Dialogue with Vitalik (Part 2): Responding to questions about the foundation selling coins, the development direction of Memecoins, and whether perso
How can Memecoin develop in a more meaningful way? How to address the controversy discussed in the Pump.fun live stream regarding the exploitation of cryptocurrencies and blockchain by malicious actors? Respond to the community's concerns about the Ethereum Foundation selling coins and the utilization of Vitalik's personal influence.
Editor: Colin Wu
This episode of the podcast is the second part of Colin Wu's conversation with Ethereum co-founder Vitalik Buterin, mainly discussing the following questions: How can Memecoins develop in a more meaningful way? How should we respond to the controversy surrounding the Pumpfun live stream regarding the exploitation of cryptocurrencies and blockchain by malicious actors? Addressing community concerns about the Ethereum Foundation selling coins and the utilization of Vitalik's personal influence.
The first part of Wu's conversation with Vitalik (I): Reflecting on the Ethereum story in China, how the Russia-Ukraine war changed me, and reflections on BCH's large blocks.
It should be noted that Vitalik was interviewed in Chinese, which is not his native language, so some expressions may not be entirely accurate; we ask for readers' understanding and tolerance. The audio record was generated by GPT, so there may be some errors. Please listen to the full podcast.
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How can Memecoins be meaningful? Why has there been little progress?
Colin: Let's switch to a lighter topic. Recently, Memecoins have become quite popular. You previously suggested that Memecoins could be combined with some public utilities or charitable actions, but it seems we haven't seen many good cases so far; many seem to be for hype or profit. Do you have any suggestions or thoughts on this?
Vitalik: One reason Memecoins are popular is that everyone is thinking about what the next application scenario for blockchain is. In 2017, ICOs brought many new coin projects, and in 2020 and 2021, there was a boom in NFTs. Now, in 2024, it seems there are no new applications emerging. Generally speaking, there are two types of blockchain applications now: the first type is idealistic, doing some good things but often lacking profitability; the second type is highly profitable but lacks real significance.
I have always hoped for applications that combine both. This topic is very important because I personally lean towards idealism, but I also know that decentralized applications have had problems for a long time.
I remember when I was in high school, there was a decentralized Facebook project that raised $200,000 but ultimately failed. What did this failure teach us? If you can't make a profit, you can't hire better technical teams, nor can you compete with centralized projects. The interesting thing about blockchain is that it can provide opportunities for decentralized developers to make money.
There may be opportunities to develop decentralized projects that can be profitable and have strong technical teams. However, so far, most blockchain applications, especially non-financial applications, seem to have not found such successful cases.
For example, projects like DDocs (a decentralized Google Docs) and Farcaster are not making much money at the moment. And the most profitable seems to be Memecoins. So, I am thinking: if everyone is just gambling and having fun, can we do something more meaningful in the process? Essentially, this is not necessarily bad, but it can be dangerous for some people, and for most people, if it's fun, it's fine. But if the only large-scale application in blockchain is this speculative Memecoin, then what is the significance of my participation as a core developer and researcher? Why not do something related to AI or biosciences?
So I started thinking about whether we could combine the concept of Memecoins with something more meaningful. In March of this year, I wrote an article on how to make Memecoins more meaningful, proposing three ideas:
First, can Memecoins be donated to charitable organizations?
Even if most users might lose money, can we allow low-income users to earn a little money through participation? I remember in 2021, Axie Infinity was very popular in countries like Vietnam and the Philippines because many people there earned income from games through "Play to Earn," and they felt very happy.
Therefore, second, can we consciously allow people in low-income countries to earn money through participation in Memecoins? Would this be valuable to them?
Third, I believe gambling is not a meaningful goal; we should do something more fun, at least create some more interesting games.
So, I proposed these three methods. However, so far, it seems there hasn't been much progress. At most, some Memecoins would donate some money to me, and I would then donate that money to biosciences or other meaningful causes. If they give me money, I think it's fair because it means they believe I will do something beneficial according to public values.
Why haven't most teams done something more meaningful? I think it's because there are two relatively separate groups: the first group knows how to make Memecoins, and the second group focuses on idealism and charitable topics.
It's similar to the debate I mentioned earlier about small blocks versus large blocks: one team can do things that attract users but have no significance for humanity; another team does meaningful things but cannot make a profit. The ideal situation is that these two parts can combine, finding a large user base while also being beneficial to humanity. I think this is a problem we have yet to solve but need to address.
PumpFun live stream controversy: How should we respond to blockchain being exploited by bad actors?
Colin: The next few questions may be of concern to the Chinese community. These might be the last few questions since time is running long, and you might be getting tired. The first question is about the recent vulgar live stream on PumpFun that may have attracted attention. I don't know if you've noticed. Many people have raised questions, asking how a decentralized, censorship-resistant blockchain and network should respond to those doing bad things? For example, some people use cryptocurrencies for money laundering, extortion, or like the recent live stream on PumpFun. How do you think we should respond to this situation? How do we balance decentralization with malicious behavior?
Vitalik: This question is very important. I think every field has different solutions. First, we can discuss this issue from the perspective of decentralized social media. I believe the most important function of social media now is not merely to provide a platform for publishing content; in fact, the most important service is "ranking." Many platforms need to decide which content should be prioritized for you to see.
Now we can publish anything on the blockchain; on the Ethereum chain, you can post a transaction, write what you want to say, publish images, videos, etc. There is nothing wrong with these actions themselves. The problem arises if the platform's ranking algorithm tends to push some bad content to the forefront while good content is pushed to the back, then this platform could become problematic. Many centralized platforms aim to increase "interaction," making users spend more time on the platform rather than providing high-quality information. This leads to videos like those on PumpFun being prioritized, even though most people dislike or do not want to watch them, but due to high interaction, such content gets pushed to the forefront.
Therefore, many platforms have issues where their algorithms lead to erroneous and harmful content being displayed, while the high-quality information that users truly need is ignored.
Of course, centralized platforms can solve these problems in certain ways, but using centralized methods to solve these problems also has flaws. If a platform intervenes based on its team's viewpoints, those who do not trust these viewpoints will consider the platform untrustworthy.
We saw this situation in the U.S. In 2020, many social platforms shut down the accounts of Trump and others, leading many people to lose trust in American social platforms. So I think the ideal way is to develop a more decentralized and open algorithm that aims to prioritize content quality rather than merely the quantity of interactions.
Recently, I have often mentioned "Community Notes." If you use Twitter, you should know that if a tweet has many retweets and replies but its content is incorrect, Twitter will label it with "Community Notes" below, indicating that this information is incorrect and providing relevant links to understand the correct situation. The Community Notes algorithm is actually a more democratic algorithm; many participants can vote, and if most people believe a piece of information is incorrect, it will be labeled as such.
This algorithm works well, and most people like the results of Community Notes. Therefore, I have always hoped for more similar decentralized algorithms that aim to show users more correct and high-quality information.
But the PumpFun team clearly will not do this because they are entirely focused on finding users and increasing traffic, with no idealistic component at all. So the solution to this problem will not come from their side.
Regarding privacy issues, especially in cases like Tornado Cash, I believe that the current lack of privacy protection on public chains is unsustainable. The absence of privacy will make it unacceptable for many individuals and companies. Because if you conduct a transaction, others can see your entire transaction history, so privacy protection is very necessary.
For another issue—I have two viewpoints. First, I believe it is very dangerous for the government to hold too much power and information. I come from Russia, so I am very aware of how the Russian government treats dissenters.
The second viewpoint is that even if the government has access to information, this information can be hacked. For example, last year, a journalist from a U.S. intelligence agency discovered that many communication messages were hacked, including databases that had also been attacked. Almost all countries' databases could be hacked. Therefore, although some governments believe they can control this information, ultimately, this information can also be stolen by hackers, endangering the safety of ordinary citizens.
So, I support a solution that can protect privacy while balancing transparency. Platforms like Tornado Cash can provide certain transparency while protecting privacy. For instance, when users deposit cryptocurrency on the platform, they can prove they are legitimate depositors without exposing their identity. But if the source of the deposit is dirty money, such as funds stolen from DeFi projects, users can also prove they are not thieves.
I believe that only through this method can we reduce large-scale illegal capital flows while protecting the privacy of ordinary users.
For early cypherpunks, they had a saying: "Privacy for the weak, transparency for the powerful." This means ordinary people need privacy to protect themselves, while those in power, like national leaders or top executives of large companies, should remain transparent to society because their actions have significant impacts on society.
Zero-knowledge proof technology (ZK) is very useful here. Through ZK technology, we can find a balance between privacy and transparency. In the past, privacy protection projects were either completely private or completely public, while ZK technology allows us to flexibly choose what information to prove or expose. We can adjust the relationship between privacy and transparency according to our needs.
Currently, there are some second-generation privacy projects in development that can effectively address issues like DeFi hacks, and I am very optimistic about these projects.
Why does the Ethereum Foundation sell coins on-chain? Will it cause panic?
Colin: I saw you previously replied to a question on Twitter regarding why the Ethereum Foundation sells coins on-chain instead of through OTC, as some people believe this method might cause market panic. My understanding is that this is mainly to maintain transparency, right?
Vitalik: Yes, the Foundation does face some issues when doing these things. Sometimes, people's expectations of the Foundation are conflicting. Some want the Foundation to remain transparent and disclose all operations; others want the Foundation not to publicly sell Ethereum; and some even hope the Foundation has enough budget and can pay core developers higher salaries to avoid relying on selling coins to raise funds. These three expectations are actually difficult to meet; they form a contradictory triangle.
Moreover, many people misunderstand some of the Foundation's actions. A few days ago, an account from lookonchain posted a message saying that the Ethereum Foundation account sold over 5,000 ETH. But in fact, this account is not one we control and is completely unrelated to us. In reality, this was money we paid to a developer a long time ago, and he transferred it to another account.
The 35,000 ETH we sold in August was actually completed through OTC channels. We handed these ETH over to OTC services from platforms like Kraken, so they could sell them over a longer period, in a more cautious manner, avoiding a significant impact on the market. Therefore, we did not sell all 35,000 at once but processed them in batches through their OTC services.
We chose this method to maintain openness and transparency, allowing the public to see that our trading methods are more prudent and controllable.
Indeed, one of the problems we face is that although much information is public, there is a lack of a centralized place to display it. We released a transparency report before DevCon, detailing our specific funding usage. The report mentioned how our funds are allocated and the flow of funds from some of the Foundation's large accounts and other accounts. For example, we have a wallet for our Berlin office used to pay some developers' salaries and other expenses.
Although this information is public, it has not been well centralized in one place for display. This is also an area we are working to improve.
Now we are aware of this and are considering how to better address this issue. While increasing transparency, we must also acknowledge that fully meeting everyone's needs is very difficult. For example, the Foundation has a certain budget and needs to pay developers adequate salaries to avoid other better-funded companies poaching our researchers.
This is indeed a dilemma: to pay developers reasonable salaries while not selling too much ETH to raise funds is almost impossible. Therefore, the Foundation faces the challenge of continuously adjusting and meeting different demands during the improvement process.
How to avoid personal influence being misused by project parties and others
Colin: Lastly, there's a question: in the Chinese community, everyone calls you "V God," which is quite a special title. Although you might not like being called that, some people may think that those who approach you or even try to please you might gain certain benefits. What do you think about this phenomenon? Or do you think those who have a good relationship with you might gain some benefits? (Although personally, I do not agree with this accusation from the community)
Vitalik: Recently, I have started to refuse more. Most of the time, I will refuse those who want to take a photo with me. Five years ago, I started saying I would no longer be an advisor for any token projects, and this year I also made it clear that I would not invest in tokens. If I want to support a certain field, I will do so through some organizations rather than doing it myself.
For example, if I want to support a certain field, some people will help me think about which projects in that field are worth supporting, or what rules we can use to support these projects.
I think this is a natural transition from a small ecosystem to a larger ecosystem. When the Ethereum community was small, with few teams, it was very important to directly support each team. If a team is doing something valuable, it should be supported.
Additionally, I need to stay connected with the real world. I cannot become a scholar in an "ivory tower" who does not understand what is happening in the real world. But as the community grows larger, this becomes another issue. With more projects, everyone wants to discuss with me, and many people hope I will invest in their projects. So, in a small community, my task is to accept, but in a larger community, my task is to refuse. Therefore, in the past year or two, I have started to refuse more direct support for certain projects.
Sometimes, if a project is quite good, I might support it a little, but I won't maintain a long-term relationship; instead, I will consider whether there is a more neutral way to expand this ecosystem.
However, there is also a balance issue here; I need to participate in this world. If I do not engage with any applications, I will become increasingly distant from our ecosystem. So, this balance needs to be adjusted, and indeed requires some adjustments.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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