Hey it's Chris Bleck on this week's episode I'm speaking with Alex Gluckowski
he's the co-founder and CEO of Matterlabs which is the company behind
ZK Sync which is a layer 2 network being built on top of Ethereum. This is a
conversation that's really gonna open your eyes with regard to the security
around layer 2s and who you actually have to trust when you put your money
there. You're not gonna want to miss this one especially if you use Ethereum
layer 2s. First quickly let me thank my two sponsors. This week's episode is
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Alex Gluckowski did I say your last name right?
correct all right but thanks for jumping on a call with me
sure you we had a podcast like two years ago you remember and we we talked
through I think you guys were did you have a product yet I don't think you had
any product out there yet oh no you just had the swap tool
exactly we had ZK Sync Lite the first version of the app specific ZK Rollup
and now we have a generalized one yeah so at that point it was just you could
make a deposit to this mysterious thing called the layer 2 and you could
transfer funds between addresses but you couldn't do anything else and I think
you could swap but not okay yeah I think that might have even been added later
right but like you know so two years ago layer 2s were so novel to us that we
were just so amazed that you could you could take assets off of mainnet and
move them around on this mysterious decentralized allegedly decentralized
layer 2 and now look at us right because back then we were just talking about
here's the future here's the things we might be able to and now we're at the
point where you can basically do everything you can do on mainnet and
more mm-hmm one of the things that I enjoyed about our chat and about the way
you guys do things is your I think you're the only layer 2 project out
there that that sort of talks about freedom and self sovereignty and
financial you know sovereignty I guess you know stuff like that so tell me a
little bit about your thoughts on that and how it got you here how it got you
into the space absolutely so this is simply due to the fact that it's been
the DNA of the kissing from the day of its inception this is what brought me
into crypto the deep passion for freedom and its intersection with the passion for
technology and realization that blockchains is the most fascinating
technology that can protect and enhance freedom into this world because the
digital life becomes more and more prevalent and you know soon if our
assumptions are correct most of the internet will transition will migrate on
chain so the we see blockchains web-free is just the continuation of the internet
revolution and whatever the internet has done to the world of information the
blockchains will do to the world of value and so it's insanely important
that we don't make the same mistakes as those that were done in the development
of the internet which started out as a decentralized network to such a degree
that it was supposed to be able to survive a nuclear war right like with
all the completely being partitioned with all the data centers disconnected
and still functioning properly and then today we live in a situation where like
five companies five co-corp corporations control 80% of the internet traffic and
they can dictate policies and rules and do a lot of decisions on behalf of the
users so the the web three year evolution started as a counter movement
to that and we want to preserve it for a very long period of time and we want to
evolve it beyond something that can easily be manipulated like we want to
live with this awareness and we want to build new systems by design and build
new cultures and user communities around the idea that we want to preserve the
sovereignty in the welfare world so like the internet so the precursor to the
internet was walled gardens like America Online and prodigy and CompuServe and
I'm sure there were other ones out there and they control all the traffic within
their their ecosystems obviously the internet came along and ate their lunch
right they tried to hang in there but it ate their lunch now with a theory of and
layer twos it's different right because you know we can compare it to the
internet but you know you've got a theory and was which has its own issues
you know with the switch to proof of stake and it's debated we can talk about
you know if you want but it's debatable about how decentralized that is at that
point versus how it decentralized it was before but then you got these layer twos
like zk sync that are starting out centralized right there's so it's not
like the internet where that where it started out decentralized it's actually
more like aOL where it starts out centralized and then it plans to and
promises to decentralize over time but there's still a business behind it a
business running it right so it's it's a little bit different the incentives are
a little bit different don't you think I want to differentiate I want I will
slightly disagree some of the layer twos start completely centralized and they
just basically purely networks operating under the the disguise but the layer
twos such as zk sing are and she actually decentralized in some critical
like in essence in what makes them a layer too so like the it's very similar
to a situation where you have a wallet on your mobile phone which is non
custodial which controls your funds and even though you can you know the the
wallet can be upgraded or the iOS or whatever wallet provider Android you use
could theoretically replace this app with something that could have access to
your keys as long as this is not happening the wallet remains non
custodial and you fully control the assets there so you could argue yes we
want like fully decentralized hardware true ownership would mean that you have
your own open source components your own devices which you fully control but like
it's a spectrum it's not a binary situation where it's either fully
controlled by you or not fully control date what makes layer twos layer twos by
definition is that they must inherit security from Etheria so they must
inherit all the enforcement of the rules that are programmed there all the
blockchain constraints which is you can only spend money if you own the some
balance in your account and you cannot spare more spend more than the balance
that you have in your account and in order to spend it you have to authorize
the transaction with your signature and you cannot spend the same transaction
twice you have some concept of unknowns and so on so those rules have to be
enforced in a way that is backed by a theory or whatever underlying layer one
you're using so if this is fulfilled then you have a true L2 so in this sense
ZKSync is a true L2 so you can deposit funds you can withdraw them there is no
way for us to to manipulate any of the state any of state transition change any
rules like you can validate verify the code yourself you can re verify the math
behind the zero knowledge proofs the cryptography we're using and you can be
you can have a guarantee mathematically to the extent to which the code is
bug-free that the L2 is doing what it's supposed to do what you what what you
trusted to do I hear you but I feel like there's more to the story I have this
clip I know you heard it Vitalik Buterin saying something about L2 is I just
want to play it and then talk about it with you and the other thing that like
I've talked to the roll-up teams that they all want to do next year is they
want to start taking off training wheels right so the roll-ups and layer twos
that exist on Ethereum today they basically all have what I call training
wheels like some kind of backdoor that lets developers come in and like say
stop and change the protocol if they see that some kind of bug has happened so he
says they all have training wheels so what are the training wheels what are
the back doors into zk-sync I would not call it back door I would call it what
what it is really called upgradability for emergency use cases for like or in
the four cases of emergency where the developer team or the group of you know
like the Security Council whatever you call it has the ability to upgrade the
system the and this is something that is really difficult to change unless layer
one and the social consensus around layer one all the users of layer one
essentially will kind of opt-in on will commit to resolve certain situation
certain types of situation at you know collectively that they will say like
certain protocols are so important that we all agree that we will have to fork
aetherium in order to resolve a bug that that is happening in those systems
because not all protocols are equal like some systems are relatively simple like
you can take Uniswap for example that has a limited contract surface you can
deploy it once you can verify the code you can test it for a prolonged period
of time then kind of like the probability that that there is a bug is
very very low and you can just use the system and then migrate to a new version
which you deploy separately this is very hard to do with L tools at the level of
maturity at which we currently are all of the L tools today are very very early
and their development cycle and we know for a fact that the the cryptography
we're using is not final it's not ready to ossify it just in the first couple of
years after the zero knowledge proofs got to a point of maturity where we can
actually use them in production we know that new protocols are being developed
that are much more efficient and we will have to switch to them like ZK sync is
currently in the process of switching from plonk to a new proof system called
bujam which is orders of magnitude more efficient and will enable transactions
on a radically different scale so like as long as we know that these things are
happening we'll have to do upgrades upgrades themselves can be done with an
opt-in manner so you can propose an upgrade the the core team or governance
of a certain protocol can probably can make a proposal and say this is the next
version if you don't like it you have plenty of time to opt out withdraw all
your funds no one can stop you because there are enforcement mechanisms which
we discussed where you can go through layer one you can say like here is a
priority queue I want my transaction to be executed no matter what the value
with the current validators the sequencers whether it's a centralized
sequencer or decentralized sequencer whatever they want they have to do it if
they don't do it I always can enforce it myself and it can produce my own proofs
for the blocks to withdraw my funds but there will be always situations of
emergency like Bitcoin had box in the core protocol
etherium had box in the core protocol and the only way to fix those box were
was to to make a hard fork but all the users all the full node operators of
Bitcoin and etherium had to upgrade their software or at least the super
majority but that's a lot different from a multi SIG right it's a lot different
because that was a centralized consensus mechanism exactly so the what we need to
get to is a an order the social acceptance of layer zero of our social
layer behind networks such as Bitcoin and etherium that they will have to do
the same for layer twos like if layer twos are important and we can talk why
they are important we can talk about like why it's not possible to implement
decentralization at arbitrary scale in layer one itself and what's the proper
role of or layer one what's the what's the role of layer two but let's just
take it for granted it's not possible like you need layer twos you need to
modularize the stack if we want to cover billions of people and give them access
to blockchain in a fully decentralized trustless and affordable manner we need
to use L twos so we will need to figure out how to to to avoid those training
wheels and switch to these more advanced upgrade mechanisms so like I get that
you know when you're building this advanced technology you need you need
access to be able to fix bugs which has been the story since for the past you
know several three four years I guess with the DeFi as new apps have been
developed and you know we first had these admin keys they became multi SIG
some of them transition to DAOs but they all kept the ability to make fixes in
some way and we've seen multi SIGs justified in that way which is
inherently a problem which we don't really need to get too deep into but
it's inherently a philosophical problem because the holders the alleged holders
of the multi SIG have no way to prove the security of that multi SIG to
anybody who has a vested interest or who has deposits on the platform so multi
SIGs as a as a tool of control over third-party assets is flawed and will
probably one day be illegal I think but in the meantime we've got this situation
where you got 400 million dollars worth of other people's money on ZK sync era
and you've got a four of seven multi SIG which and I'm looking at L2B now which
is a great website L2B.com according to L2B the code that secures the system can
be changed arbitrarily and without notice by the governor that currently is
a four of seven multi SIG the governor can also change the verifier contract
without notice so when I read that I read that 400 million dollars worth of
other people's money is subject to the security of this and the integrity of
this multi SIG is that accurate or is that inaccurate?
the it's subject to security of the underlying system which is then in addition
passively secured by this multi SIG this multi SIG does not have to perform any
active function in order for the funds to remain. Let me rephrase the question
what's the worst thing that this multi SIG could do to maliciously or not that
it would and it's all theoretical and it's all hypothetical but I think that
of anybody that works with any layer two you're probably the one person that I
could actually get an honest answer about this from. What is the worst
possible thing that this multi SIG could do to the 400 million dollars worth of
funds that are on ZK SIG era? Well if the multi SIG is compromised it could harm
the funds there. What does that mean? It could drain the funds? It could steal the
funds? What? It could upgrade the contract to something malicious and what could
that do? It cannot directly steal any funds this is very important. But give me
the worst case scenario if somebody like stole all you know stole all seven keys
like just some crazy situation it's this action movie right? Yeah sure they then
could upgrade the smart contract to something that could be controlled by
someone else and then this whatever whoever this entity that controls the
new contract could then do whatever it wanted with the money. So the multi
SIG could upgrade the contract without notice no time lock no time
delay to move the funds what from the bridge into their own wallet? Exactly.
Okay so all the funds currently on ZK SIG era and every other layer two right
that uses a multi SIG which I think is all of them. The multi SIG is the is the
linchpin like none of this other stuff really matters like I get. No no it does
if the other stuff does matter a lot. So you're saying that a multi SIG is a
single point of failure if it fails then the system can fail in its
security. This is true and this is correct but the other stuff does matter
a lot because what makes L2 and L2 is that it remains secure in the
absence of any action on behalf of this upgrade multi SIG. Right. And I also I
like like like the reason I'm on this podcast is because I really like your
attitude and I fully agree with your message and your the meta message I'm
hearing from you is you have to think for yourself and you have to understand
the reality you have to understand the systems like what they really mean and
not the marketing bullshit and then you have to think for yourself like what's
the best course of action and so like so you have to understand that yes multi
SIGs are bad we want to get rid of them in order to remain decentralized at any
layer and unless we find a way to do this Ethereum will fail. Ethereum will
fail to either decentralize or scale like we will remain in the balance of
the blockchain dilemma or it will fail to secure the system right. So but I
want to ask a different question what would be the better alternative like
until that time till we get these new mechanisms till we design them and
get the broad acceptance of the community to have a better way to
manage the upgrades to manage security risks mitigation of bugs and so would it
be better for us to not develop any other tools not deploy anything at all
not you know like work on these protocols and build stuff and build
teams and work on cryptography so like this is the question for me like to me
it feels like obviously since we're doing this that it's better for the
community to move forward with the trustless technologies or at least with
trust minimized technologies with the ultimate goal to get to a state where we
can scale Ethereum or Bitcoin on all the decentralized blockchains in
infinitely with limitlessly without any any bounce while fully keeping them
decentralized so that that final state is the most interesting thing for me to
discuss like how we can get to this state yeah yeah yeah my my objective my
agenda is never to tell people to stop developing or to say this shouldn't
exist or to say anything like that my agenda is always transparency and
education right so in the case of L2s here's my concern I'm gonna go back to
what I said before I think that the multi SIGs for now as long as they exist
are all that matters when it comes to when it comes to the what a normal
person needs to understand with regards to who they have to trust in order to
use this technology yes there's all this other stuff going on with sequencers
and validators and proposers and all these other interesting parts of the
network that are eventually going to ossify into something really cool
potentially but any decentralized system is only as decentralized as its most
centralized part and the most centralized part of every L2 right now
that I know of is this multi SIG control and we just were saying let me just
finish this because it's important we were just saying that this four of seven
multi SIG and on Arbitrum it's a different thing and on Optimism it's a
different you know the thing as far as numbers go but they all have these
multi SIGs that are capable I believe all of them have zero time delay zero
notice required to upgrade the smart contract and to do anything they want
worst-case scenario steal all the money you know but there's a million other
ways that they could go about it while that exists one attack vector remains
open that is ever on my mind every minute of every day that we've seen
before which is the government which are state actors right and bottom line you
know and this is why I go after base so much with Coinbase they've got a multi
SIG they've got a hundred thousand ETH now on the network they're owned and
operated by a regulated entity in Coinbase they're subject to a KYC AML
laws already they're subject to bank secrecy act they're subject to all these
different state laws and regulations but there's they're pretending that base is
exempt from all of that whereas they own and operate it you know and I think you
know same thing with ZK sync you guys own and operate that network while it's
centralized under a multi SIG and that that's where I get frustrated because
nobody wants to admit that even though it's very very clearly true you know so
that's where that so when I say it's all that matters to me it's like that goes
back to the most you know the centralized part is as central you know
that's that's the measure of which you can look at how decentralized the network
is in my opinion do you agree with that or do you think I'm off if the multi
SIG is the least or the most centralized part of the system that is correct
oftentimes multi SIG is not the most decent most centralized part of the
system if you think of the multi chain I think what any swap about any swap
exploit a couple of weeks ago or a month ago where the it was supposed to be a
multi server NPC system but is with actually controlled by the servers kept
in the apartment of the CEO and then he was captured by the Chinese government
and then he was forced to leak all the keys and was not actually the most
insecure part of the system because the the actual security mechanism of the
system was not sufficiently decentralized right so like it's very
important to differentiate between different networks some of them really
derive security from aetherium and only use the multi SIG for emergency control
some of them have the multi sick as the you know a safer part of the system
because they have participants there like is you can sing Security Council
with 15 different prominent people in the crypto space in different
jurisdictions and it's really hard to control all of them no it's not and then
it's not hard to control them it's very easy to control and upgrade they're all
getting paid they're getting paid to do a job right they're all getting paid
they're they're they're part of the company basically they're doing a
service so it's not difficult to control them you can get if I mean I give I give
true problems to people to networks that have a hundred people that need to
collude in order to do harm to it because it's still too few you know so
when you're talking about four or seven or twelve to say that like it's too
hard to control them I mean look if the if a nation-state comes after Arbitrum
okay and says you have to do this or else you're in violation of the law it's
not going to be hard to get that multi sig to agree to a be quiet about it and
B you know make changes quietly and C you know do things that might be against
the interests of depositors if it's going to protect the company and if
they're getting paid to do it our ZK sync signers getting paid no they're not
getting paid for being sars is that documented like I have I didn't see um
is the signer list public or how are you guys handling the multi-sig we will
release a very deep detailed document about decentralization and the you know
like we like as I said Ziki sink is an alpha version as most of the other L2s
we are in very very early stages that's not the final state so I don't really
want to focus much on this current state I agree with you that this is 400
million dollars on it understand the risks and the realities you do the
really good job describing it I would love to speak about the the like what we
want to do about that like to do it stay here or do we want to move to some
better situation is a different world possible at all well I mean look there's
400 million dollars on the network right so I mean yes it's in an early stage but
you guys and every other L2 team made the decision to encourage to incentivize
as much you know as much trust from retail depositors as you possibly could
you know with these airdrops and with these other incentives well no we think
a sink era is officially an alpha it's a it's a very early technology is a kiss
sink light is in the proper release we could let's talk about the kissing flight
it's a lot easier okay so sorry so ZK sync era is the layer two that can run
smart contracts and you know people are moving their money to it and trading on
and all this stuff in order to encourage in order to achieve a future airdrop
right we never spoke about any airdrop and so like okay but okay I get it people
are L2s I see a lot of there are a lot of people interested in the technology
and in the ethos of decentralization and freedom and this is why they are
experimenting with with the stack but as I said and as is clearly documented in
all the official documents it's it's very early stage it's an alpha technology
you should not use it for anything serious
should not put you know it money there so Arbitrum did an airdrop obviously
optimism did an airdrop ZK sync is hinted about an airdrop the idea was to
encourage people to to bring their to bridge their money to this layer two you
know and I get I get it okay so there's no promise of anything but it's an alpha
product at 400 million dollars worth of crypto on it and all of it is subject to
the security of a multi SIG where the signers haven't even been you know
released announced I don't I guess there hasn't been anything from you guys yet
as far as how it's secured or why people should trust it so a hundred percent of
the funds on on this particular layer to have have an irrational amount of trust
from from depositors wouldn't you say I mean really like that for looking at it
from the outside in separating yourself from it as much as possible does it
make sense for 400 million dollars to be entrusted to a multi SIG where you don't
know who the signers are how it's being secured why you should trust it you know
you have no idea and you barely know anything about ZK sync the company or
who's behind it or anything like that like does it make any sense for for
people to be entrusting their money to that and wouldn't you say the only reason
they would probably do that is because they don't really understand the fact
that they're placing that irrational trust in in this system so I'm gonna ask
the counter question do you think that madam ask trust wallet and all the other
mobile wallets together hold more funds than any single I'll do combined would
you agree to the statement so like probably right probably so but do you
know who controls the upgrade keys to all those applications who can go on the app
store or on the Google Play and just pull a trigger and say let's upgrade this app
to something malicious that will send all of the private seed phrases and
private keys from all this mobile wallets to the server of of this control
by this malicious actor and then extract the keys as happened recently with with
a like large-scale attack on I think when last boss is compromised you don't
know right like you don't know like is there a multi stick at all or is it
controlled by a single system administrator who can just do this
secretly without letting anyone know and just like let the phones upgrade to this
malicious version and be operated for a while until he collects enough of the
seed phrases to upgrade like this is exactly the same situation like there is
some like if you cannot really verify the software yourself and you if you
don't control the upgrade channel you are entering some trust assumptions that
the software is not going to be maliciously upgraded this applies to
everything this applies to your hardware devices to your laptop to your mobile
phone to the apps themselves to the app store like all like all of those things
have their independent admin keys that could inject malicious software it's not
the same thing it's I'll tell you why it's not the same thing because if they
push an upgrade not everybody's gonna upgrade at the same exact time it's
gonna become apparent very quickly something is very wrong out there in the
world of social media and interconnectivity not everybody's gonna do
the upgrade at the same time right so people and plus this is why we tell
people these hardware while it's 2FA etc okay so there's a lot of people who
this wouldn't really affect at all there's it's not the same as a layer 2
that has a multi sig that can in the dead of night get four people together
process a transaction and steal half a billion dollars worth of money
instantaneously this is basic this would be the same thing if Metamask could
flip a switch and turn off every single body every single wallet that exists at
the same time and steal money instantly it's not the same thing and also they
can do it instantly and they can affect more wallets within a short period of
time and with more fonts in it than any single this is the absolute the same
situation just at a different scale and yes you have the alternative such as
hardware wallet which you could go and install on air gap machine and probably
like follow your own security measures only map pass messages with QR code
decode them and so on and so on and this is what we want to encourage people to
like initially we did not have those hardware keys we only had software
wallets also for Bitcoin in the very first days of Bitcoin there was only a
software wallet and the operators the young the the providers of their
operating system who always have a backdoor of some kind could install some
malicious upgrade and like affect some people and extract their money the the
what's different here is the scale is like you know some modalities but it's
fundamentally the same thing whether you like you can upgrade something that will
lead to malicious results ultimately we don't want this to happen but the the
situation is very similar so like if you're asking me why people do trust the
systems maybe because they are not taking them seriously you know like
maybe each individual just deposits a little bit of ether a little bit of some
NFTs just to play around like this is a playground today this is not the next
financial system it will become one if we follow the critical thinking if
people the users in the first place like demand from the developers that the
standards go up that there are like the if multisig they use they use in a
proper way with time logs for upgradability with certain measures with
with inability maybe a multi-seq can be only used to freeze the contract for a
short period of time and then the governance of the protocol has to
intervene and from the upgrade and eventually we want to get rid of any
kind of multi-seq any kind of like trusted majority assumption all together
but until that happened we have to accept the the the state of the maturity
of technology for today this is I think this is the answer to your question
could the multi-seq be used to to freeze a wallet to freeze an account the
amount is it can be used to make a malicious upgrade if you use your admin
key to maliciously upgrade your mobile wallet app it could be used to freeze
your assets on this app it could be used to take this assets no I know layer 2 on
ZK sync on all the layer tools that have upgrade keys they can upgrade the
contract to whatever so any malicious concept so multi-seq could be used to
freeze assets I know I would not put it this way the malice it cannot be used to
freeze assets and sorry like you keep asking the question I will have to
repeat in a certain way because I have to put things extremely you know we have
like this conversation is sensitive so I have to put things very correctly I
cannot misuse abuse my words right you still understand sure so a multi-seq
cannot be used to freeze the funds to affect any specific accounts there is no
bad door like in stable coins I can all this US or like if you have that stable
coins have a function to like freeze certain account sees funds from certain
accounts none of that exists in L2 like not a single L2 I know has has a vendor
let me rephrase the question it could a multi-seq be used to upgrade the system
the layer tubes logic specifically to relaunch in a way where everything is
just the way it was before except specific aetherium addresses on the
layer to no longer have access to the funds that they did before the upgrade
well the multi-seq can be used to upgrade the system to any smart contract
so this smart contract could be anything right so that's a yes as I said like the
the multi-seq itself cannot be used to freeze funds it can be used to upgrade
this the system too okay so it can be used to upgrade the system to a version
that that basically screws over certain to somebody's this version yes okay so
if it's compromised okay so hypothetical situation what what what is the company
behind ZK sync the ZK sync is the protocol it was created by the book by
open source developers there are a number of developers matterlabs was
company that initially started working on it now there are multiple different
companies a lot of independent developers contributing to the protocol
development so it's not one company okay so so matter labs gets a notice from the
Treasury Department US Treasury Department
requiring that specific assets in specific addresses on ZK sync be frozen
or confiscated or whatever what does matter labs do do they violate do they
violate the notice do they tell OFAC they can't do anything like or do they
use the multi-seq to upgrade the system to comply it's not it's not really
technically feasible it's not easily doable like that that's with the
situation you describe or even the the change you're describing is actually
like pretty hard to implement that that's that's a very complicated very
complex thing how do you think coinbase would react to this type of a notice
with I think they would fight back I think the coinbase as a US jurisdiction
would go to a court and I think the US is largely successful and is kind of
superpower in this world exactly because it's a jurisdiction with a rule of law
it's not like you know a dictatorial state where a single government can
decide whatever they want they would go to coinbase coinbase would fight
back obviously this is not what we want we don't want to rely on just yes and
integrity of a single company or a group of companies we want to rely on math and
open source code and this is what matter labs and the key sync is all about but I
think specifically for coinbase they would fight back and I think they have
a track record of doing this and they have proven themselves as with winning
the case against ACC and being generally very of very high integrity
within in this matters but I think where we're at what my understanding is is
that while the multi-seq exists and while we're in this sort of infantile
state of the alpha state of L2s it is technically possible to comply it's hard
and not easy and it might you know degrade the performance of the network
in some way but it's possible but we need to trust the integrity of whoever
is on this multi sig to fight back to not comply to do whatever that's that's
my understanding and that basically is still a lot closer to a centralized
exchange as far as who we need to trust you know it's closer to something like
finance than it is to something like aetherium or Bitcoin you know as far
as the main that goes and when it comes to trust assumptions when it comes to
what how far do you have to go mentally once you really understand what's going
on here how far do you have to stretch you know your your your how far do you
have to suspend your your disbelief and your suspicion of other people's motives
in order to entrust your money to this system that's where I'm at and that's if
I'm wrong in any part of that feel free but that's my current understanding I
think there is a fundamental difference between something like an L2 and a
centralized exchange like Binance in a similar way how you know like could a
government government or any authority impose a decision for a car manufacturer
to implement an upgrade to like freeze the car from a legit user legit owner of
this car and for some cars if they have an explicit function to freeze control
and I think the newer cars all have that like Tesla would probably directly have
this they just switch you off and off the grid and then you stop on the
highway I think all their cars that are still controlled by the board computer
could theoretically do this but practically it would be cost impossible
like the complexities is way beyond what what this can be a car manufacturer
can do so I think this is you know like there are degrees of this like if you
demand a task that is ex orbit and Lee complex and difficult to implement and
risk it in command you can't really demand compliance for such things like
like you can demand you know like you could issue an order that you have to
pay tax from every crypto transaction and theoretically you could comply you
could build very complicated accounting software that would track all of your
transactions and go into database and check with whom you transacted with
jurisdiction what IP blah blah but that that sounds like a answer multiple tasks
right so this is this is something similar it's absolutely not trivial like
if you don't have a function to freeze specific account that is hard to
implement especially hard for complex software pieces like ZK roll-ups or
optimistic roll-ups if they have full implementation of the tropics and
optimistic yeah but the problem is that you can still shut it down right so if
you can't comply and your choice is shut it down or go to jail you can still
shut it down and you can also from my understanding L2B freeze people's assets
you know because if you well okay let me read from L2B again tell me if it's
right or wrong users can submit transactions to an L1 queue which means
that you can submit a transaction on layer one on on aetherium to force a
withdrawal of your money without doing it through the bridge or the L2 or
anything like that so you can submit a transaction to an L1 queue but you can't
force it to be processed the sequencer cannot selectively skip transactions but
can stop processing the queue entirely so in other words if the sequencer
sensors or is down it is so for everyone so if you if your sequencer goes offline
nobody can withdraw their money is that right this is correct because the
biggest thing is now in the alpha state if the like we have a big high priority
project to implement the to essentially open the fully permission the sequencer
and this is happening in a very short term and this as long as this is not
happening it will remain alpha and it will remain a playground and not a
serious system so every depositor know that though shouldn't that like be oh
they do they do this is very well this is in our documentation in in the
security on the security nobody reads the docs nobody reads the doc well then I
mean you can't like I don't know what what what what what do I have to do I
go and shout shout it to like every user like yes if people if people don't read
the docs then this is why regulators exist because because financial
businesses will never disclose the actual risks in a prominent way first of all
people are stupid okay people are dumb they're not going to take the docs
could there be a big link to docs right there and nobody's gonna read it they're
gonna take their $10,000 and they're gonna bridge it and they're not even
gonna think about it people are dumb right so this is why regulators exist
because when those people lose their money they start to cry and they cry to
government they say why didn't you protect me why didn't you protect me
then the government comes back to the financial company or whatever it is and
says all right what you need to do is put in giant you need to put a picture
of somebody a homeless person on the home page of your website it needs to be
this you know a thousand pixels by 600 it needs to say this could be you if you
use this product and then they're gonna make you put all this small little text
underneath that that goes into all the detail about ways that people can lose
their money and it's think about a pack of cigarettes that's what we're talking
about like Marlboro doesn't want it would have never done that if they
weren't forced to put a picture of a rotting lung on a pack of cigarettes
right and people are still smoking and people are still using banks and people
are still doing all this stuff but I mean the fact that like I promise you I
promise you that there and you know this too there's people listening to us talk
that have money on an L2 and are hearing this conversation like oh my goodness I
did not know that if I knew that when I was bridging my money I might have not
done it or I might have thought about it a little bit more that they could just
literally turn off a sequencer and I could lose my money forever like what if
they get you know approached by a nation stay or by a regulator or by an
intelligence agency and they're told to do to pause for a month or you know
whatever it might be like that's the kind of stuff that people just can't
wrap their heads around until they're literally slapped in the face with it
does that make sense that that's why I'm so vocal about that's why I go and try
to just get people's attention with this stuff because otherwise they'll never
pursue it and I'm doing everything I can to people think I want regulation I
don't want regulation I'm trying like I think that if we can get enough of this
out now and get people to understand it maybe we could avoid those kind of
stupid regulations in the future but I mean the way we're heading right now I
just think that more and more people are gonna freak out when one of these like
when base or one of these L2s locks up their money for months or years kind of
like happened with Celsius FTX etc where people just weren't thinking they
weren't thinking when they made that deposit and next thing you know you're
you've your 50 grand of Bitcoin or whatever is locked up for how long now
and you know your college your kids college education is inaccessible like
that's the kind of thing we're talking about here as far as transparency and
slapping people in the face with the information so they get it I agree I
fully agree I fully support the the your intention here and this is why I'm on
this podcast yes we actually did prominently tweeted and wrote in the
blog post about the security risks and I agree like I understand why regulation
is there our job is to do it better and to get to a situation where it's
completely governed by math and open source code and a decentralized
community as broadly decentralized as the theorem itself and this isn't unique
to L2s right this is the entire DeFi aetherium space like nobody's doing an
adequate job of going above and beyond I mean you know first of all like you know
like me and others have been putting these messages out there for three four
years now and I've had other L2 teams attack me align malign my character you
know just for making people aware of the reality of the situation right and so
we've got a long way to go but it's not unique and I'm beating you up because
and I'm sorry if I sound really frustrated you're you're the one per
you're the first person and the only person from any L2 team to be willing to
have these conversations you know all the other teams have either ghosted or
attacked or maligned or you know whatever and it shows that they've got
something to hide and that's where I get really frustrated you know it's like
okay we can say it's in our docs on page 357 you know if you don't see it it's
your problem but that is the road to regulation so that leads me to believe
that these other teams actually want the regulation you know and I think that
Coinbase wants some form of regulation I think they want to be accepted by the
government they want the government to look at base and say okay it's now
reached a version where we can accept it and that is so antithetical to
everything you're talking about how do you coexist in this space with the team
that's building base when they obviously want acceptance by the government and
you're trying to offer people a tool for freedom like how can those two things
coexist oh I don't see a contradiction I think we are allies actually with with
Coinbase and like what they have done for the crypto space and for ensuring
that the regulation doesn't become abusive and with all the fighting they
done in courts and educating the regulators I think they're doing a
marvelous job like I have to give it to them and of course being an exchange
they have to be on the safer side on you know on the more gentle approach
to regulations like I am a technologist so I am looking at things from the
technological perspective first and from a perspective of freedom so like my job
is to build systems that do not require trusting people like they I'm coming
from this background they're coming from the background where they are working
together with regulators to create the safety and security for the users but
ultimately I think our goals are shared and the the future we we are approaching
from these different angles is the same it's the future where assets of you know
online digital assets of everyone are non-custodial fully controlled by the
individuals and people have full freedom to do with with assets whatever they
want but as long as the multi-sig exists it's not any of those things right
depends on the role of the multi-sig you know like multi-sig is is a neutral
technology can be used you can use it with your family just to authorize some
you know expanding yes let's not confuse like multi-sigs for for self-custody
versus a multi-sig that you use as a mechanism for control over a network
that has third-party assets deposited onto it right so they're two very
different things we're just talking sure sure multi-sigs as a tool for control
over third-party assets yeah let's not go with multi-sig let's just say like you
don't want any admin key entity any any admin key that like no matter how
controlled that can unilaterally change the rules of the game right we don't
want this for crypto but we also like but looking from this perspective
multi-sigs are actually a huge step forward from the admin keys used by the
web to services the this mobile wall is that we discussed are probably controlled
by a single key on a single machine rather than on a multi-sig by multiple
different people in different jurisdictions that might be prominent
people who you like not as easy to compromise so like it all depends on the
context we have to be nuanced we have to understand the context we don't want to
hide any truth but we also want to do look at things like probably so like in
certain situations multi-sig would be a step forward in other situations it
would be an obvious big step backwards we want to always move forward we want
to get to a better future from changing the reality from from where we are today
towards giving more power to the people and more freedom did do you think that
coinbase like coinbase launch base obviously they know that regulators are
behind on L2s they know that lawmakers don't even they can't fathom it yet so
they're just trying to get a head start they're trying to do something crazy
they fully they fully expect to have to negotiate on the way that the layer two
works with regulators and potentially with lawmakers because they're a
regulated entity right so they're gonna keep that multi-sig as a full-on god mode
upgrade anything tool of control until they reach a state that is approved of
and has the blessing of their government overlords wouldn't you say that's a
fact that's accurate I have no insight into the intentions of different teams
I can only talk about myself and my team right what I can see in the public
communication of coinbase looks very in line with the spirit I believe they have
genuine intentions of good but of course I don't know you know I can't read their
minds but I think they they are on the good side but they're not gonna ossify a
smart contract burn an admin key make something immutable never changeable
something that they're running as a license a licensed regulated entity
they're not gonna do that when there's situations out there happening like with
tornado and things like that where devs are getting thrown in jail basically
what it boils down to for for deploying immutable smart contracts right for for
not keeping an admin key to be able to to bring a tool into compliance and so
coinbase with all their lawyers with all their you know thousands of counsel that
they have on staff and millions and millions and millions of dollars worth
of legal fees and stuff like that they're not going to take a risk in that
way so they're gonna keep that full control until they get to a point where
it's it's got the blessing of the government so between now and then
there's gonna be a negotiation and that negotiation is gonna result in changes
to the way that they operate the layer 2 and that might be in one year or it
might be in ten years I don't know how long it's gonna take to figure this out
but that's gonna affect the way that your layer 2 works too right so it's
like I I see this as they're setting the precedent if you guys think that they're
doing the right things then you're basically signing off on that whole route
like do you look forward to the day when there's regulation and rules and stuff
coming from the government about layer 2s do you look forward to that because
it would erase uncertainty for you as a developer and you could just okay well
we've got a KYC all the bridges we got to do all the stuff at least we know now
what we have to do we don't have to worry about it anymore do you look
forward to that day or how do you think about it I think about it in a way I
think there is a really fundamental issue here with developers being sent to
prison for writing code and deploying photo and github or as a smart contract
this reminds me of the crypto revolution in the 1990s where it was
prohibited to export cryptography code and and so people like there were
activists who were making tattoos of RSA code and going with this really
customs and things like this to me it looks like a violation of the freedom of
speech and to me this is the situation this is a moment of truth like you can
you can stand up and show your support for these developers and if you have a
massive legal team you can also go and support these developers and fight for
the right to free expression free speech and the freedom to write code and this
is really fundamental because if we get to a situation where we normalize
punishing developers for writing code then we this is way worse than then just
you know the amount of six controlling something then everyone will be forced
like all the wallet providers all the hardware wallets all the software wallets
will be forced to introduce a backdoor in the walls themselves all the hardware
manufacturers like your laptop and mobile phone manufacturers will be
forced to introduce the back door to take control of your assets if the
government wants like we have to oppose this collectively this is way way more
fundamental than any of the issues around L2s yeah I agree with everything
you just said but I'm looking at it from a little bit of a different angle that
angle is that if the tornado cash developers had kept an admin key on the
tornado smart contracts and they receive the threats from government that they
ultimately received which was fix this or go to jail they would have frozen all
of the assets in the tornado cash smart contracts until they got instructions
from the government on what to do they would have done that too too and you
know I shouldn't even say I know that for sure
Roman and Roman if you're and and Alex if you're listening to this sorry for
making this assumption but humans have limits right humans have limits on what
they're willing to risk for other people sure there's martyrs out there who will
go to jail when faced with this but most humans will will have this in front of
them and say okay you know what I've done everything I can I have this back
door right here I'm gonna use it in order to protect my family protect me
protect you know in my own interests so as long as that tool for control exists
we have to trust humans to go against their own best interests in order to
trust them with our money you know and so and plus you know in the case of the
L2s we also have to trust businesses we have to trust VCs we have to trust all
these other financial interests to go against their best interests as an
individual as a as a company as a for-profit entity we have to trust them
to to go against all that in order for us to be able to rationally trust them
and when it comes to Coinbase like it doesn't make any sense like historically
they were they're selling data to the government already like they're already
sharing data with the government they're already selling surveillance software all
this kind of like why they're they've already shown us that we shouldn't trust
them so why should we have that irrational level of trust with a
company like Coinbase you know and it's it's just the way a company works like
people think that I'm bashing them but this is just like the reality of how
things work with businesses and with tech and like so at that level it
doesn't make sense you know to look at it just from that one point of view you
got to look at as if the back door exists it can be used and we have to
trust you guys to go against your own interests in order to trust you with our
money so this again this is why I think it's important to have teams who are
dedicated and really passionate about building systems that are completely
trustless and we are in a race to do it fast enough before bad things happen and
and so this is why we we working on their knowledge proofs this is why we're
thinking about the trustless multi-sig less upgrade mechanisms and we need to
grow it by in from the general Ethereum community because no one no single team
can do it alone right amen man well I mean the beat so look first of all like
thank you again for doing the podcast with me and I know it's like not easy
but you know one thing that I've always appreciated about you specifically is
you've always been very open as open as you you can be with a lot of this stuff
you know I know you come from a genuine place as far as pursuing actual freedom
for people and not having people locked into stupid senseless regulations and
laws and stuff like that and I know you're you have to tow a weird thin line
you know with regard to a lot of the stuff which makes it really frustrating
in a lot of different ways I'm sure but you know like the stuff you have like
the the credo right and things like that on your website and on your github and
and in other places like I can see the cypherpunk in you and in the team I know
it's there I I just want to see I really hope that that can somehow translate
into the layer 2 world you know a little bit more because like I said like as
long as these backdoors exist it's like hey it's like it's just the cypherpunk
part disappears a little bit because it's like it's just the opposite it's
like you know Bitcoin I mean yeah it had bugs it had hard forks and it had
whatever you know the problems along the way but it never had that level of
control over it right never had the backdoor the multi-sig whatever the
admin key whatever you want to call it where you had to trust once it was
properly decentralized over time right I mean it's like yeah obviously Satoshi
was the only node the only miner in the beginning but there was never a limit on
how many people could be miners there was never a limit how many nodes could
operate after that first block was was mined so it's it's very different you
know and that's where I just get really frustrated because I think people bring
that mentality along with them when they use a theory I'm in layer twos that
Bitcoin level of decentralization in their head and then slowly they start to
figure out over time that it's not like that you know and that's that's where I
get frustrated because um you know a lot of layer two teams just don't want to
they just don't want that information to be front and center and nobody wants to
be first to write which is hard I'm sure like if everybody else was was front and
center with big warnings on their home page you guys would be doing it but
nobody else does it right so it's like you don't want to hurt adoption on your
product and let the other ones just pull ahead cuz they're they're continuing to
hide the reality of things so hopefully the industry figures this out before
the regulators have to jump in right yes I agree with you I understand your
frustration and it's really important that people like you raise the voice and
educate the community and keep pushing for this kind of standards and so I
really respect the work you're doing I know it's hard you're getting a lot of
harsh reactions to what you're doing to the way you're doing because you're not
compromising on your values and keep pushing you keep asking hard questions
and maybe the way to deal with this frustration for now is really to to
perceive L2s as like playground it's use it for gaming use it for you know fun
and if t-stuff for art like don't don't don't take it too seriously don't put a
lot of money there don't put your fortune there like there can be bugs
there can be you know like they this emergency situations with with the legal
stuff keep it simple and playful until we figure out truly decentralized
trustless governance models and switch to them ten billion dollars on layer
twos I think it might be a little late for that right
some of this money is used to see some stable coins that are back door anyway
like it we need to take it in a complex look well thanks again for doing this
we'll have to do this again sometime as the product matures and we can see how
things are coming along and where we can eliminate some of the the complaints
that I have I look forward to that man thank you Chris