OSAKA, Japan—Enclosed in a dark room, three developers were crowded around a table featuring a dead plant, a yellow clock and a black suitcase, while standing on a pile of crumpled bank notes.
This was an immersive experience set up by Elsewhere, and a cryptocurrency called Kong, to get attendees at Devcon 5 this week “to discover for themselves what they think about money,” said Elsewhere’s “head of dream logistics” Greg Crawford.
Things were just as trippy outside the conference area, in “Devcon Park.” There one could find unicorn dinosaur cut-outs, spaced across the grounds, interspersed among stalls offering custom-made rice balls and t-shirts. The whole thing felt a bit like the utopian future, if your idea of utopia involves cute pink monsters.
But Ethereum isn’t just about turning the world pink, nor theorizing endlessly about money. Its supporters—the thinkers, devs, money people, anarchists and everyone else who makes up the community—want to create a better, more utopian financial system. And, based on what else was on display at the biggest Ethereum developer-focused conference of the year, it’s making steady progress.
Devcon as a protest event
The unlikely person spearheading the charge at the Ethereum-focused event was none other than Bitcoin.com founder and Bitcoin Cash proponent Roger Ver. He was at the conference to show solidity with other blockchain projects, believing that people should use whichever blockchain works for them.
In one of his most brazen interviews, he spoke on stage about how it was time for developers to break the rules and do whatever they wanted—if they believed it would make the world a better place.
“This is a protest event,” Ver said onstage, adding, “We are building tools to empower individuals. That’s the goal that still has me excited today.”
Sharpening the tools for a financial revolution
There were many companies on display this week building those tools.
Orchid Labs’s upcoming decentralized VPN uses blockchain technology to create a more perfect privacy layer on the Internet, allowing anyone to access content from anyone else. It’s a first step toward a paid-for Internet, where users make micro, or nano transactions, to pay for services from each other, rather than from a telco, cable or Internet provider.
At the other end of the spectrum, we saw new privacy tools from the likes of accounting firm Ernst & Young. It’s leading the charge for businesses to use its tools compliantly, within the law. It’s open-sourcing its tools, meaning anyone can use them, for anything. (And, according to EY’s blockchain lead Paul Brody, developers are already thanking them for building the first tool, Nightfall.)
Experiments with radical funding methods were also in evidence. The key technology here is the DAO, which, once launched is self-sustaining and virtually impossible to shut down. One DAO, MetaCartel, issued a grant used to fund another DAO, Orochi. That was used to fund events held around Devcon (including, of course, a DAO-themed event). While this was used to simply organize a whisky event, the same technology could be used to organize funding for Hong Kong protests, for example.
And the community is ganging up on big business too—and subverting their technology. While Facebook attempts to keep its cryptocurrency plans on track for 2020, Ethereum developers have forked the code to create their own version, dubbed OpenLibra.
Radically, according to its website, it’s, “An alternative to Facebook's Libra, that places emphasis on open governance and economic decentralization.” That pretty much sums up the ethos at Devcon—if you don’t like the way corporations are doing it, do it your own way.
Of course, this being Devcon, some influencers objected to even deigning to fix Libra. “Shame on us for lending our legitimacy to Libra,” Ethereum Foundation researcher Vlad Zamfir tweeted, adding, “I've never been more disappointed in the Ethereum community.”
Building an alternative financial system
Many developers are working on more pure forms of finance on Ethereum, known as DeFi. This is the idea of creating financial contracts between any number of people, without the need of a trusted third party. For example, you can lend, or borrow cryptocurrencies on the financial platform, Compound. One of the cryptos you can lend or borrow is DAI, which is itself a great example of DeFi: it’s a stablecoin pegged to the US dollar that doesn’t have a third party holding dollars in reserve to maintain the peg. Instead users lock up ether as collateral in smart contracts.
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Interest in DeFi continues to grow. About $525 million is currently locked up in smart contracts for DeFi related activities, about half of which is for DAI. Nearly all protocols are on Ethereum, although that figure does include $6.9 million locked up on Bitcoin, in the Lightning Network. This is where Ethereum poses a real threat to the current financial institutions. Now it has a stablecoin that protects everyone from the volatility that cryptocurrencies have, these protocols can create effective financial products, without a bank in sight.
These protocols, though launched and maintained by DeFi companies, are carrying out financial services via decentralized protocols. In a sense, no one is running them, which is one reason regulators are so alarmed.
The challenges ahead
The biggest thing holding back Ethereum’s growing DeFi sector and splurge of new DAOs is scalability. The Ethereum blockchain is struggling to run too many transactions every day. Nodes on the network (that help to keep it running) had to increase block sizes by 25 percent, to enable more transactions. But that makes the blockchain more unwieldy and harder to maintain.
Ethereum has a roadmap to solve this, and phase zero is underway. Though it’s an ambitious plan, Ethereum cofounder Vitalik Buterin said in his keynote address this week that he is confident that, when it’s complete, the Ethereum blockchain will be faster, and a much more secure system, too.
Plasma—Ethereum’s fast-payment answer to the Lightning Network—has made big strides. Alongside decentralized exchange protocol, Uniswap, it released a tool for running smart contracts on a “layer-two solution,” which will help keep as many transactions as possible off the main Ethereum chain. That’s great news for DeFi projects, which are transactions heavy.
The Ethereum Foundation’s Zamfir put the whole thing in perspective during a thought-provoking speech. He argued that the Ethereum movement was getting so big and so radical that regulators and lawmakers are increasingly alarmed. He said it would be wise for the Ethereum community to consider its future more deliberately: Should the platform work with governments and regulators around the world to find a compromise? Or continue to create a fully decentralized world that was free of censorship or outside interference?
Judging by the revolutionary flair at this year’s devcon, it looks like the community may have spoken.