released in a few weeks.

Q: Is there a problem with the existing blob base fee mechanism? Is there a risk that the blob gas fee will become too high, which is detrimental to L2?

Davide Crapis: There is indeed room for improvement in the current mechanism (see other questions about "blobs"). However, the situation you mentioned is not worrisome: remember that the data cost of L1 will be passed on to L2 users and become part of the L2 fees. Therefore, when the data cost increases due to congestion, the demand for L2 transactions will decrease, which will in turn put downward pressure on the demand for blobs and drop the price of blobs. The third part of the Arbitrum Nitro White Paper is also a good resource for understanding the cost structure of L2.

Dankrad Feist: If the blob fee increases, rollups will charge users more Money Laundering. This will naturally result in fewer transactions on L2, just like what is happening on ETH L1 currently.

Q: If the usage of blobs does not reach the target (e.g., 3 blobs per Block), should the target be dropped to ensure that the fee mechanism can function correctly?

Davide Crapis: No. The mechanism is designed to price congestion, so it's normal for prices to remain low if there's no congestion. However, current demand is far below the target, which affects price discovery in congested situations. In this case, price discovery is very important, and we should improve the efficiency of the mechanism. In the short term, adjustments such as increasing the minimum fee (but still very low!) or changing the update speed can be helpful.

See the discussion here for details: EIP-4844 fee market analysis; latest proposal: EIP-7762 increases the minimum base fee for each blob gas.

Dankrad Feist: The Ethereum community is currently creating a new market for rollups - the data availability market. Many alternative solutions (such as Celestia, Eigenlayer, Avail, etc.) hope to grab market share from Ethereum. They cannot compete on security, so they want to win on price.

Even if each Block has 3 blobs, the resulting income cannot significantly increase the revenue of the Ethereum protocol. I think in the next few years, we should strive to expand this area as much as possible, without rushing to generate fee income from it.

Anyway, I don't think the cost of blob will be the best value capture mechanism for Ethereum. The data availability market changes too quickly - although Ethereum provides the best security, other 'close enough' solutions can easily capture the market, making it less than ideal to extract value from it. As a natural financial hub in the ecosystem, Ethereum L1 will have the highest value transactions, which is the best price rise mechanism for ETH.

Justin Drake: blobs won't fail to achieve the goal - we just need to be patient :) It takes time for induced demand to manifest. Another factor to consider is that some recent rollups projects (such as Base, Scroll, Taiko) have found better ways to use blobs. The optimization of these rollups extends the timeline of blob price discovery, which is fully justified.

Other

Q: What is the progress of the proposal for solving the problem of excessive issuance in Ethereum? Can the stake ratio be adjusted through a PID controller instead of relying on a fixed issuance curve?

Davide Crapis: The controller is feasible, but I think it's too complicated. We are able to express the demand curve without aiming for specific stake ratio values, but instead aiming for a range, so we should choose this simpler option. I discussed these two options in my speech at CEE 2023 (since then, the second option has received more research): Ethereum stake: current status.

Justin Drake: In my opinion, it is undoubtedly the right choice to have a smarter issuance curve that gradually approaches zero at some soft limit (such as 1/4, 1/3, or 1/2 of ETH being staked). The main bottleneck is social coordination. We need a smart and motivated person to push this EIP until Mainnet. This is a very high-impact task, and I expect the community to fully support it.

Q: What are the new developments regarding historical data expiration (EIP-4444) and the gateway network? How is the situation with Multidimensional EIP-1559? What are the current research directions for MEV? In addition, are there any resources (such as verkle.info) or recommended individuals to follow that can help me stay informed of these developments at any time?

**Barnabé Monnot：**Hello! Regarding the third question, I suggest you check out the notes prepared for the internal research meeting last month, which can help you understand more. For ePBS, we have already launched a tracker and continuously updated new materials as the issues arise.

More generally, current MEV protocol research can be divided into two main directions. On the one hand, there are some relatively specific protocol upgrade proposals, such as ePBS and FOCIL (committee-based, multi-proposal-style inclusion lists), which are under discussion. On the other hand, there is a broader direction, such as APS (a wide concept around executing bills/auctions) or Braid. Personally, I hope that specific work can provide guidance for more exploratory research.

Q: Are you researching VDFs (Verifiable Delay Functions)? Can you share how you plan to use them? What improvements have you made to existing VDFs?

Antonio Sanso: Mary Maller discussed VDF in her speech at Devconnect, which can be viewed here. I also presented related topics at the 2024 IC3 Winter Retreat. For more information about the event, please click here.

Justin Drake: There are two aspects of VDF: a) building production-level VDF as an encryption primitive, and b) using this primitive in applications.

Let me start from b) the application. The incentive use case of VDF on ETH L1 is to strengthen RANDAO to achieve unbiased randomness for leader election. In my opinion, VDF is the ultimate goal of L1 randomness, and it is still a "lavish" project in Vitalik's roadmap. So far, there is no evidence that RANDAO is being abused, so the research and development of VDF has definitely been deprioritized compared to when I entered the XTZ hole a few years ago. Other L1 projects (such as inclusion lists, stake limits, SNARKifying L1) are more important.

In addition to the L1 leader election, another important use case of VDF is lottery. In my opinion, building a 'world lottery' is an easily achievable opportunity. It is provably fair, global, and commission-free. If you want to build this, please DM me :) Another interesting VDF application that has recently emerged is the simultaneous release of blocks in the context of multiple proposals. In an unexpected turn of events, Max Resnick became the VDF bull.

Now to a), it turns out that this is much more difficult than I expected (years of work!), but there is light at the end of the tunnel. We now have MinRoot VDF ASIC, which I believe can be used for lottery production, even though theoretically there has been no actual attack on the 256-bit MinRoot analysis. We now need a team to complete the integration work to verify the MinRoot SNARK proof on-chain (e.g., Nova or STARK proof). This is easy for BN254 MinRoot, but Pasta curve requires wrapper SNARKs. If you are interested in doing this integration work, please PM me:)