WBD404 Audio Transcription

The Failure of Ethereum Governance with Lane Rettig

Interview date: Friday 1st October

Note: the following is a transcription of my interview with Lane Rettig. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this interview, I talk to Ethereum Core Developer Lane Rettig. We discuss the Ethereum foundation, why Lane quit, ethics, hypocrisy, decentralisation vs scalability, and building better institutions.

“Anytime you have a centralisation of power and wealth and influence in the hands of a small number of people…it’s so easy to delude yourself either as an individual or as an organization into thinking, just a few more years.”

— Lane Rettig

Interview Transcription

Peter McCormack: I actually like it sometimes when the interview starts and it's not, "Hi, Lane, welcome here", we are actually just talking, because when we were sat there and you came over to sit next to me, I was like, I don't know what it was, I was like, "I think he's come to tell me something".  I knew you wanted to come and have a conversation.

Lane Rettig: Did I actually --

Peter McCormack: Well, you were sat --

Lane Rettig: I remember I was at the opposite end of the table, yeah.

Peter McCormack: Well, we should set the scene for anyone watching or listening.  Two weeks ago…?

Lane Rettig: About two weeks ago.

Peter McCormack: Two weeks ago in Zonte in El Salvador, I'd gone to dinner, and there's a big group, eight or ten people, I think Gladstein was there and Alejandro was there and, had we met before, I couldn't remember?

Lane Rettig: Well, I think we had actually -- so, when you arrived at the airport, you were in a car, Alex was driving and you guys dropped Alejandro off.  So, you were there, we didn't actually meet that day.  We actually had had dinner together a couple of nights before, but again, we'd been --

Peter McCormack: Now, I mean previous to El Salvador?

Lane Rettig: Previous to El Salvador?  I don't think so.  If it was, it was in passing.  But we probably met on Twitter.

Peter McCormack: Maybe fought!  Well, look, so you came and sat down and when you sat down I was like, "He wants to have a conversation with me"!  I could sense it, because what happened was, you can sense these things.  You didn't just sit down and join the conversation; you were ready.  The conversation happened, and then --

Lane Rettig: You were chatting with someone else about someone else, I don't remember.  But, okay, I mean, sure, I don't think I had anything specific I wanted to say, but I wanted to meet you properly, because I listen to your show and I'm a fan and I like the work you do.

Peter McCormack: Thank you.  Well, we'll do the setup, because whatever show title we use, people are going to see Ethereum and say, "Pete, you've got a Bitcoin show where you're discussing Ethereum".

Lane Rettig: Ethereum's going to be in the title one way or another.

Peter McCormack: Ethereum's going to be in the title one way or another.  I have an evolving view of Ethereum, which I'm going to explain, but the reason I wanted this conversation: one, you wanted to tell you story, and if somebody wants to tell their story, I always think it's important to listen, I want it to be told if it's useful. 

But I am really into the idea of governance at the moment; it's something I'm really plugged into, both at a protocol level for Bitcoin, but also at a governance level for societies and states.  And I think we're going to have a long conversation in this about Ethereum governance, and I think that's going to be a useful lens for considering why Bitcoin governance is, what I would say, strong governance, or a strong structure of governance.  So, that's why we're going to be talking about Ethereum.

My position on Ethereum has changed.  I'm a Bitcoin maxi, I only hold Bitcoin, I'm not going to buy Ethereum; but I, at the same time, am tired of the war, because I think it doesn't achieve anything.

Lane Rettig: It's a war of attrition, isn't it?

Peter McCormack: It's a war of attrition and, look, I don't mind being critical of Ethereum for the things I understand, and if someone says, should they buy Ethereum, I'll usually say, "Buy Bitcoin, and it's for this reason".  But at the same time, it's not going away, people are using it.  Yes, it might have issues long term and it might die, fine; technologies come and go.  But I think it's really important to stop having useless fights that achieve nothing.

Lane Rettig: I think this sounds a little bit cliché, but I generally think that the things that unite us, which is to say the things we have in common, are much greater than the things that divide us; us being bitcoiners and ethereans.

Peter McCormack: Yeah, I mean you're a bitcoiner.

Lane Rettig: I am.  I think of myself as a bitcoiner first and foremost.  I am happy to share more background, but when I first got into this space in 2016/2017, the first thing I bought was Bitcoin, the first events I went to were Bitcoin meet-ups right here in New York.  The BitFest meet-ups, shoutout to those guys; fricking fantastic.  And, if it came down to a situation where I was forced to choose allegiance, I would choose Bitcoin, I want to be very clear about that.  But I also think it's possible to hold both of these ideas in my mind at the same, that both projects are cool and they both solve different problems basically.

Peter McCormack: So, I'm a bitcoiner, I only hold Bitcoin, and I've just decided that's my work.  There's never going to be a scenario where I'm going to launch, What Ethereum Did.  If I did, I would double my revenue overnight, and there's massive financial incentives to do it.  I'm just not going to do it, I don't have the time to dedicate to it and I'm not hugely interested in it.

Lane Rettig: But you're curious and you're openminded.

Peter McCormack: Well, it's not even curious and openminded; I like you and I want to talk to you and what can I learn about Ethereum that helps me understand Bitcoin better is useful.  But I'm not going to just spend the rest of my life calling things shitcoins.  And do you know what, sometimes I fear I've pushed people away from listening to my podcast, when actually they could have got something from it, just for being that.

So, I'm very supportive of what Udi's been saying recently.  Me and Danny have been talking about it a lot.  I think he's trying to make an interesting point people are missing.  It's not about people being mean on Twitter; it's actually about a certain subgroup of people who are moronic arseholes, who get a thrill out of abusing people and being complete fucking shits.  I've got very low tolerance of that anymore.  And when he frames that, I don't think he's saying every bitcoiner's like that.

Lane Rettig: Of course not.

Peter McCormack: He's just saying there's this group of fucking idiots, and I support that.

Lane Rettig: But there's a group of fucking idiots in every subcommunity and social media gives them a microphone and amplifies their voice.

Peter McCormack: Yeah, and it rewards them.

Lane Rettig: We have this in Ethereum.  I mean I think, again, every community has some of these people.  But you're right.  The intentions are such that they get rewarded for acting that way.

Peter McCormack: Exactly.  And I always think any form of extreme behaviour is a race to the bottom, and I think Udi's basically saying, "Look, there's nothing wrong with being a Bitcoin maxi and Bitcoin is amazing, but surely we should not tolerate some of this utter bullshit that's got nothing to do with Bitcoin".  So, that's why I'm happy to have this conversation, and also I want other conversations now.

So, we should probably -- people are probably thinking, "What the fuck are you going on about; why are you here today?" and then we'll get into Ethereum.

Lane Rettig: It's a good question: why am I here today?  I think I have a story to tell that may be interesting and may be viable to some of your listeners; I think that's what it boils down to.  I've had an interesting journey and an interesting set of experiences that I'm more than happy to share with you also.  I like you as well and I like having conversations with interesting people with interesting perspectives, so that's why I'm here.

Peter McCormack: So, let's start with what Ethereum means to you.  I'll tell you what it means to me.  I genuinely think Bitcoin is my vault, my safe, my hard money, safe for the future, money for my kids, something I only dip in when I need, and it's my savings and it's really hard to get; that's it.  I think of Ethereum as Vegas, but not entirely.  But I think it's a place where I would maybe take money I didn't want to put in Bitcoin and go and gamble a bit and maybe make some more.  And I know that might sound disingenuous, because you're going to tell me about lots of other important projects, but outside of that I do recognise stablecoins exist on other blockchains and I know they're useful.  And I know they exist in certain places on Bitcoin, but people are using them; I'm sure bitcoiners are using them.

I know there are a bunch of other projects, things that people are trying to build, and I've got to a place with Ethereum and Solana and anything like that, I think of that as fintech and I think it's a different space.  I think Bitcoin is trying to create the best money for the world, subvert the state; these other protocols, they're basically fintech.  The focus isn't decentralisation, more permissionless; that's what I think about it.

Lane Rettig: Thanks for sharing that.  Okay, I think something that could help us frame the conversation is that, I think when I see bitcoiners and ethereans talking at each other, we're just coming from different places, which is to say that we're looking at the world through different lenses.  I think that the lens that bitcoiners tend to use, and this totally makes sense, is the lens of money.  What is that phrase, "Fix the money, fix the world".  I think that's a really powerful lens, it's a great place to start, but I think that the lens that -- so, I have two lenses I use when I look at Ethereum specifically, or blockchain cryptocurrency more generally, and those are the lenses of innovation and institutions. 

So, in a nutshell, to me, Ethereum is an operating system for building human institutions, better human institutions than the ones we have today.  This is something we have in common, is that we are extraordinarily sceptical of existing world institutions, whether they be governments, central banks, big companies, etc, for very good reasons.  I mean, we were pre-pandemic; that's only been reinforced to the nth degree in the past couple of years.  And as a result of these different lenses, I think these two communities are optimising for different things.

So, Bitcoin again, the sort of thing that bitcoiners value most, and you touched upon this a moment ago, is security, 100%.  Yes, there's innovation in Bitcoin, absolutely; yes, there are other things that bitcoiners value; but if you were ever forced to make a choice between innovation and security, Bitcoin's going to go security.  And again, I think that is of enormous value to the world.  

I think what the Ethereum community values more, so again we also value security, that matters a lot in Ethereum; but innovation matters probably more than anything to us, specifically innovation along the lines of coordination, and human institutions are just tools for coordination.  The person who I think has done the best work on this is Nick Szabo.  His work has been extraordinarily influential and inspirational to me in my journey.

Peter McCormack: Do we know what his position is on Ethereum?

Lane Rettig: I don't know.  I know he's been in some Twitter wars with Vlad Zamfir and some other folks regarding governance, which I think we'll get into, because we're going to talk about governance.

Peter McCormack: Okay.

Lane Rettig: I mean, he's a bitcoiner, I guess.  I'm not sure he likes Ethereum, but I don't want to put words in his mouth; I have no idea.

Peter McCormack: Okay.

Lane Rettig: Just to re-emphasise, Ethereum is an operating system for building human institutions.  What does that mean?  It means that we have thinks like DAOs, being the most obvious example.  I mean, Bitcoin itself was a DAO, Ethereum itself was a DAO, and now we have all these really genuinely exciting, interesting, innovative DAOs being built on Layer 2 on Ethereum that coordinate people around all sorts of crazy things.  But again, what we're trying to do really is address these coordination problems, these sort of Moloch traps.

Peter McCormack: So, can you give me an example of one of these, because when I think of Ethereum projects, I think of something like, is Uniswap there?

Lane Rettig: Uniswap started on Ethereum, yeah.

Peter McCormack: It started on Ethereum.

Lane Rettig: That's like the first really successful decentralised exchange.

Peter McCormack: Yeah, so I think of Uniswap, I think of CumRocket, I think of stupid things --

Lane Rettig: There are a lot of stupid things.

Peter McCormack: -- and I think of stablecoins.  What interesting stuff is not coming to the top and what are we not seeing?

Lane Rettig: Okay, so I think I need to start with the big three, and I know you're familiar with all of these.  So, any time a bitcoiner or anyone, for that matter, pushes back and says, "Ethereum is a shitcoin, there's no value", I say, "We have DAOs, we have stablecoins, we have NFTs".  I think that these are rock-solid examples of things that create real value for millions of people around the world today.

Peter McCormack: Well, I'd agree on stablecoins.

Lane Rettig: We can stay with any or all of those.

Peter McCormack: I would agree on stablecoins.  NFTs are so interesting, because that's even split some bitcoiners.  I've had a couple of interviews recently where bitcoiners are like, "I like NFTs".  I'm not there.

Lane Rettig: I'm not there with digital rocks, nor am I there with CryptoKitties necessarily.  I think we need to look at short and long timeframe, where I think I've said the same exact thing about ICOs and tokens circa 2017.  99% of the tokens created in 2017 lost 99% of their value, and that was right that that happened.  And here we are now, fast-forward three or four years later, we have some really interesting use cases.  ShapeShift decentralisation project is a great example.

Peter McCormack: Yeah.  I spoke to Derek about that.  I was fascinated by that.

Lane Rettig: It probably could not happen without something like a token on something on Ethereum. 

Peter McCormack: I also think the Blockstream BMN token, I can't remember the exact name, that's on Liquid; not because it's on Liquid, but I find that interesting, because that is a token where you're getting rewarded in Bitcoin for the Bitcoin they mine.  I think that's a super interesting idea.

Lane Rettig: It's like a mining future or something, some way to participate in through a token, right?

Peter McCormack: Yeah, it's a token and I think that's also interesting.

Lane Rettig: Right, so again this goes back to coordination challenges.  And, yeah, I'm agnostic to whether these things run on Liquid or on Ethereum or on Solana, or any of these chains.  But just circling back to NFTs, we saw this Cambrian explosion of shitcoins in 2017 and as I said, most of them went away.  But now, here we are a few years later, and there are some -- we understand best practices, I think.  As a community, we understand how to get things like tokenomics right.

I think that we are now in the 2017 era with NFTs and a lot of, I don't know what the shitcoin equivalent is; shitrock NFTs!  But fast-forward a few years, and I think that there's some genuine innovation in there and we will find it, and the dominant design will emerge and I think that will create a lot of value for a lot of artists.

Peter McCormack: Yeah, I mean when I look at it all, I just think there was a point where my feed was just constant NFT, but everything, all kinds.  And it was a new series here, a new series there, all these new series --

Lane Rettig: It's still happening.

Peter McCormack: -- and I just think it's oversupply of an idea.

Lane Rettig: I agree.  But the thing is, the market will sort that out.

Peter McCormack: Well, that's fine.  But the one I do actually look at every now and then, I actually think those CryptoPunks, as art, they're kind of cool, they're kind of interesting.

Lane Rettig: They're on billboards here in New York and other states as well.

Peter McCormack: Yeah.  I'm not going to buy one, because it's too expensive, but when I look at it, most of this stuff I just think is just mass-produced shit.  But I think the Punks are kind of cool.  Now, I'm not going to buy one, because I don't want to buy a hash, I think there's no value in it; I know other people do.

The thing on NFTs I'm interested is the idea of utility in NFTs, so this idea I've talked about a few times now.  I'm very into the idea of an NFT for a ticket.  So, for example, when we went to the Yankees yesterday, send me that as an NFT and if I want to sell it or I want to move it on, I can send it to you and you've got it on your wallet; that just seems like a logical next step.

Lane Rettig: That's totally low hanging for obvious…

Peter McCormack: But I don't care what chain that's on.  That could be on Solana, I don't care, as long as I could get my ticket and I can protect it.

Lane Rettig: Because you're not holding it long term.

Peter McCormack: Exactly.  Whereas, some of the NFTs you're like, well if the chain dies in the long term, this is a problem, because the NFT suddenly loses value.  I know nothing really dies, but you know what I mean.  But short-term tickets, where it's just an actual utility, I think that's interesting.

Lane Rettig: I think it's very interesting.  I think there are certain structural obstacles to get there.  I think we will see this in our lifetime.

Peter McCormack: But the DAO; tell me about real-world DAO.

Lane Rettig: Can I just give you something to chew on before we switch topics.  I think, and this is a bit of a big statement, and we could skip over this or we could double-click on it if it's interesting, I think that NFTs are to art as Bitcoin is to money.  What I mean by that is that a lot of people early on, and for that matter still today, look at Bitcoin and they're like, "Oh, what is it really?  It's a cryptographic signature, it's a hash.  There's no real value in this".  I mean, you've spoken to contrarian anti-bitcoiners who have expressed this perspective.

I think, in the same way, I'm not an artist, I don't get art necessarily, but I'm beginning to understand that, yes, it is just a hash, but actually it is maybe the next evolution in art and I think we should keep an open mind about that.

Peter McCormack: Yeah, I guess.

Lane Rettig: It's a new medium, is what I mean.

Peter McCormack: Yeah, well I guess the difference being is some bitcoiners believe that Bitcoin will ultimately replace all money.  I'm not there.  I think it has a symbiotic relationship with sovereign currencies, but I can understand the world where they think it gets to and who knows, maybe they're right.  Unless we end up living in the Matrix, I think that NFTs are just another medium; they don't replace art.

Lane Rettig: I see what you're saying, they don't replace art.

Peter McCormack: Whereas, the goal of Bitcoin for some bitcoiners is to replace money.

Lane Rettig: If we are living in the metaverse in the future, they will replace art.

Peter McCormack: Possibly, yes.

Lane Rettig: But that's a separate question!

Peter McCormack: I don't think I'm going to get to live in that world.

Lane Rettig: I don't think I will either.

Peter McCormack: But I see it as just an additional medium that some artists may or may not use.  The change will be the day if Banksy ever does an NFT, a real one, not the fake one that happened recently.  I mean, if someone like that --

Lane Rettig: I mean, Banksy is the type of artist who will sell art on a street corner for $10 or something, or £10, I guess, to unsuspecting customers.  Maybe there is already a real Banksy NFT, who knows.

Peter McCormack: Yeah, but we will see.  I'm neutral on the future of them, I think there are some things that may come out of them that are interesting, but I'm more focussed on money right now.

Lane Rettig: I think the likelihood that Bitcoin replaces all money is roughly equivalent to the likelihood that NFTs replace all art.  I really think that there's an interesting parallel going on here.

Peter McCormack: Yeah, but I still think they're different goals, but we're get around there.  Right, DAOs, tell me about DAOs.  Someone actually reached out to me recently and said, "Pete, I want to launch a DAO to buy Liverpool Football Club, would you get involved?" and I was like, "No, because you're not going to buy them and I don't have time for this nonsense!"

Lane Rettig: DAOs are raising crazy money.  I was at a DAO-focussed event the past few days, and there was a DAO that was created ad hoc, just from people having a conversation like this, and someone spotted the multisig and threw some Eth into it and some other people "aped in"; that's the new terminology, is you ape into things.  And at the end of that day, there were more than $3 million in it and it's still growing rapidly.

Peter McCormack: What is the DAO?

Lane Rettig: This particular DAO?

Peter McCormack: Take a step back.  For somebody listening, watching, what is a DAO?

Lane Rettig: Okay, this is a really hard question to answer.  So, DAO stands for Decentralised Autonomous Organisation.  There was an initial DAO…  So, the idea emerged around 2014/2015.  I think Dan Larimer was one of the first people who proposed this early idea in some early writings.  There was some idea of a decentralised autonomous corporate, I think, a DAC back around that time.

Peter McCormack: The King of Blockchains!

Lane Rettig: Separate topic!

Peter McCormack: Yeah!

Lane Rettig: But the first DAO that I'm aware of was "The DAO" very confusing.

Peter McCormack: What, the one that got hacked?

Lane Rettig: The one of 2016.  Well, whether it got hacked or not depends on your definition of hack.  This very quickly gets into --

Peter McCormack: Let's not cover that one; that's been done a million times.

Lane Rettig: It has, but it is both the single most important event in the history of the Ethereum blockchain and community, so it's like the day that Ethereum lost its innocence, so to speak.  So, to understand anything about Ethereum today, you do really have to understand The DAO.  It's sort of become ancient history in crypto years, because it was five years ago, but it wasn't really that long ago and it was a very traumatic experience for people who lived through it.

Anyway, a DAO, at the end of the day, is a coordination mechanism.  It is, in very concrete terms, it's a smart contract on a platform like Ethereum, where people can contribute value in the form of ETH or stablecoins or other tokens, etc, and usually there's some sort of a voting mechanism.  So in the case of The DAO, it was sort of like a decentralised VC fund.  So, the idea was that people throughout the ecosystem contributed ETH, at that time it was really only ETH, and there were a small number of people known as "curators", and the curators were responsible for spinning off these little investment vehicles, which were like subcontracts, and then those could be used to invest into investible projects at the time.  The idea was that those projects would pay dividends, returns back into the DAO fund and everyone would benefit from it.

Peter McCormack: Did The DAO launch at the launch of Ethereum?

Lane Rettig: No, this was a year or two after, it came along, but it was very early.  Ethereum was a very immature platform.  So I guess, sorry, to finish The DAO story, what happened was, the project was launched very quickly, it was not really thoroughly audited and in the defence of the folks behind it, it wasn't intended to get so big.  It's exactly what I described a moment ago; it was a group of friends who were like, "Hey, this is fucking cool.  Let's throw some ETH into this thing and let's see what happens, let's see if the idea takes off".  But the thing is, it's permissionless by design; that's how smart contracts work, and they didn't put in any caps or limits.

So, a few days later, again exactly the same phenomenon that I just described that just saw a couple of days ago at this event, there were hundreds of millions of dollars of ETH in it.  In fact, it was on the order of 10% or 20% of all the ETH in existence at that time.  And so, this is something else people don't understand, is that if the attacker had made off with all that ETH, that would have been pretty apocalyptic for the network, especially given the plans to transition to proof of stake and stuff, right.  So, this is one of the reasons that ultimately, there was a decision to do a hard fork and return the funds.  So, yeah, I mean this story's been told many times.

Peter McCormack: Quick version?

Lane Rettig: Of what happened after that?

Peter McCormack: No, of the hack.

Lane Rettig: So, there was a low-level exploit in the contract code.  It was the first time it had ever been identified and it had never been exploited previously.  There were some folks, like Professor Emin Gün Sirer's team at Cornell, Phil Daian, a few other folks who actually had identified some of these vulnerabilities prior to the attack happening, and actually posted about them publicly on a blog, called Hacking Distributed.  So, check out the articles there; they're really good explanations of the low-level details.

Long story short, the attacker, for that matter anyone, because again this is permissionless, was able to craft a specific type of transaction to the contract that didn't immediately drain the funds into that attacker's wallet; but what it did was it transferred the funds into one of these subcontracts and then there was a cool-off period, I think it was about 30 days.  This attacker was able to keep sending these transactions and just keep withdrawing the same funds, or I should say just keep withdrawing funds into this kind of subcontract over the span of a few days.

If no one had intervened, then what would have happened is 30 days later or so, they would have been able to then subsequently withdraw all of those funds from that subcontract into wherever they wanted, into their own wallet.  What happened was, people cottoned on to what was going on, and there was this really robust and -- this is genuinely, even Ethereum aside, this is one of the most interesting stories of all time, certainly one of the most interesting stories I've ever heard.  Cami Russo does a really good job of talking about this in her book, which came out recently; also recommended if you want to understand the Ethereum back story.

But basically, yeah, there was a group of people around the world on multiple continents who came together.  They dubbed themselves The White Hat Hacker Group, and they launched a counterattack.  They found the exploit, they exploited it themselves.  Because they had so many people submitting transactions, they were actually able to DoS the attacker, so that their transactions ended up getting processed before the attacker's did, and they were able to drain most of the funds, using the same exploit, into their own wallet, their own subcontract.  Then, they were able to return those funds to folks later.  Then there was a hard fork and that's that.

Peter McCormack: So, what was the size of the funds that the hacker had managed to drain?

Lane Rettig: I think they ended up with something around the order of 20% of The DAO, or something.  Like I said, the DAO -- I mean, ETH also, the price was changing at this time.  It was some hundreds of millions of dollars.  The attacker probably had something around the order of $30 million, $40 million, $50 million, something like that.  But The White Hat Hackers had the rest.

Peter McCormack: And this became a real point of contention, because it was like, "Shall we hard fork, or is, 'Code is law'?"

Lane Rettig: Exactly, and this is also a fascinating piece of lore.  When the attacker started their attack, they posted a message.  I think it was encoded into the first transaction that they sent, something like that, so it's actually there on the blockchain; you can actually read it, you can decode it.  And it says something to the effect of, "Thank you for creating this contract, thank you for putting money in it, I'm going to use the feature that allows me to withdraw funds to my address.  Have a nice day".

Peter McCormack: Code is law!

Lane Rettig: I don't know where I put my hat.  I'm wearing a hat that says, "Trust the code, it's fine!"  It's over there.  But yeah, if you believe the code is law, then the attacker was not breaking any rules.  So again, this was the schism in governance in Ethereum that led to the hard fork that -- it was called "an irregular state transition", so it violated the rules of the protocol and the funds that the attacker had made off with, it transferred them back to the original owners, or back to The DAO, or something like that.  And of course, the network that became known as Ethereum Classic chose to keep mining on the original chain and not respect that hard fork, because they believe the code is law and it should be immutable.

Peter McCormack: So, the hacker got to keep their funds on Ethereum Classic.

Lane Rettig: On Ethereum Classic, correct.

Peter McCormack: Do we know if they ever moved?

Lane Rettig: That's a good question.  I mean, we could probably find out pretty easily.

Peter McCormack: Yeah, it would be interesting.  Okay, so how much debate was there around having the fork, how contentious was it?  I mean, obviously Ethereum Classic was created, there were obviously people who disagreed.  But it's one of those ones where I kind of wrestled with it.  I always try and think on both sides and I think code is law.  If you're going to build something immutable, great; but at the same time, somebody has stolen.  This is essentially a theft.  It depends how you describe it; it's an exploit.

Lane Rettig: So, I'd agree with you, it's pretty clear that that was not the intended use case of the contract, although that is the way the code worked.

Peter McCormack: Of course, yeah.  But I don't want to have an exploit in the code with my bank and have my funds taken.

Lane Rettig: But this is the thing about governance, is that there has to be human interpretation, right?

Peter McCormack: Exactly.  But ultimately, I think it was a bad decision.  I ultimately think code is law, I do.  But at the same time, seeing where Ethereum is now, and I consider it's fintech, it's not something I'd like to ever happen on Bitcoin, but while I consider Ethereum as fintech, I'm like perhaps that's a differentiator that Ethereum has and actually is a separation from Bitcoin.  But I think it's a really tricky one.  Mainly I think it was wrong, because I think the people who made the decision were the people who lost their funds.

Lane Rettig: Yeah, I think they're zero skin in the game, or conflict of interest, depending how you look at it.  Just as a point of contrast, there was another event that happened in Ethereum, I think it was late-2018, early-2019.

Peter McCormack: Was that when something got frozen?

Lane Rettig: Yeah.  So, this was a Parity Multisig Wallet and a similar amount of money.  It was, at that time, equivalent to $200 million, most of which belonged to the Web3 Foundation and a host of other projects, that had raised ICOs and were storing their funds in this multisig contract.  It didn't get stolen, it got frozen, because of an exploit that someone, devops99 was their handle, took advantage of; whether intentionally or not, we don't know.  And there was a lot of controversy at that time about whether or not we should do another hard fork, and whether or not we should restore those funds.

Peter McCormack: And it got close.

Lane Rettig: I don't think it was ever close.  It was definitely debated a lot, but it was pretty clear that, again this begins to get into Ethereum governance, the people who make those decisions were pretty opposed to it and it was not likely to happen.  But the consequence of that was that a lot of the folks there, the Web3 Foundation folks, the Parity folks, mostly left the ecosystem and now they have their own ecosystem, which is Polkadot.  So, you have to consider if the hard fork hadn't happened the first time around with The DAO, maybe those people would have gotten pissed off and left and done their own thing, or something.

Peter McCormack: I mean, I assume Polkadot's another one of these protocols that hardly anyone's using and raised a lot of money and made people rich!

Lane Rettig: I don't have an opinion on it.  It did raise a lot of money.

Peter McCormack: There's so many of these things.  How many people do you think were -- what's the fewest number of people who were able to make that decision to fork Ethereum?

Lane Rettig: The original DAO?

Peter McCormack: Yeah.

Lane Rettig: So, just to be clear, I wasn't around at the time.  I joined the community --

Peter McCormack: What do you think, is it something that it can be a couple of people can make that decision?

Lane Rettig: I think at that time, I mean Vitalik's voice has always been influential, people have always looked up to him.  There are a lot more decision-makers in the community today than there were at that time.  Again, I don't know, but my guess is at that time, Vitalik weighing in in support of a hard fork seemed like that may have been enough to tip the scale, a single person.  Again, I think that that may not be the case today, but it was the case at that time.

Peter McCormack: Okay, fine.  It's a good setup.  We should probably now talk about the Ethereum Foundation.  What is it, as soon as there seems to be a foundation created in any protocol, it seems to go wrong because a foundation applies some kind of centralisation?  The Bitcoin Foundation failed.  There was an attempt at creating a similar one a couple of years ago that got disbanded, just because people disagreed with it.  So, explain to me who the Ethereum Foundation is, what it is and what it's designed to do?

Lane Rettig: I'll do my best.  So, by way of background, I first touched blockchain, Bitcoin, Ethereum late-2016 and then at the beginning of early-2017, I was taking some time off work at that time, so I was in an exploratory mode.  I learned about it, was fascinated by it.  Previously, it hadn't clicked for me before, because I had been a founder of a start-up and I think I'd just been very heads down up to that point. 

I went down the rabbit hole very rapidly here in New York, started attending meet-ups, live BitDevs, which I mentioned, some Ethereum events as well, and attended the Ethereum Devcon 3, which happened in October, November 2017, I think, in Cancún.  I went down there as a volunteer, literally knowing nothing.  I mean, I walked into the room having no clue what a smart contract was, more or less.  And, because I was a volunteer, I was working alongside the organisers, which was the Ethereum Foundation, and got a chance to be a fly on the wall for a lot of the research meetings that were happening there prior to the conference.

I was hired by the Ethereum Foundation shortly after that, so November, December 2017.  I worked as a contractor for the foundation -- basically, everyone aside from the directors are contractors; that's just how the foundation works -- for a couple of years, and then parted ways in 2019.  There weren't any titles, but I was a Core developer, I was working on a particular piece of the technology, called Ewasm, Ethereum-flavoured WebAssembly, which was a plan to build a new smart contract virtual machine for Eth2; but also doing a lot of advocacy, a lot of travelling, a lot of education, a lot of hosting meet-ups, hiring, speaking at events, that kind of stuff, and governance ultimately. 

I was hired in this hybrid role as an MBA, as someone with founder experience running start-ups, to act as an internal consultant, interview all the individual teams, and figure out ways to introduce better management practices at the foundation, and that's a whole separate story about what happened there.

Peter McCormack: Let me just understand the Ethereum Foundation, though.  It is essentially a governance, advocacy and development nonprofit?

Lane Rettig: It's a nonprofit, so it is a Swiss Stiftung, to be specific, which is a foundation structure.  It has some number of directors.  I don't know if it has an officially stated mission, but I guess it kind of promotes the health of the Ethereum Network and ecosystem.  So again, there's a little bit of backstory here.  You have to understand how Ethereum was created.  Again, Cami Russo tells this story really well in her book in more detail than I could in this conversation.  The Infinite Machine, is what that book is called.

But basically, there was dissention among the ranks.  There was something like ten-ish people who had come together to build Ethereum, people including Gavin Wood and Joe Lubin and Vitalik and a few others.  And the long story short, there was a decision about whether Ethereum would be a for-profit company, or a nonprofit, and Vitalik made the final decision.

Peter McCormack: Ethereum would be?

Lane Rettig: Ethereum, right.  So, it wasn't a legal entity; there was just a group of people writing some code and I think they got a sense that this had the potential to be quite big, right, because this was 2015.  And, Joe Lubin, as the story is told, really wanted to create a for-profit company.  Who else was involved; there were a couple of other folks involved?

Peter McCormack: So, it would be a corporate --

Lane Rettig: Charles Hoskinson was briefly the CEO of Ethereum.  Really interesting backstory there, but again, correct.  The idea was would it be a corporation, what would it be?  Vitalik made the decision to make it a nonprofit.

Peter McCormack: I kind of feel like it probably should have been, because if you think about it --

Lane Rettig: It should have been a for-profit, you're saying?

Peter McCormack: I think it should have, because I think if it's not for profit, it should strive for maximum decentralisation, and I don't find Ethereum strives for maximum decentralisation.  I think it makes compromises on decentralisation for throughput and the ability to build certain things out.  And by the way, you know how untechnical I am, but that's my impression.  But if it was company --

Lane Rettig: What do you think would be different if it was a company?

Peter McCormack: I think it would be a fintech decentralised -- sorry, a permissionless fintech layer for people to build fintech technologies on, and I think it would have less of a war with Bitcoin, because it wouldn't be about it being money.  Because, one of the things I think is interesting in the world of fintech is the idea that I don't have to go and create logins everywhere; I can just have a hardware wallet and I can move assets from one person to another, and that's down to the people building it to allow me to do that.  That kind of fintech layer I think is interesting in some ways.

Lane Rettig: It's interesting how we keep coming back to fintech because, yes, that is one of the things that you can do with Ethereum, certainly it's happening with DeFi; but I think what I'm suggesting is, to me, and I think to a lot of people who are very deep into it, it's a lot more than that.

Peter McCormack: Of course.

Lane Rettig: This goes back to that thing I said about operating system for building better human institutions.

Peter McCormack: Yeah, and I'm certainly going to trigger some people with these kinds of ideas.  And I guess if it was a company, then the DAOs would be less interesting.

Lane Rettig: If it was a company, here's the thing; it would have shareholders and it would have accountability to their shareholders, it would have fiduciary duty.  And again, this starts to get into the governance.  I think this is one of the issues with the foundation, is that in any normal scenario, a foundation -- in fact, again I don't know what the rules in Switzerland are.  But here, for example, a foundation is required to raise a certain amount of its operating budget from donors every cycle, every year, whatever it is.  And then by definition, it has accountability to those donors.

The thing about a foundation that was endowed with 3 million Ether, as I think the Ethereum foundation was, that's a lot of money, that's billions of dollars today, is that it doesn't have any accountability to anybody, period, full stop.  This is what it comes down to.

Peter McCormack: But it kind of has shareholders, because they're not shareholders by the traditional term, but proxy shareholders in terms of the people who hold a lot of ETH, who have a lot of interest in the direction of Ethereum, whether they bought them or gained them as part of the premine.

So, this whole war about premines I only think matters if you're trying to create the best money in the world.  I don't think anyone else cares.  Bitcoiners hate the premine, but they're trying to compare two things that are slightly different.  I don't see it.  I see Ethereum, even if it is decentralised and not a company, I still see it like a company.  I consider the premine is just the shares that the founders got.

Lane Rettig: It's true; I think that's a reasonable first approximation.

Peter McCormack: And therefore, it kind of has proxy shareholders.

Lane Rettig: So, okay, a couple of things to talk about here.  The first is that, let me be very clear, the premine ultimately was the biggest reason I left Ethereum, period.  There were other reasons involving the Ethereum Foundation governance, we can talk about those; but, look, I previously worked in traditional finance.  I worked for a hedge fund a few blocks from here and then in Hong Kong after that, and felt that my role in the world, my role in human society, was a cog in a machine that was making rich people richer.  And that's an oversimplification, just to be clear.  There are pension funds and things, ordinary people's pensions, that invest in things like hedge funds, okay, so it's an oversimplification, but that's what I felt like after a few years of doing this.

I started this job in 2006, was there through the Financial Crisis.  I'm a very values-driven person and I felt I wasn't able to live up to those values in that role, okay.  Fast-forward a few years, went back to school, started a company, sold the company, got into Ethereum.

Peter McCormack: You're about to say, "The same thing happened again"?

Lane Rettig: That's where I'm going with this story; it's fairly obvious, right?  But, look, the first year in Ethereum, I said, "I'm going to keep an open mind.  I don't care what they pay me, I don't care if they pay me, I want to maximise learning, I want to travel and thank you, Ethereum Foundation, for giving me the opportunity to do that, it was very eye-opening".  But after a year, 18 months, I was like, "Holy shit, what am I really doing here?  I'm really pumping Joe Lubin's bags, all due respect to Joe Lubin and all the other Ethereum whales.  It's just not what I want to do.

The reason for that was largely the premine, because at that moment, 70% of all the Ether in existence, as of a couple of years ago, had been distributed in the premine.  Today, it's about 60%; it's been diluted a little bit.  So, I don't know what the right number is.  I mean, we will never have another Bitcoin, we will never have another immaculate conception again.  I don't know if the right number's 10%, 15%, 20%, you could draw the line wherever you want.  80%, 70%, 60% is too much, it's just too much by almost another magnitude.

Peter McCormack: And, who are the biggest holders within that?  I know Vitalik.

Lane Rettig: Vitalik's holdings are public, by the way, very transparent.

Peter McCormack: The strange thing about Vitalik is I don't see him as financially driven.

Lane Rettig: He's not, trust me.  I know him; he's not!

Peter McCormack: Whereas Joe Lubin clearly is.

Lane Rettig: He's a businessman.

Peter McCormack: So, Vitalik, Joe Lubin, who are the other key -- Charles Hoskinson perhaps.

Lane Rettig: I mean, here's the thing.  Other than the very small number of people like Vitalik who are public, also the Ethereum Foundation multisig wallet address is public, we don't know.  I can assume that the people who happen to be the crypto growers that happened to be in the room at that time, and the very small number of investors who got Ethereum circa 2015, did very well.

Peter McCormack: Okay, all right.  So, you've joined the foundation --

Lane Rettig: The point is, it's on the order of a few hundred people, maybe a thousand, maybe a couple of thousand people.  It's a very small number of people.

Peter McCormack: But within that, there's a few who have very significant interests.

Lane Rettig: Yeah, it's a very long tale.  And I've heard rumours, this is totally anecdotal, that a very small number of individuals, like one or two-ish people, singlehandedly bought up very large percentages of the premine, basically the ICO, because they were able to participate anonymously; there were no limits.

Peter McCormack: Okay.  So, you joined the foundation 2017, you are a bitcoiner, but also interested in Ethereum, and you're not hugely financially driven, but your interest in Ethereum is what it can be and what it can do.

Lane Rettig: The social side.

Peter McCormack: Yeah.  So, you're joining the foundation to contribute to that, you feel like this is a good use of your time.

Lane Rettig: I felt like Ethereum was the most important project in the world at that moment.  That's why I wanted to contribute to it.

Peter McCormack: Not because you want to create NFTs, but because you think you can rebuild --

Lane Rettig: Human institutions, better institutions.

Peter McCormack: Which we all know are broken right now.  Interestingly, the long conversation I had yesterday with Rob Hamilton, was it yesterday?  No, the day before, was about how institutions have been broken by the broken monetary system, which was really interesting.  But anyway, we don't need to debate whether it can or can't, some people say, "DAOs are fucking stupid", some say they're great, it doesn't even matter right now.  That was what your goal was.

Lane Rettig: Correct.  Also, just learning about -- I'm a computer scientist first and foremost, I'm a software developer.  I'm also an armchair economist, I've always been deeply fascinated by economics, by anthropology, by the study of human institutions, coordination, jurisprudence, law, things like that.  So, Ethereum just tied together all these different threads for me, and money as well.  I mean, I've had a background working in finance as well.

So I was like, "Holy shit, this is the seven things I'm most passionate about.  This project touches all of them!"  So, it was just head exploded, stare at the wall for 30 minutes to let it all sink in, "Okay, I want to work on this", and they gave me the opportunity to do that.

Peter McCormack: Great.  So, you joined in 2017 and you leave in 2019.

Lane Rettig: And I spent all of 2018 and the first part of 2019 almost non-stop on the road, travelling, conference to conference, meeting people, doing sprints with my team, roughly 50% advocacy, social stuff, 50% technical stuff.  And the advocacy included a lot of governance stuff.

Peter McCormack: So, where did things go wrong, what was the point where you were like, "I'm not sure what I'm doing here, I'm not sure what this is"; can you talk me through that?

Lane Rettig: Yeah.  I don't think there was a particular moment.  I think it was, my experience with the Ethereum Foundation was negative, almost from the very beginning, and I can explain what that means.  It's interesting, because as I touched upon earlier, I still think very highly of Ethereum as a project, as a community, as a technology, as a platform, and I don't think very highly of Ethereum Foundation given my experiences there; and I think it's important to emphasise these things can both be true.

Peter McCormack: All right.

Lane Rettig: And so, what kept me there was my love for the project and the people I met, what kept me there as long as I was there, but was my love for those things, in spite of the negative experiences I had with the foundation.

Peter McCormack: And, did it get to the point where you could still do your work, your advocacy work, or did you get to the point where you felt you actually were ethically compromised in doing your work?

Lane Rettig: That's a great question.  Yeah, I think probably there was an ethical conflict there, because of what I said, because of the premine.  That's what I'm saying.  That, for me, was sort of the final straw.  There were a host of other things, but I was, "Look, I can deal with these things".  The Ethereum Foundation wasn't paying me well, they weren't treating me well, they weren't treating a lot of people well.  There's a whole host of internal management and governance issues.  Maybe I could overlook all of that for the project and the love of the project.

So, I guess maybe the answer to your question is, when I became more active -- again, just to be clear.  I started late-2017.  I said, "Look, I'll give it 12 to 18 months.  I'm just going to sit down, shut the fuck up, do the best work I can do, be the better person and give this a chance to sort itself out".  It didn't.  So, fast-forward 12 to 18 months, my level of discomfort and exactly, that ethical -- I'm remembering now, I have almost PTSD over this, because I had a lot of sleepless nights in early-2019, and I think that it was me wrestling with my conscience.  And that's what led me, after those 18 months had passed in early-2019, to become more activist, take a more activist role.

So, one of the things I was trying to do was create a new foundation, right.  Not replace the Ethereum Foundation, not destroy the Ethereum Foundation, but just create another pole of influence in the ecosystem, and there was a lot of support for this.

Peter McCormack: A completely separate foundation?

Lane Rettig: A completely separate foundation, because I felt that the Ethereum Foundation was irreparably broken.

Peter McCormack: You wrote something on your Medium about this, didn't you, about governance?

Lane Rettig: I wrote a lot about governance.  There was a tweet you may be referring to, which was April of 2019, where I tweeted that, "Ethereum governance has failed", and this was a tweet thread where I went on to explain, and I had been very, very active in Ethereum governance.

Peter McCormack: Had you quit at that point?

Lane Rettig: No.  This sort of precipitated that.

Peter McCormack: Is this your Jerry Maguire moment?!

Lane Rettig: I think so. 

Peter McCormack: I had one in advertising.  So, I used to work in advertising and I loved it.  And then by the time I hated it, I realised my job was to convince people to buy shit they didn't need and work weekends for people I didn't like, paying me to do a job that just didn't…  Advertising had lost its creativity.  I like old-school advertising --

Lane Rettig: Mad Men stars!

Peter McCormack: Mad Men stars, yeah, where it's an art director and a copywriter working together to create beautiful ideas.  And the industry got destroyed because there were too many channels; it just became bullshit.  So, I wrote this -- I'll share it with you, I wrote this thing called -- bear in mind I had a digital advertising agency, and this thing was called, "Online Advertising Does Not Work", and I wrote the whole thing, like why, where it's fraud, and how it can be better.  And our website, we just made that our homepage and I sent it out to all my clients.

Lane Rettig: Amazing.

Peter McCormack: And then I think I'd quite within six months after that.  It didn't do what I wanted it to do; it didn't.  I wanted it to be like Jerry Maguire's moment, which he wanted, where everyone would turn round and go, "Yeah, this is great", and it was like, "No".

Lane Rettig: Yeah, very similar.  So, I actually wrote exactly that piece about Ethereum; I have that piece about the ten ways that I think Ethereum's broken.

Peter McCormack: I think I read it, but I think I read it in 2019.

Lane Rettig: Yeah, this would have been 2019.  So, there was this tweet thread, and again it was just, I'm a very values-driven person, and I probably saw the writing on the wall and knew this would be bad for me personally, for my career, for my personal brand, whatever; I didn't give a fuck.  That's why you and I are having this conversation now, because again I think that this is a story that needs to be told.

I was helping run the main Ethereum governance mechanism, which is this thing called AllCoreDevs, this call that happens fortnightly with all the teams around the world that are developing all the Core clients, within literally the smoky backrooms at these events, sitting at the table with the decision-makers.  In fact, yes, I think this is what you were referring to on Medium.

There was a post called, "How open is too open?  How transparent is too transparent?" something like that; we can find it and link it, where actually, this is just for me, from the beginning, Ethereum was always about creating value for the world for everyday people.  And again, about dismantling these shitty institutions and existing hierarchies and power structures we have in the world.  And to find myself in these rooms, around these tables with a bunch of wealthy white dudes from primarily Europe and North America, making decisions about a network worth billions of dollars, paternalistically --

Peter McCormack: Changing the monetary policy?

Lane Rettig: The monetary policy, we can talk about that, how that happened.  It made me very uncomfortable and I wanted to share that message with the world, share this experience, and people really didn't like that; it made them very uncomfortable.

Peter McCormack: So, God, there's so many things to talk about!

Lane Rettig: I know, right?

Peter McCormack: Let's start with the response to the tweet thread.  Just give me the short version.  I think I need to know that now.  I'm going to imagine some support, some hate.

Lane Rettig: Some small degree of support from really close friends, and that's kind of what got me through it, people reaching out privately in DMs saying, "I totally agree".

Peter McCormack: It's always privately!

Lane Rettig: Always DMs, right.  A lot of hate.  It's funny, when you and I first discussed having this conversation, doing this episode, you said, "Be prepared for backlash".  I was like, "Dude, maybe it will happen, but it can't possibly be worse than what I experienced in 2019".  It was bad.  I'd never experienced anything like it up to that point in my life.  There are long threads on Reddit of people calling me an evil baby-eating monster and even people that I consider friends suddenly deciding that I had become evil and been corrupted by the bitcoiners, or something, and that I was a Trojan horse sent in to destroy Ethereum, conspiracy theories.  It was wild; mediation got me through it, honestly.

Peter McCormack: Do you think it's because there's people who genuinely disagree with you; and do you think it's also because people felt their backs got threatened?

Lane Rettig: I think it's this latter, I think it's this autoimmune response.  It's tribalism, is really what it comes down to.  If people disagree, and there are people who disagree and who did engage with me constructively and said, "Hey, Lane, you have these ideas about the new foundation, about a better way to fund the public good than we're able to achieve right now.  Let's talk about that, let's poke holes in this", but it was mostly just vitriol.

Peter McCormack: Right, okay.

Lane Rettig: This is the problem with social media.  I had great conversations in person with defensive people.

Peter McCormack: Well, that's always the way.  Of all the dicks I've dealt with on Twitter, only one I've met in public in person, I'm like, "What are you fucking doing?  Let's have a beer and let's talk things through".

Lane Rettig: Exactly.  99% of the time, that works.

Peter McCormack: But he was like, "No", and he completely lost his shit with me in public.  I was like, "Okay, well I'm just going to leave".

Lane Rettig: Incidentally, there's another thread here.  This is actually I think the biggest issue with virtual governance, things like DAOs and Cloud states.  Balaji speaks a lot about this vision of a network state or a cloud state.  I've learned about another project two days ago that's working on this which is very exciting.  I don't think you can govern something strictly, pseudonymously, online; people just revert to being trolls.  I think you need to put flesh, human beings in meatspace in the same room together, over beers or whatever.

Peter McCormack: There's so many things in life.  Danny, imagine we were doing this interview over -- if we did this online, on Zoom, it's an entirely different interview.  It had to be in person; there are certain interviews have to be in person.  Okay, forget COVID, there was a period of time where I would travel to interviews and not travel to interviews, but certain ones had to be in person.  When I interviewed Hester Peirce, I knew I had to go to the SEC.

Lane Rettig: Well, not to mention our friend, Bukele.

Peter McCormack: President Bukele, I had to do that one, well both of those, in person.  There are certain ones you have to do in person.  This one had to be in person.

Lane Rettig: I have to say, as an avid listener of the show, there's a difference.  I can tell, as a consumer.

Peter McCormack: Me, as the guy doing it, there was a period of time when I was doing them online during COVID.  It stopped being something I enjoyed doing; it became a job, "What ones today; which ones tomorrow?  Right, here's my notes.  Do it.  Right, are we there an hour yet?  Nearly?"  It's just shit.  These ones, I just love them, it's a different experience.

Lane Rettig: And listen, kudos to you for doing the back-breaking work of pounding the pavement and going round and doing this in person.  As someone who did this myself for a couple of years in Ethereum, I flew hundreds of thousands of miles; I know how difficult it is to live out of hotel rooms and stuff.  So, I appreciate it's a lot of work.

Peter McCormack: It's worked out okay, it's a good life.  I could complain about it.

Lane Rettig: Do it while you can, because I feel like it doesn't get any easier as we get older. 

Peter McCormack: Well, we've said we're going to try and get a studio in Austin next March for a whole month before Bitcoin 2022, and we're going to fly people in and have one base.

Lane Rettig: Rogan style, yes!

Peter McCormack: Well, just so I can get all the right people in.  It's almost as central as I can get, Texas.  I can get the California people in, I can get the New York people in and I can get the Texas people in, and we're going to try that for a month.  Jeremy here's going to come and help us with the camera work; hopefully, Emma will be here as well helping with everything, and that gives us a chance to just try and have a base.  I don't think we'll ever have a permanent base, but we can do two months of shows.  And every single in-person conversation's going to be better, because it's real.  You get emotion, you get the peripheral vision, you get to relax in a chair.

Lane Rettig: We all love technology, we all live largely virtual lives, we all went into the pandemic thinking this obviously sucks, but let's make the most of it.  I got my first VR headset.  I'm so tired of it, I'm so done.  Maybe this is just a generational thing.  Maybe our kids' generation, or something, they will really live in a metaverse, but I'm very old-fashioned.

Peter McCormack: But it had to be in person, and I'm glad it is.  So, I think the best question to ask is, how did Ethereum governance fail; why did it fail?

Lane Rettig: Yeah, it's a great question.  Again, there's a lot of pieces here to look at, but let's set aside the Ethereum Foundation for a moment and talk about Ethereum, the protocol, the technology.

Peter McCormack: Yeah, and okay, perhaps tell us how you think it should have worked.  I'd rather hear how it should work and then hear how it failed, rather than the other way.

Lane Rettig: You think so; starting with how it should work?

Peter McCormack: Yeah, because I want to start with the purity of what it --

Lane Rettig: Okay, I can try.  So actually, this is interesting, because it touches upon a difference, maybe the core difference between Bitcoin and Ethereum.  So, I don't know that much about how Bitcoin arrived in this place, because it was already in this place in 2017 when I really got into the ecosystem, right, and this is a place of kind of, it's not no governance, but it's minimal, minimal governance.  When shit hits the fan in Bitcoin, when a bug is discovered, or something, there's definitely enough coordination mechanisms in place that those things are addressed quickly, the message gets out, miners upgrade, etc.  So, you can't say there's no Bitcoin governance.

Peter McCormack: But that's important; you need that.

Lane Rettig: Right, that sort of meatspace social governance.

Peter McCormack: Yeah, and it's disaster scenario.

Lane Rettig: Right, exactly.  But not only.  I mean, Taproot is really interesting; there's a governance mechanism by which that and Schnoor signatures and all these kinds of -- there are technical upgrades happening to Bitcoin.  But it is, by design, very slow, kind of snail's pace.

Peter McCormack: Yeah, hard to change.

Lane Rettig: Exactly, by design.  Ethereum has the worst of both worlds, so it's kind of in between.  So, let me try to explain.  So, you have this spectrum.  So, on the one hand, you have absolute, absolute minimal governance, which is Bitcoin.  At the opposite end of the spectrum, you have formalised governance structures; you have something that resembles the governance of this country, or some other nation state.  You have voting, you have democracy, you have a notion of identity, you have participatory institutions, ideally less extractive and more participatory inclusive institutions, which are not doing so amazing right now, but it's better than the alternative.  You have legislative assemblies, you have courts, etc.  You have all this rigid, formal governance.

Ethereum is right in the middle, and it is very, very much a case of this thing called the Tyranny of Structurelessness.  Tyranny of Structurelessness refers to an essay written by someone named Jo Freeman in the 1970s.  It came out of a women's rights, feminism movement.  In short, when I encountered this and read it, it sent chills down my spine, because it spoke so directly to what I was experiencing in Ethereum.

So, what Tyranny of Structurelessness refers to is the fact that human society, human institutions and organisations always have hierarchy, always; it cannot be avoided.  Any time you have more than two or three people sitting in a room together fighting over scarce resources, figuring out how to allocate time, making some decision, some hierarchy just emerges.  So, you can either choose to formalise that hierarchy into institutions and roles and democracy and things like that; or, you can just let this structureless kind of tyranny emerge.

So, this is kind of what's happened in Ethereum, it's what happens in a lot of these institutions and organisations, that sweep governance under the rug and stick their fingers in their ears and say, "We don't need governance, we're better than that, we're smarter than that, we don't like politics".  This is the thing.

Peter McCormack: It sounds like an argument against anarcho-capitalism.

Lane Rettig: You'll have to ask your friend, Michael Malice, for his opinion on this.

Peter McCormack: Well, so this is one of the things whereby I get into discussions.  I get called a cuck and a statist, a statist cuck, and it's not because I love government and I think it's great; I just believe that we, as humans, naturally organise ourselves and humans can be greedy and evil.  And therefore, we're better of having democracy and institutions that are responsible for us, rather than having just an open structure.  But I'm open to the debate and happy to listen to both sides; I'm just on the side, I prefer the idea of small government, if we could do it.  I need to read this.

Lane Rettig: I have very similar political sensibilities to you.  It's one of the reasons I was excited to have this conversation, and I had exactly those thoughts as I was listening to that conversation that you had with Michael.  At the end of the day, these structures are designed to enfranchise and protect the needs of the minority.  I shouldn't say the minority. 

Look, you're going to have this elite group that emerges in any of these chaotic scenarios and again, I first had experience of this in Ethereum; I'm sure it's happened and is happening all over the world in many situations, and the elites are going to do quite well for themselves.  But then, you're going to have this large group of people who, for one reason or another, maybe in the case of a project like Ethereum, they're just latecomers to the project.

Peter McCormack: The peasants.

Lane Rettig: The peasants, exactly, the proletariat.  The elite structures have already ossified, they've already emerged at that point in time, like when I joined the project, for example.  There was a very clear class difference 2017/2018 when I was in the project, between pre-presale people and post-presale people, because Ethereum had 100Xd, 1,000Xd, whatever, by then.  So, it was this very small group of people who all knew each other, all trusted each other, had these working relationships, were making the decisions and on top of that, they were post-economic; they had this economic security, so they don't care if they're getting paid.  Then, there was the rest of us, who have bills to pay and realities and have to keep our feet on the group.  So, this is the kind of issues that are not well addressed by Tyranny of Structurelessness.

So I think, to answer your question, circling back, I think Ethereum has the worst of both worlds, being in the middle.  I think if Ethereum, on the one hand, were to say, "We don't want a foundation, we don't want governance, we want to stop evolving the protocol", then Ethereum could go in the Bitcoin direction.  Maybe it's too late for that.  And even if that's not right --

Peter McCormack: But the Bitcoin protocol does evolve.

Lane Rettig: It does, but as I said, much more slowly and it optimises for security.  Ethereum is optimising for innovation; two different things. 

Peter McCormack: I think Bitcoin's doing two things: it's optimising for security, I agree with that; I also think it's optimising for the best money ever.  I don't know what --

Lane Rettig: What the monetary policy of Ethereum is?  Nobody does!

Peter McCormack: But the monetary of Bitcoin just doesn't change.  And there are people who work on Bitcoin who are Core contributors, all the people who have -- what are the people who have access to the GitHub?

Lane Rettig: Commit access.

Peter McCormack: Yeah, commit access.

Lane Rettig: Core developers, basically.

Peter McCormack: Core developers; the handful who maybe have that.  They may be big Bitcoin holders, I don't know, but I never feel like decisions are being made to make Bitcoin worth more.  I think what they're doing is trying to build the best money that ever existed and not fuck up.

Lane Rettig: Don't you think that has largely been accomplished?  Hasn't Bitcoin kind of won that already?

Peter McCormack: Yeah, but I think there's more stuff to do.  There's more on the privacy side and the most interesting stuff's at the higher layers now anyway.

Lane Rettig: For sure.

Peter McCormack: What I'm saying is, I 100% trust and believe in the people who have commit access and the Core contributors.  It is the mission.  I think for you on Ethereum, it was the mission.

Lane Rettig: So here's the thing as well.  Ethereum's a big tent, okay, whereas Bitcoin has this kind of toxic maximalism culture and this autoimmune response, which we talked about before.  Ethereum is the opposite.  Ethereum welcomes you with open arms and unicorns and rainbows and avocado toast and stuff like that; but the downside of that is that Ethereum does not have a mission, it doesn't.  You will ask ten ethereans, ten Core contributors, you will get ten different answers, and this is just what I was saying before, Ethereum has the worst of both worlds. 

I think the answer to your question is, Ethereum cannot and will not go the Bitcoin direction, so I think that what Ethereum should do is go the other direction and it should have a constitution.  I think a constitution might be -- bitcoiners would laugh at this idea, I don't think it's appropriate for Bitcoin, but it could be appropriate for Ethereum.  And then, once you have this core statement of shared values, shared principles, this ethos in writing, sure, not everyone's going to agree with it.

Peter McCormack: How the fuck do you ever get that?  Let me argue over every word!

Lane Rettig: We tried.  We had a conference in 2018 where we tried to do this and we failed.

Peter McCormack: What do you think Ethereum is trying to be.  Like, I say Bitcoin is trying to be the best money that exists.

Lane Rettig: And it's very clear; people agree about that.  It's like, what defines you as a bitcoiner is, do you agree or disagree with the statement?

Peter McCormack: And therefore, everything they do, whether it's Layer 2 technology, whether it's Taproot, anything, it's does this make Bitcoin better money?  And I believe every time, it does.  For you, forget everyone else, what do you think Ethereum's snappy message should be, mission?

Lane Rettig: It should be what I said before, and I've had a lot of practice and a lot of time to think about this.  It should be, to be the best operating system for building better human institutions, period, full stop.  But not everyone agrees with that; we have other narratives.  It's all down to the narrative. 

Seeing how the Ethereum narrative has evolved since the beginning is fucking mind-blowing.  You go back to their very early days, 2014, 2015 days, you see Gavin Wood talking about his vision for Web 3, having primitives not just compute, but also things like messaging and storage; those never really emerged.  The decentralised global computer, the ETH Is Money meme; that's a big one, now the ultrasound money.  There isn't a single narrative.

Peter McCormack: The ultrasound money is just so fucking dumb.

Lane Rettig: I was assuming we'd touch upon this!

Peter McCormack: Well, because look -- we're going all over the place.  World computer, I kind of got it, and I still think in some ways, it kind of is.

Lane Rettig: It's a very slow, very expensive computer, but it is a decentralised world computer.  That was actually the narrative that hooked me.

Peter McCormack: I mean, ETH Is Money; define "money".  I mean, I had the conversation with Peter Schiff recently, I said, "In prison, cigarettes are money". 

Lane Rettig: And he said, "Yeah, because you can smoke them"!

Peter McCormack: Yeah, it's funny, he did say that!  So I'm like, whatever, ETH Is Money.  But this ultrasound money I think is so hugely disingenuous. 

Lane Rettig: I haven't made up my mind about it.  So, just for the sake of argument, can we touch upon both sides?  So, I think that people who scoff at this meme, most bitcoiners, will do so because Ethereum's monetary policy is loose and has changed many times; and we should talk about that as well, because that was part of those decisions.  And, how can a money be sound if a small number, if a cabal, so to speak, can change it at will.  I don't think it's exactly that simple, but that's on the one hand.

On the other hand, Ethereum has begun to reduce its issuance and the issuance will continue to reduce and in fact, reach a point where it's net deflationary, so more coins are being burnt than are being created.  So, if your definition of sound money is that the issuance is predictable and well-known, like I think is it Bitcoin is slowly approaching deflationary, or that it's basically the issuance is deflationary, then Ethereum kind of is sound money, if you believe that.

Peter McCormack: But what if it changes again?  How many times has the main -- I can think of at least three --

Lane Rettig: Four-ish.  But now it's more complicated, because there's two Ethereums, right; there's Eth and there's Eth2.

Peter McCormack: We've got so much to get through!  Okay, let's take it back a step, because we're going on tangents here.  Why did it fail?

Lane Rettig: Why did Ethereum governance fail?  Yeah, let's go into that.

Peter McCormack: Basically, I want the juice of this.  What was going wrong; what was the stuff you're like, "This is fucked up".

Lane Rettig: Yeah, let me explain what I meant by that.  So, the things that need to be decided as part of Ethereum governance, yes, there are technical things, for sure; there are questions about the protocol; there are low-level questions.  Those things I think Ethereum has done a good job of.  However, increasingly, as the stakes grow, as more things, more institutions, financial tools, primitives, whatever, are built on Ethereum, there are increasingly non-technical things that need to be decided.  So, these are things involving ethics; these are things involving economics.  The most obvious example here is economics.  That's not a technical question, it's an economic question.

Peter McCormack: Economics, monetary policy?

Lane Rettig: Right, monetary policy is one of them; it's not the only thing.

Peter McCormack: What do you mean about ethics?

Lane Rettig: Ethical questions?  Well that's, for example, funds recovery.  So, this was around that time.  I said that was 2018, early-2019, right, so this was also one of the things that led me to say that.  That was probably the hottest issue at that time, and here's another one.  Mining.  So, at that time, there was a proposal to switch from Ethash, which is the hash function that's used for Ethereum mining, to a new function called ProgPow, programmatic proof of work, in order to make Ethereum more ASIC resistant.

There was a particular line in the Ethereum whitepaper.  The Ethereum whitepaper is not like the Bitcoin whitepaper, okay.  The Bitcoin whitepaper is a fixed thing, right, seven pages.

Peter McCormack: Is it seven?  I thought it was nine.

Lane Rettig: Maybe it's nine, sorry.  I'm probably showing off my ignorance here.

Peter McCormack: Well, my brother's just getting into Bitcoin, right, and works very closely with me.  He keeps saying, "I cannot believe there is a money that might become a base money for the world, and it's defined in nine pages".

Lane Rettig: It's fucking mind-blowing, genuinely.  Yeah, that's a foundational document.  This quickly gets into religion; let's table that.  You've had that conversation; I have too.

The Ethereum whitepaper is a marked-down document, actually this is amazing, I've never thought about it in these terms before, but this literally is the difference between Bitcoin and Ethereum in a nutshell, right.  The Bitcoin whitepaper itself is immutable, like the Genesis block.  The Ethereum whitepaper is a marked-down document on a Wiki on GitHub.

Peter McCormack: So, it can change?

Lane Rettig: So, it can change, it has changed, you can see the edit history.  And there was a line, which I think was actually removed, I think, that referred to Ethereum being minable on GPUs, the idea here being that anyone who owns a GPU can participate in mining at home; that was the original idea and it was true at the beginning; and ASIC resistant. 

So then, this whole debate arose in late-2018, early-2019 and to some extent, it's still going on, about whether or not -- basically, evidence emerged at that time that there were Ethereum ASICs for the first time, okay; rumours, and we know now they exist.  So, there's a technical piece to this question, but really what it comes down to is economics and ethics. 

You had asked, what do I mean by ethics, ethical questions?  Well the question is, who can mine, who deserves to earn the mining rewards?  Is it large Chinese mining firms who have access to this hardware; is it people mining from home; is it existing miners with GPU farms, things like that?  The point is, Ethereum is kind of a technocracy, in the sense that there is a relatively small group of technical Core contributors, Core developers, who get on this call.  I described the fortnightly call, it's called the AllCoreDevs call, and make these decisions in a fashion called "rough consensus".  This is another topic which is very interesting.

But long story short, there are two issues with this.  The first is that technical contributors first of all don't have the expertise to weigh in on these things.  We don't have training in economics and then we're making monetary policy decisions; we don't have training in conflict resolution and ethics and philosophy and these questions; that's the first issue.  The second issue is that a lot of the technical Core contributors are very reluctant to weigh in on these things, maybe because they don't feel they have the expertise, but also because it opens them up to liability.

Hypothetically, if this group were to make a decision to change the mining algorithm, you could have existing miners come after you and sue you.  There are legal scholars who have suggested that maybe the Core developers have some sort of fiduciary responsibility.  Actually, this gets back to what you were saying before, that all holders of Ether are, by some interpretation, like stakeholders in the network.  And, there's just no body of law around this right now.

Peter McCormack: How many people are on the call; what's the number of these people?

Lane Rettig: So, all of my information is a bit out of date, because I stopped contributing a couple of years ago, but it would range anywhere between 7 or 8 people up to 30-ish people.

Peter McCormack: And, how do you get elected to be one of those people?

Lane Rettig: You don't, there are no elections.  This is Tyranny of Structurelessness.

Peter McCormack: But what stops me randomly joining the call?

Lane Rettig: We have had people randomly join the call, pretty funny episodes actually.  Well, I mean the short answer is, you wouldn't know where to find the link.  It's sort of quasi-public.  It is in a public channel if you know where to look for it.  Again, it's a grey area, it's very much a grey area, but basically if you have commit access, if you are a Core developer to commit access to one of the Ethereum full-node implementations. 

But again, asterisk, this is also not super well defined, because there's a lot of them that are not mainnet viable, that are not mature feature complete, etc, and some of those developers join the calls as well.  But basically, if you're known socially to be a constructive contributor technically to the project, and again this is in the order of maybe 50 people total; they're not all always on the calls.

Peter McCormack: And, correct me if I'm wrong; the way this is solved in Bitcoin is everything is done through a BIP?

Lane Rettig: Everything in Ethereum's done through an EIP.

Peter McCormack: But it feels like, to me, everything's done through an EIP, but there are board meetings; these sound like board meetings?

Lane Rettig: Yeah, sort of, yes.  I guess there are not meetings for Bitcoin?

Peter McCormack: I don't believe there's a -- I mean, I wouldn't know.  I should probably get someone like -- I mean, I don't know who works on the devs; Jonas Schnelli, is that his name?  So, maybe he gets involved, or Brian.  I should speak to somebody who's a Bitcoin Core developer and I should learn exactly how that works.

Lane Rettig: My understanding is, so there's BIPs, of course.  The main coordination mechanism for Bitcoin is the Bitcoin dev mailing list.  It's a very old-school, old-fashioned way of doing this.  That's how Linux got built and still gets built.  Yeah, no question, Ethereum, it's more like a board meeting, yeah.

Peter McCormack: So, someone must control the link that goes out?

Lane Rettig: Yeah, that's what I was doing.

Peter McCormack: Okay, and so that is a decision that comes from the Ethereum Foundation, that someone has a --

Lane Rettig: No!

Peter McCormack: But it's under the governance of the Ethereum Foundation to run this meeting?

Lane Rettig: Kind of.  It's very messy, it's a very grey area.  So, there has been a lineage of people who have done this.  Hudson Jameson, I don't know if you've ever crossed paths with Hudson?

Peter McCormack: I have actually.

Lane Rettig: Good guy.

Peter McCormack: I sent him a private message once to see how he is.

Lane Rettig: Yeah, good guy.

Peter McCormack: I'd like to meet him.

Lane Rettig: Yeah, I'd love to arrange that actually; that would be a lot of fun.  He may be in town this week, we can make that happen.  Genuinely good guy.

Peter McCormack: I just want to know if he's okay.

Lane Rettig: Yeah, I think he's okay, I hope he's okay.  So, he kind of singlehandedly ran this process.  I think he was the second person ever to do this.  So, let me think.  I got involved in 2017.  Hudson probably started doing this around 2016.  I started helping Hudson out, because he was doing this by himself and by the way, I think this is a position of enormous responsibility, enormous stress.  You're sort of the face of the company.  Not the company, sorry, why am I saying company?  The face of the project and the governance of the project to the world, so to speak, on channels like Twitter and Medium. 

Hudson was the person responsible for announcing when there had been bugs discovered, that kind of thing.  So, he was on the front lines, so to speak, so I was backing him up a little bit in that role, and I helped him run a number of these calls.

Peter McCormack: Do you think this led to what we were just nodding at each other about?

Lane Rettig: I think it was probably a factor.  I mean, that's a huge burden for anybody to deal with.

Peter McCormack: So, how is the agenda set for these calls; did everyone bring their own item?

Lane Rettig: So, the coordinator, which is Hudson, and this is also partially what I did, opens an issue; it's basically done on GitHub, right, opens an issue on GitHub a few days or a week or two before the next call and puts out a draft agenda, and then other folks, members of the AllCoreDevs are invited to come in and propose additions or modifications to the agenda.  But really, at the end of the day, it is that one person's responsibility to act as coordinator, or moderator, and set the agenda for the calls.

Again, this is a position of enormous power and responsibility, because if something doesn't make it onto the agenda, then it's not going to be accepted as an EIP, and it's not ultimately going to make it to the protocol.  So, it is a very important seat to be in.

Peter McCormack: And these are all Ethereum Core contributors?

Lane Rettig: Yes, for Ethereum 1.  Now again, there's now an Ethereum 2, and that has a different mechanism.

Peter McCormack: Okay, we'll come to that.

Lane Rettig: So basically, yes, all sort of production Ethereum today, yes.

Peter McCormack: Does Vitalik join those calls?

Lane Rettig: From time to time.  But when I was doing this, and I think up to and including the present, very rarely.  He'll come and join everybody in on specific things, but he's been much more hands-on with Eth2 than Eth1.

Peter McCormack: Let me give you a real-world comparison of what you've explained to me, and you can correct me if my comparison's bad, and this is where I see flaws.  We talked about my digital advertising agency; we built websites, we did social media campaigns, we did search engine optimisation, we did email marketing, everything a digital web agency did.  Our company had no business with our developers. 

We had probably 15 developers, some PHP, some .NET, and then we had layers of project managers, user experience designers, account handlers etc.  I'm CEO, I had a business partner, I operate sales and planning.  My business partner, Olly, did the operations.  We had a board with another guy, Tim, on it and we moved, I think, Debbie and Vic into the team. 

A comparison would be that that company, the board meetings that we used to have every two weeks, would be run by the devs --

Lane Rettig: And only the devs.

Peter McCormack: -- and only the devs, with anyone choosing to turn up if they want to, they don't have to, but some did, some didn't.

Lane Rettig: And there's no formal quorum, by the way, so I could give you at least one or two examples of calls where significant decisions were made with only five or six people on the call.

Peter McCormack: Yeah, and they're making decisions in terms of, what's the pay structure.

Lane Rettig: Exactly, how we're going to issue stocks, how many stocks are we going to issue, who's going to get them, things like that, right.

Peter McCormack: And the interesting thing is, these developers are some of the smartest people I've ever met.  They absolutely crushed it for me for years.  I love them all, we built a great company.  But they didn't have the skills to run a company, they had the skills to develop.  I don't have skills to develop, I had the skills to run a company.  Everyone knew what they were good at, what they ran, and we had a structure, because a structure works; ultimate decision-maker, but I would always run everything by my business partner.  But if we didn't agree, I made the ultimate decision.

Below that, we had a board where we tried to decide things together, and then people managed their clients and projects.  The structure worked, because we had structure and experience.

Lane Rettig: And even more to the point, you had accountability, which is to say that if you fucked up, your arse was on the line and your board could fire you.  I mean, that's the way companies work, and there's a reason for that.

Peter McCormack: They couldn't fire me!

Lane Rettig: But you know what I'm saying.  The point is, there is formal accountability, structures are in place.

Peter McCormack: We were a small private company of 40 people.  What you're referring to, a public company, yes, you can be fired.  I'm pretty sure there is a scenario where perhaps Michael Saylor could get fired from MicroStrategy; maybe I'm wrong.

Lane Rettig: Yeah, it's a public company and I'm sure that's the case.

Peter McCormack: Steve Jobs got fired by Apple, and this shit happens.  But I had accountability to my business partners and investors.

Lane Rettig: Exactly.  Accountability is the least sexy thing in the world, it's the most boring thing.  I went to business school, I had a class in corporate governance, it didn't interest me in the least and I didn't at all appreciate or understand how important it was until I got into Ethereum and saw what happens when you don't have accountability structures in place.

Peter McCormack: Humans build structures that work; not always, but generally speaking.  Okay, so this already sounds to me like a complete shitshow; it just does.  Me, as somebody who's run companies, I can look at that and go, "That's not going to work.  If you're making those decisions, that's not going to work".  And that's why, when you said earlier about whether Joe Lubin created this as a company, well if he did, those decisions wouldn't be made by those people in those rooms; there would be a different structure.

Lane Rettig: Well, I think there would be more structure, I think the people making the decisions would be qualified to make the decisions; I think they'd have their legal liability covered by a company, which again is a big issue in Ethereum, and I think there'd be accountability.

Peter McCormack: So, to me, this is just a failure of structure, therefore the foundation, I understand why you say it's failed.  One thing I'm quite interested in knowing about, the area I'm always interested in, is the monetary policy.

Lane Rettig: Yeah, let's talk about that; it's interesting.

Peter McCormack: But the reason I'm interested in the monetary policy is one, I wouldn't want something where the monetary policy keeps changing; but look, I've also maybe just got rose-tinted glasses, because Bitcoin's never changed.  I'm like, "Oh, then that's perfect, you should never have a change in monetary policy", and we're all against central banks who do have a change in monetary policy.  It is decided by five, well ten old white guys in a room who may be also changing the monetary policy for things that affect their own pockets.  I think we had it revealed the other day that the Fed was buying things that Jerome Powell owns.

Lane Rettig: Surprise surprise.

Peter McCormack: Yeah, surprise surprise, etc.  But the monetary policy, the reason that interests me most, I want to know if there are monetary policy decisions that are made which will lead to the value of Ethereum going up directly, and if there are people who maybe are large Ethereum holders, got to influence those decisions, and whether they were making those decisions for themselves rather than Ethereum; for number go up, rather than for what Ethereum needs.  I'm leading you down to a certain place, but I want to know if that kind of shit happens.

Lane Rettig: Look, I think I touched upon this earlier; there are two ways to look at this.  The positive way is to say, and actually we talked about this in Ethereum, should Core developers, should people participating in AllCoreDevs, be paid ETH and have a publicly-known something, wallet address, something; in other words, should there be skin in the game?  That's the positive side.  We shouldn't be making these decisions arbitrarily.  What I'm saying is, we should be facing the downside consequences as well as the upside.  We should know that if we fuck up, this is sort of a form of accountability; our own bags are on the line.  That's one way of looking at it.

The other way of looking at it is that there's a massive conflict of interest, which I understand is kind of what you're getting at.  And actually, this was one of my issues in Ethereum, was that there was no disclosure of conflicts of interest, and they are rife.  I mean, they are everywhere in this space, in the Ethereum Foundation, among the Core developers, etc.  A couple of people did, I think actually Vitalik was one of them, he went out and said, "Look, this is my public Ethereum wallet address, these are the others.  I'm an advisor for these projects, hold these coins, these tokens, etc".

I think that again, this is a thing, this is a normal thing in real-world governance.  We were obviously not doing as good a job as we could be in the United States Government, for example, but basically conflict of interest disclosure is a standard thing; that's just a starting point we should have had.

Now, to your question, what I can tell you is the process by which these changes are made.  There are kind of hooped bits in them.  I can't tell you how much ETH they hold, I don't know that.  So, Ethereum monetary policy, I believe originally it was five ETH per block, something like that, and the network launched in 2015 and you could do the maths on the back of an envelope, but there are some thousands of blocks per day, as opposed to Bitcoin, where there's 188 blocks per day, whatever the number is, because the Ethereum blocks come out much more often.

The original vision was that in relatively short order, on the order of two years, three years, something like that, Ethereum would transition from proof of work to proof of stake.  And proof of stake, I actually really dislike proof of stake; that's another rabbit hole we could go down if we have time.  We could save it for another episode.

Peter McCormack: I think we're going to end up doing another one at some point!

Lane Rettig: Yeah, it's all good.  So, proponents of proof of stake like it for a couple of reasons: one is that it's greener than proof of work, you're not burning the CPU ASIC cycles; another reason is that it allows you to pay less for security, in theory, so the block rewards can be a lot less.  So, the idea was that Ethereum issuance would start quite high, some hundreds of millions of dollars' worth of ETH were being issued per year, but that it would drop drastically with the transition to proof of stake.

Peter McCormack: There's no halving?

Lane Rettig: No, there's nothing baked into the protocol, okay, but we're getting to that; it's not automatic, it's manual.

Peter McCormack: Right, okay, because the first monetary policy change I remember was halving the --

Lane Rettig: Not exactly.  I think it was 5 to 3 ETH.

Peter McCormack: Was it 5 to 3?  Right.

Lane Rettig: Roughly, yeah.

Peter McCormack: I remember it, yeah.  That was 2018?

Lane Rettig: I think that was Byzantium, I think that was 2017.  Again, I may be off by one year, but I was joining the project around this time.  So, I think that was 5 to 3 ETH, something like that, maybe 3.5.  That was a decision made by the Core devs on the CoreDevs call. 

Now, I participated in the next reduction, which was, again I don't remember, it was 3 to 2, I think ETH per block, something like that, and there was a very specific reason this decision was made, and this gets a little bit to the guts of Ethereum, both technically as well as the monetary policy; they're kind of interconnected.

Peter McCormack: Change in the issuance benefits every holder.

Lane Rettig: Reducing the issuance benefits every holder, sure, other things being equal.

Peter McCormack: Yes.

Lane Rettig: So, Ethereum has this coordination mechanism called "the difficulty bomb".

Peter McCormack: It's like the US debt ceiling!

Lane Rettig: It's actually a similar mechanism.  It's a very smart mechanism, actually, I like it a lot.

Peter McCormack: Yeah, which is not fixed when it should be.  The debt ceiling is an argument in Congress.

Lane Rettig: And we're not going into it again, you know.

Peter McCormack: Yeah, they're going to have another argument and they're probably going to shut down.

Lane Rettig: The last time the government was shut down here was, I believe, towards the end of 2019.  I couldn't get my passport renewed.  I was fucked; it was really bad.  So actually, we were like, "Oh, the federal government is far away, who cares"; it actually impacted me.

Peter McCormack: Yeah, and I assume what happens is there's some horse-trading backdoor to get the debt ceiling raised.

Lane Rettig: Sure.

Peter McCormack: And the difficulty bomb, my understanding was that it was fixed.

Lane Rettig: Here's the thing.  It removes inaction as an option for governance.  There must be, at the very least, a coordinated protocol upgrade every 18 months, plus or minus.  Again, it's changed over the years, but when I was involved, it would start to take up something like the 13-, 14-month mark; and by the 18-month mark, it's exponential, so the blocks would slow exponentially and you'd get to a point where blocks are coming every 30 seconds, every 60 seconds, and then the network would kind of halt slowly.

So, a fascinating mechanism, really, really interesting.  It was originally put in way back in the day to ensure the transition to proof of stake, because the idea was that there would be opposition among the proof-of-work miners, who wouldn't want to support proof of stake, because they would lose out, basically; their capital investment would be worthless, or worth a lot less.  And so, again, a very smart mechanism was put in.  But the thing is, the transition to proof of stake and Eth2 has taken so much longer than expected that the difficulty bomb has been pushed back at least three times, maybe four times by now.  Now, here's the thing.  This is where things begin to get very interesting and also very complicated. 

If you look at Ethereum monetary policy, as of inception, as of the Genesis block, you have to factor in the difficulty bomb, which is to say that the first time it kicked in, which would have been, I don't know, 2017, something like that, issuance would have halted at that point in time.  And, the idea was that there should have been a proof-of-stake chain running by then, but there wasn't.  And so, every time we pushed back the difficulty bomb, we increased the issuance; increased, not decreased, which means diluting everyone's holdings significantly, actually quite a bit.  I mean, if the network is three years old and you're adding 18 months, what is that; that's a plus-50% issuance.  That's a huge increase in inflation.

So, as a result, to counteract that, at least partially, the per-block subsidy was reduced.  So, that's the context of how decisions were made, okay.

Peter McCormack: It's kind of a halving?

Lane Rettig: But it's not, because as I said, it's supposed to be net neutral, kind of, and again I think a lot of this nuance is lost when you hear people talk about this over some money meme.

Anyway, there's 10 to 12 people who made these decisions.  I was running Python scripts, I was one of these people, I think Vitalik probably chimed in, a couple of other folks did, but none of us are trained economists, none of us.  And, at least in the decisions that I was a part of, not only did we not get input from economists, I should dig up some of these Twitter threads or Medium articles, it was kind of put your finger in the air, judge which way the wind is going, "Okay, we're going to reduce it from 5 to 3, why not?  That sounds like a reasonable number".  We don't know what the right amount is, we don't, genuinely.  The best thing we can do is look at what Bitcoin's doing, look at what other networks are doing.  Okay, Ethereum Classic was attacked; it's not paying enough.  We need to pay more".

Peter McCormack: Okay.

Lane Rettig: In defence, this is all new.  I've actually had conversations with friends who are macroeconomists, developers, and they're, "We don't fucking know blockchains".  Macroeconomics, as a field, is only a few decades old; they have no idea.  So, that's the answer to your question.  It's Core devs primarily.  I certainly don't think it's the case that some whale is necessarily --

Peter McCormack: Influencing the decisions?

Lane Rettig: No, influencing they are, for sure.

Peter McCormack: Oh, they are?

Lane Rettig: And I've had, by the way, I've also had pseudonymous whales reach out to me, both in person and online, and kind of nudge me one way or the other.  So, there's people that talk about like a --

Peter McCormack: What's a nudge, "Hey, I think you should make this decision" or, "Hey, I'll give you this if you make this decision"?

Lane Rettig: Both.

Peter McCormack: Oh, so there are people offering incentives?

Lane Rettig: Yeah.  I've never been threatened, or anything like that, but I did have shady figures approach me at parties, in dark rooms, and say, "Hey, you don't know me, but I'm this person, I was influential on the network previously, I'm a big Ethereum bag holder".

Peter McCormack: So, there were people out there offering bribes?

Lane Rettig: I don't think I was ever actually offered an explosive bribe.  I was sort of sent funds to do things like, "Hey, I want you to spin up a voting website to vote for ProgPoW", which was this possible change in the mining algorithm, like I said before, "Here's $1,000 to do it", something like that.  We're not talking about huge sums of money.  I never was given explosive bribes, but what I was -- it's kind of influence peddling.  I don't know the exact word for this.  Maybe that's not the right for it, because that would be me selling influence.  It was people cosying up to me and saying, "Hey, let's have a beer, let's chat".

Peter McCormack: Lobbying?

Lane Rettig: Lobbying suggests it was formalised.  It was very informal. 

Peter McCormack: So, there's a lot of informal lobbying?

Lane Rettig: There's a lot of strings being pulled, and I heard pretty wild stories about some of these known and unknown bag holders, who did have much more direct influence over other participants in these conversations.

Peter McCormack: Okay.

Lane Rettig: Like, for example, Core devs who were very active in these conversations, who had some ETH presale participant billionaire basically paying them a salary.  That probably counts as a form of influence, right?

Peter McCormack: Yeah, but I'm just trying to think what people would say about Bitcoin.  They'd say, "Well, look, there are Core devs who get paid by big holders". 

Lane Rettig: Sure, I'm not sure there's any difference.  I'm not suggesting, just to be clear, I'm not suggesting anything terribly underhanded is going on.  What I am suggesting is that we're not revealing conflicts of interest, and we should be doing that.  We should have way more transparency than we have.

Peter McCormack: Because we pretty much know who every Bitcoin Core dev is funded by; that gets announced.  I don't know, "Coinbase are sponsoring these two people".

Lane Rettig: Human Rights Foundation.

Peter McCormack: Yeah, "Human Rights are doing these projects.  Gemini is doing…"  It's pretty out there.

Lane Rettig: Sure.  This is not really the case in Ethereum.  There's little to no transparency around who these folks are in the first place, or how they're funded, basically.

Peter McCormack: What's Joe Lubin's role in all this?  I'm not asking for any kind of accusations, but he's the guy I'm interested in, because it feels like it's his project.  It feels like Vitalik is the Tech Director and he's the CEO; that's what it feels like to me.

Lane Rettig: So, what I know is that he was involved, not from the very, very beginning, but shortly thereafter, which is to say post-whitepaper, pre-Genesis.  He was personally paying, I think, probably for a lot of expenses for the team during the initial process, because folks like Gavin Wood and Vitalik probably didn't bring much to the team economically.

Peter McCormack: And, he had a lot of Bitcoin as well.

Lane Rettig: He probably had a lot of Bitcoin.  He had a background working in finance, etc.  And he probably almost definitely invested very heavily into the presale.  So, he's definitely a large Ethereum holder.  We know that he likes -- I shouldn't say "we" know.  My understanding, based on second-hand information, is that he singlehandedly funded ConsenSys' operations for the first few years, and ConsenSys built some pretty cool shit, so that's probably good for the network.

Peter McCormack: Built some cool shit for Saudi Government.

Lane Rettig: Is that true?  I didn't know that.  Oh, yeah, there was some partnership.  Well, look, ConsenSys got really big really quick and was doing a lot of things in a lot of places.  I'm not super surprised.

Peter McCormack: Then it went out to raise a lot of money at one point.

Lane Rettig: Yeah, and I heard there was a big investment recently by JP Morgan or something.  I don't know the details.  Look, I think Joe's an interesting figure, I think ConsenSys is an interesting organisation.  From a governance perspective, it's interesting, because it is a second pole in influence to the Ethereum Foundation.  So, when I was active, 2018, 2019, if you were building something, especially at level 1, the Layer 1, and you wanted funding or support, you really had two choices: you either go to Vitalik; or you go to Uncle Joe.

Peter McCormack: Uncle Joe?!

Lane Rettig: Yeah.

Peter McCormack: Sounds creepy!

Lane Rettig: I think it's a bit different now.  There's more money and there are more protocols and projects in like DeFi, for example.  People have deep pockets, so there are probably other sources of influence and funding.  But yeah, look, he has been very influential for a long time in the project; he's been pretty open about that.  I don't know, is ConsenSys mining?  Is he personally mining?  Maybe, probably.

Peter McCormack: But you said you used to work in hedge funds, you were helping rich people get rich, and you felt you were doing the same at Ethereum.  What specifically do you mean?

Lane Rettig: Well, this goes back to the presale and the premine.

Peter McCormack: Okay, so that changed everything?

Lane Rettig: So 70% of Ether, at that point in time, in the value of the network was in the hands of a small number of people.  Joe was probably the largest holder.

Peter McCormack: So, you believe the Ethereum Foundation is run for the benefit of those people?

Lane Rettig: Of whom?

Peter McCormack: The decision-making for Ethereum, do you think it's run for the users of Ethereum who might benefit, or do you think it's run for the benefit of those people?

Lane Rettig: I think the Ethereum Foundation is run at the whim of Vitalik Buterin.

Peter McCormack: Okay, still?

Lane Rettig: I mean, again, as of two years ago.  I have no idea what's happened since then.  I think the governance of the foundation itself is structured in such a way, there's a certain number of board seats.  I think Vitalik has multiple votes.  There's little to no transparency, little to no accountability.  Thank goodness Vitalik is not a bad actor; I think he's a decent human being and has the best interests of the network at heart.

However, it's hypocrisy and this, as I said, premine was the biggest reason I left Ethereum.  I think the second biggest reason is hypocrisy.  This is an important point to make.  Ethereum, to the extent that there is a publicly-stated mission, as I was alluding to before, it's about building better human institutions that are more participatory, fair, more transparent, etc.  And yet, Ethereum governance itself, and specifically the Ethereum Foundation, is none of those things.  There's no transparency, there's no accountability whatsoever, period.

Peter McCormack: How does that get fixed then?  I mean, it sounds like to me, it should just be disbanded.

Lane Rettig: I want to make one important point, which is that again, we have to be careful about not conflating Ethereum and the Ethereum Foundation.  I think that in the beginning, it was certainly the case that if you'd taken away the Ethereum Foundation in 2015, 2016, Ethereum would have died or never been created.  That's not the case anymore today.  I would have hesitated to say that a couple of years ago.  I think it's pretty clear at this point, Ethereum is too big to fail and if you were to take away the Ethereum Foundation, or ConsenSys, for that matter, the network would be just fine today.  So, Ethereum has succeeded in spite of the dysfunction of the Ethereum Foundation, not because of it being a glorious success.

Peter McCormack: But would you disband the foundation?  It sounds to me it's just a toxic, disorganised mess.  If you disbanded it, you could replace it with something better?

Lane Rettig: I think we have to be careful how we define "you".

Peter McCormack: Well, I'm asking your opinion.  I'm saying, what is your opinion?  You've put yourself out there saying it's failed.  Okay, so what should be done?

Lane Rettig: Yeah, when I said failed, I was referring to Ethereum governance, not to the Foundation specifically.

Peter McCormack: But isn't the failure of governance within the foundation, the failure of the foundation?

Lane Rettig: Yes, but again, I was not referring to the foundation, I was referring to the protocol; two different things.  Again, it's really important to not conflate these two in our minds.

Peter McCormack: Governance of the protocol?

Lane Rettig: Ethereum Foundation bootstrapped Ethereum protocol governance.  So, Hudson Jameson, the gentleman I mentioned before, he, like me, was a contractor for the foundation.  The foundation paid for the Zoom account that was used to host these calls, they're posted on the foundation YouTube, etc.  Now, I actually think that that should have, a long time ago, been moved off of foundation property onto, I don't know what, that's the question; something that's central by the community.

Peter McCormack: Right.

Lane Rettig: So, Ethereum Foundation has been very active in governance.  To give you a very concrete example, when The DAO hard fork happened, when the decision was made in 2016 to do that, there were maybe ten people on that conversation, eight or nine of whom had influence with the Ethereum Foundation.

Peter McCormack: Fine.  So, do you think Ethereum governance should be taken out of the Ethereum Foundation and rethought?

Lane Rettig: Yes, that I can concretely say, yes.  This is kind of what I was trying to do in 2019, was to create a new thing, called a foundation, maybe an association, some kind of structure.  I mean, really it's a DAO at the end of the day, that had the transparency, had the accountability, to the community, had those structures in place, and that did not happen.

Peter McCormack: So, if you take the governance of Ethereum out of the Ethereum Foundation, the Ethereum Foundation can focus on education --

Lane Rettig: Giving grants; that's kind of what it does.

Peter McCormack: Yeah, education, advocacies, supporting different projects, but you remove the conflict of interest that exists between the foundation, the people who run the foundation and the governance and the people who control the governance of Ethereum.  That seems to me like a huge conflict of interest.

Lane Rettig: Where's the conflict of interest?  It's because they hold a lot of ETH, is that why?

Peter McCormack: And, we don't know the difference influence levels that happen in different places, who's sponsored by who.  It sounds to me like Ethereum governance should be completely separated and rethought.

Lane Rettig: Here's the thing, right.  This is kind of a circular dilemma, because if you say, "Take governance away from the foundation", fine, I'm on board with that; I don't love the foundation.  Whose hands are you going to put it in?  You need a new foundation, or called a DAO, or something.

So, number one, how do we ensure that the same failures of governance don't happen to the new foundation, if we're going to call it foundation, and I have some ideas I have to explain, increased accountability, transparency, etc.  There are ways we can do that.  But the point I'm trying to make here is that the foundation was created in the first place to do this.

Peter McCormack: Yeah, fine, but bootstrapped, you've involved me on that point; it sounds like it's not required anymore.  I mean, I would be saying, look, Bitcoin governance is successful, it is a success, so why not emulate that model?

Lane Rettig: I think the best projects that I've seen, and very few have actually followed through on this, but many intend to, they all say they want to do this, is that they have something, a company or a foundation or both that bootstraps -- that's a good word, right; kind of bootstraps or stewards this thing into existence, and then decentralises itself and disappears, which is again kind of what ShapeShift and Erik's team are trying to do right now.  I think that's a great idea.

I've heard several folks say, and I wasn't of course in the room at the time, but that the original goal of the Ethereum Foundation was exactly this, was to liquidate itself and disappear after the protocol was functioning and healthy.  Actually, this is the thing that happens.  This is exactly what we, as a community, are trying to fight back against, is that any time you have a centralisation of power and wealth and influence in the hands of a small number of people, this is true of the Ethereum Foundation, this is true of every big company or foundation that ever existed, even if the people who created it go into it with the best of intentions and say to themselves, "We're going to remove ourselves.  We have no ego in this", etc, inevitably the thing just gets to a place where it just procreates, it just refuses to die, and it's just so hard to do that.  It's so easy to delude yourself, either as an individual or as an organisation, into thinking, "Just a few more years.  We're giving grants, we're educating people, we're doing good things", to believe that yourself, even if that's not true, objectively.

I guess what I'm getting at here is, this goes back to the hypocrisy I touched upon before.  If the Ethereum Foundation were very serious about this, how do you solve this?  It's fucking simple.  Create a smart contract, transfer all your ETH into it and set a ticking timer on it and say, "This smart contract is going to vanish and take all the funds with it in one year or two years' time, or whatever that is.  They could have done this in the beginning.

This is what's called "a credible commitment", okay, and this is exactly the superpower of Ethereum and of blockchains, is that you can create a credible commitment, it's visible, it's transparent, the whole world can see it, and this is like Dr Strangelove, you know that movie way back, about the Russia/ US nuclear holocaust.  And the Russians were like, "Look, we have our nuclear missiles armed and loaded, and they are targeting US cities and if we don't intervene, they're just going to trigger, it's just going to happen".  So, it's what's called a credible commitment.

They could have done; they could still do that and they haven't done that.  Why?  Because they're hypocrites, in my mind.  Does that make sense?  And it was this hypocrisy that kept me up at night and I was like, "I don't want to support this, I don't want to be a part of this".

Peter McCormack: Because, yeah, I get it.

Lane Rettig: So, yes, we should have/still should create something new that has the accountability and transparency and transfer gradually, or suddenly, I don't know, the power and influence to something, to a better mechanism.

Peter McCormack: But I imagine there's only one person who could make that happen, which is Vitalik?

Lane Rettig: No, I don't think that's true anymore.  Look, I got very close to forking Ethereum in 2019 and making this happen, and there were a lot of people in the community who thought it was a good idea at the time, because we have the option of forking, is what I'm saying.  So, any subset of the community could do this.  It didn't happen and I think that it's good that it didn't happen.

Peter McCormack: It would become Ethereum Cash.

Lane Rettig: I mean, one of them does.

Peter McCormack: Yeah, I don't think that's the right idea.

Lane Rettig: Probably not.

Peter McCormack: But I wholly understand where you're coming from now from the hypocrisy level.  That kind of makes sense.

Lane Rettig: I think the right thing to do is probably not a fork, it's probably not attacking; it's live and let live.  Let the Ethereum Foundation do its thing.  It can be as functional or dysfunctional as it wants to be.  We're going to be the better people, we're going to go over here and we're going to build something better.  But then the question becomes, how do you fund it; and that's where things get very tricky, this question of the public it's funding.

Peter McCormack: So, is there any particular shady shit that went on also that we should be aware of?

Lane Rettig: This is a good question.  I think there was a lot of naivety, and to give a concrete example of this, I was part of a team, the Ewasm team, and we were like ten people.  We were not treated super well or paid very well, but we were also given freedom to travel and things like that, so it was kind of a mixed bag.  And the Ethereum Foundation, around this time in late-2017, early-2018, 2018 I think, started giving grants to their parties, projects, things like that.  And these grants were, in some cases, five figures, some cases six figures.  I think some of them went up to seven figures.

We started seeing this grant money leaving the foundation, to be clear coming from the same multisig, the same source of funds as we were getting paid our salaries, or fees I guess technically for the work we were doing, and there was no explanation, no transparency into how those decisions were made.

In one particular case which I remember, there was this announcement.  The Ethereum Foundation would publish these blog posts where they would announce the recipients of the latest round of grants, and you'd click on it and you'd land on the landing page of one of these projects.  The very first thing you see, I think it was even above the fold, was, "Angel Investor, Vitalik Buterin", things like this.

So again, this is, what is it, it's lack of professionalism, it's lack of disclosure of conflicts of interest, but that's seeing millions of dollars of grant money flow to projects that directors or stakeholders in the Ethereum Foundation had personally invested in prior to that; friends of Vitalik and friends of other kind of core stakeholders.  I don't know how these decisions were made and I'm not necessarily suggesting it's definitely nepotism or insider dealing, but what I'm suggesting is, without transparency, without disclosing conflict of interest, we don't know.  There was a lot of this kind of stuff that happened. 

It's bad enough on the face of it; it's worse because simultaneously, we felt shit on as contractors.  There were PhDs, experts in their field, who were getting paid something like $25 an hour for their work from the Ethereum Foundation, no benefits because we were all contractors.  Other people were, I think, probably paid quite well, and I think this had a lot to do with how close you were to the decision-makers, how much they liked you, stuff like this.  No HR; it didn't exist, because we were all contractors; no recourse.

Peter McCormack: What are you working on now?

Lane Rettig: You want to talk about it?  I thought we agreed not to talk about it.

Peter McCormack: Well, because I have to ask another important question, so it's not that I care about what you're working on, but I have to ask a different question, so I need to know what you're working on now.

Lane Rettig: Okay, yeah.  So I, in 2019, thought about forking Ethereum, thought about building a better Ethereum and had this scheme in my mind, sort of a vision of a different technical roadmap, things like proof of stake and sharding, core aspects of Ethereum 2.0 roadmap I disagreed with.  I had a vision in my mind of what I would build, and I found this project called Spacemesh which, to a large extent, overlapped with my vision.  So, this is like a better a Ethereum.

Peter McCormack: A smart contract platform?

Lane Rettig: Correct, a new smart contract platform called Spacemesh, yeah.

Peter McCormack: So, my only question is, and you know what question I'm going to ask, will people accuse you of being critical of Ethereum to now promote Spacemesh?

Lane Rettig: I mean, I have a pretty thick skin, I think you do too.  I don't care what people accuse me of.  I think if you go back and look at what happened in 2019 and look at the order of operations, all of this stuff that we're talking about here came long before I learned or ever got involved in the Spacemesh project.  I became very vocal of my criticism of Ethereum in early-2019 and joined that project late-2019.

Peter McCormack: Does Spacemesh have a premine; I have to ask that?

Lane Rettig: It's complicated.  I mean, 25% of the total issuance, as of ten years post-Genesis, collectively will go to investors and Core team.  However, issuance will continue long after that, and it will go down to about 5% over the long term.  So also, there's no coins at all issued on -- there is no premine.

Peter McCormack: So, it's not issued on day one?

Lane Rettig: Nothing is issued on day one, nothing is issued for the first year.  There's a long vesting period, and it vests very, very gradually.  So, the first year, Core team investors get zero; only the miners have it.  And then from that point, there's graduations.  It goes down towards around 5% long term.  This has been an internal war on our team, by the way, because I'm trying to fix what Ethereum did.  60% to 70% is way too high.  5% is pretty fucking good, you've got to be honest about that.

Peter McCormack: Yeah, but it sounds to me this is a bit more like a company structure?

Lane Rettig: It's a company that is going to decentralise itself and turn into a community-led DAO and make credible commitments along the lines I was talking about a moment ago.  If I have a say in this, and I do, whatever funds are left in the company as of Genesis, or shortly after Genesis, are going to go into something like a multisig with a timer on it, like I said, that's just going to vanish.  Those funds need to be spent or deployed within some reasonable period of time; that's how you do this.

Peter McCormack: Look, I'm not hugely interested in Spacemesh, I'm more interested in when this is release, the different attack vectors.  If people listen to this and they're critical of you, one of the things they might say, that's naturally one.

Okay, one other thing, because we could go on for fucking hours, this is fascinating; one last thing, we don't have to spend too much time on it, is Eth2 ever going to happen?

Lane Rettig: Yeah, that's a good question.

Peter McCormack: What is the problem?  I've no idea, I don't track it, I just see Marty Bent's ever-growing thread.

Lane Rettig: Much love to Marty.  Marty was here in New York and he and I were getting into this space at precisely the same time, in 2017, so we crossed paths a few times; lot of love to Marty.

Peter McCormack: Yeah, lot of love to Marty, lot of love for his podcast and his newsletter.

Lane Rettig: His podcast is wild, like wild!

Peter McCormack: His ongoing email thread regarding Eth2 is kind of funny.  I've not spent any time looking at what's the issue.  Are they trying to do something that's just not possible and they're going to break Eth?

Lane Rettig: So, it's fascinating and we could do two hours on this.

Peter McCormack: Sorry, one other question.  So, when Eth2 launches, will there be Eth1 and Eth2 and everyone who has Eth1 will have Eth2 tokens, and is essentially getting a dividend?

Lane Rettig: So actually, that's already true.

Peter McCormack: It is?

Lane Rettig: So, Eth2, it's so complicated.  The roadmap has multiple phases in it.  There were originally six phases and a phase zero.  The programme must be zero indexed, so it's actually something like in the order of seven phases, right.  The first phase, phase zero, actually launched in December, so it's been running for nine or ten months now.

Peter McCormack: Is that Beacon?

Lane Rettig: Correct, that's the Beacon chain.  So, the Beacon chain, the way this works is, it is a proof of concept of proof of stake.  So, anyone who holds 32 Eth on Eth1 mainnet can move those 32 ETH into a particular designated contract on the mainnet, and then that enables them to run one validator on the Eth2 Beacon chain.  Therefore, you have effectively moved your mainnet ETH into people call it BETH, which is Beacon chain ETH.  So, there are already two ETH and they're not fungible, because you can trade your BETH on a secondary market, but that's like trading futures, which you were alluding to before. 

So, assuming that what's called "the Merge" happens sometime early next year, which is the officially stated plan, eventually the two will become one again.

Peter McCormack: It won't happen!

Lane Rettig: You don't think so?  I think it will happen, but I think the thing that has happened is, number one, it's taken way longer than anyone said; number two, the scope has been reduced dramatically.  So, the original vision was that we're going to have this Eth2 thing running and it's going to have 1,000 shards and each shard is going to look like Ethereum we have now, and the shards are going to be opaque, which is to say you can run an application, it doesn't have to care about which shard it's on or which shard it's talking to; none of that's going to be the case. 

There are now a very small number of shards and by the way, this also changes a lot, and I'm also not super up to date on this so, caveat, do your own homework, please crosscheck the facts.  But my understanding is that there's a small number of shards.  Each of these shards is not going to be homogenous; they're not going to each look like Eth1 like they're supposed to.  Each of them is going to have what's called a different execution environment, so that's something like rollups.  Again, it gets very complicated very quickly.

But I think that the takeaway here is that each of these shards is a separate ecosystem.  You can think about them like separate blockchains.  And this is also already true of the rollups that we're seeing in Ethereum, where these are things like Optimism and Arbitrum, each of them is a separate ecosystem, so you can kind of build bridges and move things from mainnet Eth into one of these rollup ecosystems, or move it to Eth2, or move it among.  But each of them is separate, which means that we lose this composability, so you can't just -- it's very complicated.

Peter McCormack: Is it solving scaling issues, because that's what it's about?

Lane Rettig: Yes and no.  I mean, it solves scaling, but at the cost of, you lose this composability, and composability is just so central to Ethereum.  The fact that you can build these crazy DeFi things on top of these primitives, like Maker came along and created Dai, which was the first stablecoin, and other people can build things on top of Dai and you can have CryptoKitties and then have someone deploy hats to put on top of your CryptoKitties, all permissionlessly, all composably; a lot of that goes away in an Eth2 world.  So, it's sort of an unsolvable problem.

Peter McCormack: Should they have just built Eth2 on Oracle?!

Lane Rettig: Oracle, the company?

Peter McCormack: Yeah!  I think what I'm saying is, has the concept of what a blockchain can do been taken too far?

Lane Rettig: I think what a single blockchain can do is very limited.  I think that we are seeing the limits in Ethereum today.  I think that it's very disingenuous when folks talk about Eth2 as the solution, the promised land, just over the next hill, all our scalability problems are going to go away, because they're not explaining the downsides and these nuances.  I think you also have to look at what projects like Solana are doing.  Sorry, I know we're going even further into shitcoin territory here.

Peter McCormack: No, but we've been talking about this this week quite a bit, because we've been busy --

Lane Rettig: Yeah, you have talked about it.

Peter McCormack: I'm not going to invest, I'm not going to start covering this as projects.

Lane Rettig: But from a strictly technical perspective, it's very interesting.

Peter McCormack: Well, just context.  I see a Solana go up to $220, I'm like, "What is this thing?" and it's this continual sacrifice of decentralisation for scalability.

Lane Rettig: Exactly, 100%.

Peter McCormack: And I feel like that is a race to dumping the blockchain and building something on a traditional database, but that's permissionless in some way.  And maybe someone's going, "Pete, you're a fucking idiot, that doesn't make sense".

Lane Rettig: Yeah, it can't be permissionless or censorship resistant, by definition, if it's not decentralised.  The way that Bitcoin gets these properties that we all know and love is by being so fucking decentralised.

Peter McCormack: From what I've been told about Solana, I would argue that it's not really decentralised.

Lane Rettig: I think their gamble is that it's decentralised enough.  And I will give them one fact, which is that most people, most degens trading NFTs and digital rocks don't care as much about decentralisation as you and I and the people in El Salvador and places like that.

Peter McCormack: I don't think they care at all.

Lane Rettig: Well, if they didn't care at all, then they shouldn't be on a blockchain in the first place; they should be using Firebase.

Peter McCormack: Yeah, but I just don't think it's an issue.  If you care about decentralisation, then you care about maximum decentralisation.

Lane Rettig: You're saying that it's all or nothing?

Peter McCormack: Yeah.  When you don't care as much about decentralisation, I think you don't really care about decentralisation.

Lane Rettig: I think it's a slippery slope, I think we'd agree about this, and once you start going in that direction, you start making compromises.  Look, I'm with you.

Peter McCormack: I think these people are just having fun.  Basically, I think they're having fun, they're making money, they're trading rocks, they're trading tokens, CumRockets and dogcoins and they're having fun.  And from a distance, I'm watching them have fun and then I'm in this little world here where I'm arguing about the state and the Fed, and I'm watching all these people over there have fun.  It's like I'm in a business meeting --

Lane Rettig: I know where you're going with this!

Peter McCormack: -- in a Vegas hotel, and I can see through the glass window to all the people that are down there and they're on the roulette wheel, and they're drinking and having fun, and I'm up there.

Lane Rettig: So, I'm with you 100%, I really like this characterisation.  But it's even worse, because they're winning and they're making money hand over fist and folks like you and I are here, trying to do real work and move the needle for humanity.  It's very hard to focus.  But it was also like this in 2017.

Peter McCormack: And I was having fun in 2017!  But I was with Travis Kling the other day and Danny, and I was just saying, I'm not rich, but I am at my wealthiest moment in my life right now, and I feel poor!  I'm like, "Look at all these people making so much money!  They're buying rock jpegs for --" they're buying fucking jpegs for more money than I've ever had!

Lane Rettig: It really shows you how much wealth there is sloshing around out there.

Peter McCormack: And I'm like, "No, we've got to move the world forward.  I'm principled in doing this" and also, I can't do that, because all these people will yell at me!  I mean, look, the reason I don't want to have the fight anymore, because they're just two different things.  Why fight these people?  It's like fighting to close down Vegas.  They aren't the enemy.  The enemy is the Fed, the enemy is the pound, the dollar, the euro, the people making those decisions.

Lane Rettig: 100%.

Peter McCormack: That's the enemy.  They're not even competing for Bitcoin and actually, do you know what, I spoke to Dan Held the other day and he said, "Cool, you made a load of money on dogcoin, you made a load of money in Solana, this is why you should put some in Bitcoin and hold it for the long term".  And this is what I think Udi's point is.  It's like, "Why are we having this fight?"  We can call it a shitcoin if we think it's a shitcoin, we can call it not competition, but we can criticise the project but embrace bringing those people into Bitcoin.

Lane Rettig: Sure.  Bitcoin could do a better job of this.  I mean, one of the reasons I joined the Ethereum ecosystem in 2017 and didn't become a Bitcoin Core contributor was because Ethereum folks were so warm and welcoming and bitcoiners were not.

Peter McCormack: I mean, look, it's different.  The blanket statements like that sometimes don't work, because I've had a mixed response from bitcoiners; some are absolute shits to me, actually some are absolute fucking cunts to me!  But mostly, everyone's great and I've had a brilliant time, right.  But there can be a better job done in terms of -- I always want to separate what's the protocol to everything else.  2017 Fork Wars, absolutely protect the protocol.

Lane Rettig: It's interesting, because that's precisely when I just coincidentally joined the ecosystem.  So, this was what I was exposed to, this vitriol in the very beginning.

Peter McCormack: Yeah, and I didn't understand it.

Lane Rettig: Civil war.

Peter McCormack: This is what me and Danny were chatting about.  We didn't understand what was at stake, because we'd just joined.  I was like, "Is this maybe big blocks, maybe small blocks, let's see how this works out?"  Now, as it happens because I've done four years, it's like, "I get it now".  Absolutely protect that, fine.

Lane Rettig: This goes precisely back, we were just talking about this slippery slope of how much decentralisation is enough.

Peter McCormack: And I absolutely fundamentally support that.  What I don't fundamentally support is the harassment and abuse and targeting of people for having a different opinion.  You can think they're wrong.  Giacomo Zucco thinks that everything outside of Bitcoin is a scam and a shitcoin; Mr HODL does, and that's fine; they should be allowed to make their points.  I don't, but I don't even see the benefit of having that argument.

A lot of people write to me all the time telling me, "I know you're Bitcoin only, but what do you think of this?"  I say, "Look, I'm not interested, I'm happy to play the long game with Bitcoin, and by the way, this is why.  Let's have that conversation".  But I can't dealing in this endless war that achieves nothing, because the other problem it creates, just this conversation alone as an example, I'm naturally thinking about, how do I release this so people don't go, "Oh, look, Pete's a shitcoiner now, Pete's going to launch What Ethereum Did".  None of that's going to happen.

Lane Rettig: What Ethereum Didn't!

Peter McCormack: What Ethereum Didn't, but I want to have this conversation.  It doesn't mean I'm going to do Ethereum shows for the rest of the year.  I'm not going to cover Solana.

Lane Rettig: Please don't.

Peter McCormack: I'm not.  It's going to be a Bitcoin show, but I naturally have to think about that.  And also, it's almost like the coercive language around what I said, my point what Udi's trying to do.  I think he's trying to say, "You can be a Bitcoin maxi without being a massive twat".  Matt Corallo does it brilliantly, Jonas Schnelli does it brilliantly.  A bunch of these people who've done way more for Bitcoin than a lot of these fucking morons, dothodl morons online, and they're more composed with the way they do things.  So, I'm just trying to take this different approach with it now, but it gets a bit complicated.

Lane Rettig: Look, I think this speaks to a bigger malaise we have in society around cancel culture and the price of wokeism; it's a similar phenomenon.  What does liberalism really mean?  Liberalism really means a marketplace of ideas; liberalism really means not only tolerating, but intentionally exposing oneself to conflicting opinions and having these conversations constructively and respectfully.  I think you do a great job of this, but yeah, if something's going to destroy our society, it's this.

Peter McCormack: Danny, how many times have people tried to cancel me in the last two years?

Danny: A handful.

Peter McCormack: Yeah, a handful of times.  Bitcoiners have tried to cancel me.

Lane Rettig: You're probably getting it from both sides, right; you're getting bitcoiners who say you're not maximal enough, and then you have…

Peter McCormack: Yeah, and they're becoming the thing they hate.  And I don't think it's everyone.  I think it's a small group of idiots that people don't want to stand up to.

Lane Rettig: Right, because the risks are asymmetric.  The downside risk is far greater than the upside risk.

Peter McCormack: I mean, I don't give a fuck.  Literally, if you want to cancel me, if you're listening, try.  Four attempts: one --

Lane Rettig: Lawsuits and things.

Peter McCormack: Well, that as well.  I've had one very specific one, which I'm not going to go public about that was a very public direct attack on my income.  Fucking bring it on now.  Don't become the thing you hate.

Lane Rettig: That's a great motto.  Bitcoin is about freedom at the end of the day.  Live and let live.  What do they call it?  One of the Burning Man principles is radical self-expression.

Peter McCormack: I think the point Udi's trying to make and I'm going to talk to him about, he's saying, and some people disagree; some people are of the opinion, "Bitcoin wins whatever", and that's fine, cool.  I think he's of the opinion that Bitcoin may lose the war on narrative; there is a war of narrative.  It may lose that war on narrative at some point.  I don't think it does.  I think the reality is, we have a country that's made Bitcoin legal tender and I think we're going to get more, and I think in the end, Bitcoin's governance and monetary policy is why it wins. 

But I just think there's different ways we can approach people with different opinions.  It's conversations like this, it's not -- I can't yell at anyone anymore.  I joined that, "Everything's a shitcoin".  I can't do it.

Lane Rettig: That's why I'm way less active on Crypto Twitter than I used to be.

Peter McCormack: It doesn't scale, as well.  The arguments you have at 1,000, then at 10,000, 100,000, 300,000, you get through it, it just doesn't scale.  I used to phone Danny sometimes, almost counselling me every week, I'd be walking round a bar for two hours saying, "How do I manage Twitter now, because it doesn't matter what I say, it's just a shitshow?"

Lane Rettig: I found myself, once people started listening to me, I found myself self-censoring and I hated that, because again, the risks are asymmetric.  The upside of saying something, okay, you might have some people pile on and say, "Yeah, thumbs up, I like that"; but the risks of saying something that triggers people…

Peter McCormack: I think for me, Twitter's now broadcast rather than conversation, and it's conversation with people I follow and we mutually follow, but it's mainly broadcast.  It just doesn't scale.

But, wow listen, look, this has been fucking brilliant.  I'm so glad we met in El Salvador, I'm really glad we did this.  I think there's a lot that people will enjoy about this, I may have got some things wrong technically or made some shitty points, apologies for that.

Lane Rettig: I may have as well!

Peter McCormack: Well, we know I'm not technical, but I think your story's fascinating, I'm glad you told it.  I think there's things that bitcoiners can learn from this, I think there's things that ethereans can learn from this.  I think we should definitely get back together and do something next year when I'm in Austin, we spoke about that.  Let's do something else.  I'm going to read that article and, yeah, all the best with everything, man.  Stay in touch, this was great.

Lane Rettig: Thanks, Peter.  Yeah, thanks for having me.  This has been a lot of fun.  I've learned a lot from this conversation as well and I think if folks like you and I can sit down and have this civil, respectful conversation, I mean hopefully we can inspire others in cross-chain ecosystem to kind of do the same thing.

Peter McCormack: Not something I support; put all your money in Bitcoin!  But look, happy to talk to you.  Like I say, I think there's a big lesson to be learned in some of this and I'm really interested in seeing the feedback.  It might just blow over.

Lane Rettig: Possibly, you never know.

Peter McCormack: You might have to spend a week in hiding.

Lane Rettig: I'm used to it, it's okay.

Peter McCormack: All right, listen, good luck, stay in touch.

Lane Rettig: Thank you.  Hope you enjoy New York.

Peter McCormack: Yeah, love this city.