Devcon Days 3 & 4: DeFi Composability, Scam Controversy, Metamask Plugins

Happy Friday defiers! After four days of technical and philosophical talks, company announcements, hacker workshops, but mostly, tons of hanging out with old and new friends on the sidelines, Devcon5 drew to a close in Osaka.

The progress that Ethereum has made in six years since the first Devcon in Berlin, where everyone fit in a single room and speakers didn’t need microphones to deliver presentations about a platform that hadn’t launched yet, is remarkable. This year more than 3,000 people filled about 16 different rooms in a stadium-sized convention center with views to Osaka bay, catered Japanese food, and a drums performance, on top of the rainbow colors and cute animals –on onesies, cardboard cut-outs, slideshows, and even real-life ones– which are the usual at Ethereum gatherings.

Image source: Ethereum.org

The focus of this year’s Ethereum developer conference was on the transition to Ethereum 2.0 and on improving user and developer experience on the current chain. I covered Day 1 and Day 2. Here are the highlights from Days 3 & 4:

Eth2 Mostly Preserves DeFi Composability, Vitalik Says

The transition to Ethereum 2.0 should be smooth for users and developers, and decentralized finance applications will be able to keep “talking” to each other, Ethereum creator Vitalik Buterin wrote in two research posts published during Devcon.

DeFi Composability Report

Things to understand: Ethereum 2.0 is a new, upgraded Ethereum chain. It will have a proof-of-stake consensus algorithm and a scaling solution called “sharding,” which as the name suggests, divides the chain into many pieces to increase the number of transactions per second. In this new architecture, projects will exist in different shards. To some developers, this raises the risk that communication between projects will be difficult.

Decentralized finance relies on the ability of projects to connect with and build on other projects. Just the very basic action of trading ERC20 token, already requires composability. So the question is, will DeFi continue working seamlessly in Eth2? Vitalik says “largely,” yes.

Transactions between shards can still happen quickly, but they would be "asynchronous,” meaning, not within a single transaction. Developers would have to pull the contracts into a single shard and perform the operation synchronously there. Still, most use cases would not be significantly disrupted or could be trivially rewritten to survive in a cross-sharded model, Vitalik says, listing examples including from Uniswap, Compound, and Set Protocol.

Eth2 Transition Report

Disruptions to users and developers in the transition to Ethereum 2.0 from the current chain “will actually be quite limited,” Vitalik wrote. Existing applications will keep running, while account balances, and contract code and storage will carry over.

The planned transition will happen as follows:

After phases 0 to 2 have been implemented and the Eth2 chain is stably running, the full state (root) of Eth1 will be fed into Eth2. Users will have to download code that implements the network upgrade, which will be the same as any other upgrade, except they will need to include an Eth2 client. The chain will likely halt for about one hour, after which it will look like Ethereum is back online, “except at that point eth1 would be functioning as a subsystem inside eth2 instead of being a standalone system,” Vitalik wrote.

The biggest disruption will be that gas costs for some functions will increase, but developers “can eliminate the largest part of disruption from gas cost changes” by proactively taking specific measures in their code.

“Ethereum Scam”

It’s a common narrative, especially among Bitcoin advocates, to say that Ethereum is a scam because some marketing materials during the time of its crowdsale said developers were building a platform for scalable applications and it hasn’t delivered.

A CoinDesk article over the week was written from this perspective, angering Ethereans. Enough has been said about the story itself (which was a balanced piece after the headline and top). I’m interested in addressing the broader “scam” claims because they keep coming up and I’ve dug deep enough into Ethereum history for my book to know for a fact that there’s no basis for them.

1. Vitalik Buterin never claimed Ethereum would be scalable in its initial phase. One of the things that surprised me the most from my research is that Ethereum developers and researchers have been talking about the need to implement scaling solutions and proof of stake since the very early days. There’s no “gotcha” moment when people like Joe Lubin say the co-founders knew Ethereum wasn’t scalable.

Image source: Ethereum.org blog

1. Ethereum developers said the plan was to build a platform for scalable, unstoppable applications, and that’s what they’re doing. It’s been hard, and Serenity has been delayed, but much of Ethereum’s resources are going to make sure it happens. Hundreds of developers are working on seven different clients, millions of dollars of Etheruem Foundation money have been poured into Eth2 efforts, and phase zero is launching early next year. That’s far from falsely advertising something, then taking the money and running. Many people and organizations are working hard to deliver what was promised.

Anyone claiming Ethereum is a scam is at best ignorant.

Metamask Launches Web3 Plugins

Digital wallet Metamask is launching plugins to add crypto-based functionality to normal websites.

Metamask, which is a browser extension, will provide scripta loaded over verified permissionless protocols (like ENS, IPFS, or Swarm), to create a personalized wallet experience.

Every plugin has the ability to provide its own API to the sites that a user visits, as well as to other plugins, allowing plugins to build on each other, in a sort of decentralized dependency graph.

A Glimpse into Private Identity

Self-sovereign identity project Iden3 and decentralized exchange DeversiFi partnered to create a game for Devcon attendees, with the purpose to test technology that would enable people to be in control of their personal data.

DeversiFi issued a constant stream of its Nectar tokens. Players who get invited into the game, create an identity and get a portion of those tokens. Mutual connections can cooperate or betray each other, generating a prisoner’s dilema.

At the end of the game, users will receive a claim from the application server confirming their digital identity and their performance. They can then use this claim to receive the Nectar tokens they’re due, without revealing their identity. This is done by generating a zero-knowledge proof (zkSNARK). That means they’re able to prove only the information that’s necessary for them to get their tokens, and nothing else.

For most Devcon attendees (including myself) this was probably the first time ever interacting with this technology.

About the author: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.