Real Vision Founder Dialogue with Vitalik: Ethereum has no killer applications, only a killer ecosystem

In November 8th Science and Technology Festival held in Singapore’s financial, Real Vision CEO, former Goldman Sachs executive Raoul Pal and Ethernet Square founder Vitalik Buterin had a deep dialogue, involving DeFi, NFT, DAO, and many other topics, and detailed It discusses topics such as the application scenarios of NFT and the challenges faced by Web3.0, which is worth reading.

Raoul: On this day, the price of Ethereum hit a record high, and the value of the entire crypto market also hit a record high. You can imagine that when you first proposed the idea of ​​building Ethereum, you have created more than $500 billion in value in the smart contract concept of the Ethereum ecosystem.

Vitalik: To be honest, when I built Ethereum, I didn’t have this idea. I just hope that we will finish it in a few months and then go back to university. Therefore, I never thought that Ethereum would develop into its current state, nor that the scale and attention of the encryption space would reach such a high level.

Raoul: The real contribution you make with smart contracts is to unlock the value layer. It created everything we saw last year-the explosive growth of DeFi, NFT, and now everyone is moving towards web 3.0, which is creating a new ecosystem. What do you think of the development of the DeFi ecosystem?

Vitalik: First of all, I think the DeFi ecosystem is maturing. In fact, these projects still exist, and obviously many projects are hacked from time to time. But if you only focus on core projects, such as those that have existed for a few years, such as Uniswap , they just continue to be stable, continue to do what people want them to do, continue to grow, and provide whatever features people have been looking forward to.

I think the trust in these platforms will only continue to increase and be able to rely on these platforms. Therefore, I think that the trends we will see in the next few years will basically have more continued adoption, such as more types of users using DeFi and NFT space.

I think the future is not only financial or non-financial, but a kind of hybrid finance. These projects are not only related to money, but they can also benefit a lot from this huge layer of value created by directly plugging into Ethereum and the larger crypto ecosystem.

Just like DeFi components are inserted in various places, Ethereum has no killer applications, it has a killer ecosystem, and value comes from all these different parts that can communicate with each other.

As more and more applications continue to attract new users, I think we will see all these basic building blocks continue to thrive and stabilize themselves, which will eventually allow people to see more and more which parts of the DeFi field really exist , And which parts of the DeFi field will continue to exist. I think they will all be preserved, and I think we will see a lot of value slowly and steadily unfolding from them.

Raoul: Yes, I think many people mistakenly believe that DeFi is just a part of the financial system. It disintermediates banks. But what is actually happening is that DeFi is building a brand new parallel financial system and economic system. It is the entire ecosystem, not just finance. 

The value layer of the NFT space is fascinating. We have some leading projects and people gather around these communities. However, I feel that the direction of NFT development is not clear, such as the development of NFT intellectual property or NFT insurance. In what direction do you think it will develop?

Vitalik: NFT is a very large category, just like literally representing irreplaceable tokens, where each individual unit represents a different thing. An NFT can be a piece of art, a domain name can be an NFT, and an item in a video game can also be an NFT.

Among the different types of NFTs we have seen, some NFTs represent purely encrypted things, so their value basically only comes from people who are willing to pay attention to them in the encryption field. There are also some NFTs that represent assets with a certain legal effect in the real world. Intellectual property is an example, as is real estate. Just like stablecoins, we have algorithmic stablecoins based purely on cryptocurrencies, and then we also have stablecoins supported by institutions like USDC.

The same is true for NFTs. Their value comes entirely from changes in the encryption field. The value of the NFT we will own may be related to the existing legal property rights we already own, but it may not be actually used or so efficient at present.

Raoul: All the composability elements now also allow the market to be built around NFTs, so this is how we started to see the lending market develop around some artworks and other odds and ends. You can see that the combination of all these elements starts at an incredible speed. Superimposed on each other.

Vitalik: To be precise, I think there are many different combinations that are really interesting. For example, to give a few examples, one is the concept of partial ownership. NFT can be combined with real estate or DAO. If NFT has been used for real estate ownership, then the apartment association can be a DAO.

We will not manage it with a boring paper-and-pencil process like the 20th century, but use on-chain contracts and voting governance to manage it. There are many different ways to connect each of these components, and most interesting applications end up connecting different parts together.

Raoul: Yes, I think the tokenization of real estate is very interesting. Many of the well-performing real estates are expensive and most people cannot participate in it. When you tokenize it, anyone can participate, and anyone can invest 5% of their savings in real estate assets worth $100 million. This is an extraordinary change. Once this happens, the liquidity of the real estate market will be changed forever.

Vitalik: Yes, I think the irreplaceability of the real estate sector is actually the source of a lot of problems. Just like in the current city, you are either a homeowner. In this case, you will only have excessive exposure to a certain asset; you are either a renter. In this case, you will be affected by this Negative impact of assets.

Therefore, people need to have options between these two extremes, such as partial ownership, a system of ownership established over time in order to promote their own development. I think a lot of cool things are happening.

Raoul: The other thing you mentioned came up very quickly. Everyone is trying to figure out what DAO is and in what form it will behave. There are many experiments going on, and it feels that sometimes it is difficult to have such extensive project ownership because there is no specific leader. We are trying to figure out how all this will work, how do you see the evolution of the DAO?

Vitalik: DAOs and smart contracts are like Lego blocks for governance, allowing people to easily create new and different structures. Unlike now, if you want to create an organization, you have to pay huge fees to lawyers and wait a long time for it to happen. The DAO organization reduces the cost of people doing these things.

I think we can easily see that this organization has become less standardized. There will be many more different types of customized DAO organizations, or even those that only exist for a few months for a very specific purpose. Organization, even if the funds in it are small. I didn’t see a dominant scene, I just saw it opened the floodgates for a thousand different scenes.

Raoul: Yes, one of the very interesting things I saw is that the fund management industry is now revolving around DAO. The cost of building these things is so low that it has caused huge damage to this very traditional fund management business.

Vitalik: Absolutely.

Raoul: So how do you think about another thing? It feels like what we are building is pointing to Web 3.0. Now everyone has their own definition, just as everyone has their own definition of the meta-universe. What is your definition of Web 3.0? How far are we in this process?

Vitalik: I think Web 3.0 is obviously a very big term. I think there are many different things that excite different people, such as creating a decentralized form of social media, possibly more open and transparent governance, and creating Internet applications. Better integration with the financial layer, or increase the ability to own assets.

What I mean is that Web 3 is definitely a very big general term, covering a lot of things. I think they are all okay, everyone knows that a technological revolution is taking place. I think it’s not just blockchain, zero-knowledge proof is also very important.

These changes will solve many of the previous problems, such as trust issues, and allow more collaboration without a central point of trust. Many people have different opinions, and I think it’s great that they use their way to realize their dreams and opinions.

Raoul: I still think that one of the key elements missing in all of this is the wallet experience, and the other thing is the zero-knowledge proof of identity layer that I think is required by the Internet that many of us share. Many people’s view of Web 3.0 is that we have our own data, and it is okay if we want to sell our data. How far is this from the availability of digital identities and wallets that are not so difficult to set up?

Vitalik: I think the biggest usability challenge in practice is appropriate transaction fees, just as the second layer protocol is a solution to it. In the field of Ethereum, we have more and more zero-knowledge family members in Optimism, Arbitrum and Polygon .

These developments are continuing, I think it’s great, and once it’s implemented, the biggest practical usability problem faced by users today is basically solved.

I think the other very big problem is that most people are not well prepared to completely manage their existing cryptocurrency wallets on their own, ensuring that they do not lose all these digital assets.

In the real world, if people make a mistake, they can talk to the banker, the court, the police, or anyone else, and they will figure it out. Nowadays, the encryption field is also exploring corresponding solutions. People are working hard to solve the problem and reduce the chance of losing and stolen funds, so that people feel safer when dealing with these assets.

For example, through multi-signature wallets, social recovery wallets, or hybrid institutional forms of custody, institutions can help as backups without actually having complete control over the assets. Therefore, a lot of important work is in progress in these areas. I think all these issues will slowly start to be resolved in the next few years, so I am very excited about it.

Raoul: The revolution you and I are talking about seems to be the fastest technology in human history. Its growth rate is twice the speed of Internet adoption. As we just talked about, there are too many things happening, I mean the whole space is exploding in depth, not only in the number of different protocols, but also in all use cases.

In addition, because the encrypted space is often anti-establishment, the government space and the encrypted space will collide with each other. Whether it is the establishment of a central bank’s digital currency or a new financial system, it is necessary to communicate with each other and formulate a new set of rules to ensure that we can all operate. This is good for everyone, but it’s difficult in some countries because we are still using the 1934 law, which makes it tricky, we need to solve a situation where we have to establish an open Rules so that we can adapt and change, because it develops so fast.

Vitalik: I think the crypto space is a big space, and I think there are many people with many different visions. I think there is a space that can hold all these visions in this space.

I think from another possible perspective, it is about creating a fairer way for people to interact with existing institutions. Existing institutions have fewer opportunities to exercise control, but at the same time they can still provide important services.

New institutions can break into the market and affect existing institutions in a way that makes it easier to provide services. Existing institutions have a lot of control over the interface. However, the encryption world will not allow anyone to control the access point to the same extent, because it is solely for the creation of an open infrastructure.

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