ETH Denver Download
5 takeaways from the largest crypto conference
ETH Denver is the largest crypto conference in the world. An estimated 20,000 people attended from all over the world. I was there to take it all in and distill the key takeaways.
The ‘main’ conference ran from March 2-5. There were hundreds of sessions and speakers across 8 stages. ETH Denver outgrew its old venue and was hosted at the National Western Complex. A venue built for rodeos. You could still smell the animals. Center stage was the arena usually reserved for bull riding. It was all a bit comical.
The no-frills venue and enormous crowd ironically symbolized the state of crypto. An industry down in the dumps with fervent interest.
The ‘main’ conference was accompanied by hundreds of side events all over town. A week-long hackathon preceded the conference. “Denver had never been busier,” according to every Uber driver I had. Hotels were packed.
ETH Denver is organized by members of the SporkDAO. It’s grown beyond its Ethereum roots. The event is funded by donations and sponsors. Attendance is free. The largest sponsor was BNB Chain and Near. There are hundreds of booths hosted by projects and companies. They’re there to sell. It has a convention-pay-to-play feel.
People from all parts of the crypto community attend: layer 1s and 2s, infrastructure providers and applications all ranging from startups to established. Developers, founders, business builders, marketers, defi degens, creators, lawyers, investors and artists are all present. The purpose of the conference is to bring all these different people together to innovate. It’s the best conference to get an overall view of everything going on in crypto.
I have 5 takeaways from my ETH Denver experience:
Upbeat mood
To token or not to token?
Zero to 100 (knowledge) real quick
Account abstraction is trending
Litigation is coming, regulation is mum
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1. Upbeat mood
I was shocked at how upbeat everyone was. The bear market was barely mentioned. The catastrophe of 2022 was in the past. People picked up the pieces, learned their lessons (time will tell) and moved on. Conversations centered around what is being built. The conference was a remarkable display of resiliency. The economic hammering people took and public humiliation didn’t dissuade anyone. Crypto is forging forward.
Several crypto OGs remarked on the stark contrast to 2018/19 crypto winter. They shared that the mood at conferences in the prior bear market was downtrodden. In prior times, people were depressed on the verge of tears. Not this year.
I think that’s a result of two things: development and stablecoins. Crypto is an actual industry now compared to a few years ago. Development has come a long way. People pay to use applications on the blockchains. There are things to do and revenue to earn. Actual assets exist. Stablecoins provide some career security in a volatile industry. People were decimated in prior bear markets. Not only were their projects toast, but the tokens they were paid in cratered in value. What they had earned and would continue to earn was worthless. It was hard to continue. Now it’s more common to be paid in stablecoins and native tokens. Tokens still got crushed this time around, but at least people can still feed themselves off their stablecoin earnings.
2. To token or not to token?
There is an emerging, and much needed, debate on whether or not projects need tokens. The consensus view is that if you’re a crypto project you need a token. Token supporters believe tokens are needed to ensure decentralization and incentivize network participants. They’re not.
First, not everything needs to be decentralized. Second, what needs to be decentralized can be achieved without a native token. Eth and other layer 1 tokens can be used instead. Most projects, just like most businesses, are not networks. Growing a network is not predicated on crypto. Networks existed long before crypto did. Tokens can help scale networks faster, but they also obfuscate the strength of the network. Many network participants only joined to get tokens and flip them for a profit. They were only interested in a quick buck, not the actual product.
Most tokens are a get rich quick scheme. They’re counter productive.
It was refreshing to hear speakers encourage builders not to focus on tokens. Build a good product that people are willing to pay for…what a novel concept? That literally needs to be explained sometimes. No amount of tokenomics engineering is going to compensate for a shitty product.
3. Zero to 100 (knowledge) real quick
Zero-Knowledge (“zk”) is all the rage. Projects are using it. VCs can’t deploy money fast enough into zk. The more I learn about it, the more I realize how much I don’t know. Few people in the world actually do. It’s crypto’s acronym equivalent of AI and ML. It gets tossed around by everyone.
The hope is that zk will enable blockchain scaling and privacy. Zk helps scaling by executing transactions faster. A zk-proof is sufficient to prove that a batch of transactions are correct without needing to reveal all the underlying information (for more read Ethereum can’t scale…or can it?) Blockchains aren’t private. Anyone can see everything you’ve done on chain. Zk enables users to prove who they are without revealing compromising information.
ZK has gone from zero to 100 real quick. Its promise warrants the attention. But hype is masquerading as substance.
4. Account abstraction is trending
Crypto user experience is horrendous. It’s complicated, janky, error prone and there’s no failsafe. Account abstraction aims to improve UX. It hides all the complicated stuff to make the experience smoother. When you order an Uber there’s all sorts of complicated stuff going on in the background, like pinging servers, geo-locating, payment processing and identity verification. Users are oblivious to all this. It’s a seamless experience. That’s not the case in crypto. Account abstraction should make the crypto experience similar to ordering an Uber.
Account abstraction has several immediate benefits. It enables social recovery. When you lose your private key, you lose your crypto assets. That’ll be a thing of the past. Users will be able to designate other individuals as recovery agents. Sponsored transactions are possible. Onboarding crypto users is difficult because they need to own crypto tokens first. Account abstraction allows applications to prefund the users required tokens. Recurring payments can be scheduled. Accounts can be easily programmed to require multiple signatures before transactions are executed. Multiple transactions can be batched together and signed as one. Blockchain based gaming is painful because it constantly requires players to sign off on transactions. Account abstraction allows gamers to pre-approve specific types of transactions, from a predetermined dapp for a set time period.
Account abstraction was proposed in EIP-4337 in September 2021. 4337 went live on Ethereum mainnet March 1, 2023. Lots of the benefits noted are built. There is more to come. Follow this development space closely.
5. Litigation is coming, regulation is mum
There was lots of talk of litigation and little of regulation. Crypto lawyers claimed DeFi is in the crosshairs for 2023. The prognostication coincided with swirling rumors that DeFi protocols received Wells Notices. David Hoffman, the source of the rumors, retracted his statement.
The most interesting thing I heard was a crypto lawyer explaining leverage commodities trading regulation in the US. The source's name wasn’t listed on the panel. The CFTC 31.6 - Registration of leverage commodities appears consistent with this lawyer’s explanation. Commodities trading regulation is more lenient than securities regulation. That’s why crypto enthusiasts prefer the CFTC to the SEC. However, regulation for trading leveraged commodities is far more onerous. DEX and CEX provide leverage to trade crypto. The CFTC could go after these exchanges for trading leverage commodities without proper registration.
I had not heard this angle before. I don’t know how accurate this lawyer’s take is. But it may explain why Coinbase does not offer leverage. If you have any insights on this, please share.
The consensus amongst lawyers was clear. The regulator spotlight is shining on the gray area US crypto had been operating in for the last 5-10 years. The ways of the past will not work going forward.
The EU is leading in crypto regulation. It introduced the landmark Markets in Crypto Assets (MiCA) legislation in June 2022. The legislation is expected to pass this spring and be implemented in 2024. It provides clarity on crypto regulation. It introduced new classifications for crypto assets. It does not extend to DeFi.
Regulation was not a topic of conversion beyond lawyer panels. I was surprised to not hear more complaints about crypto business being ostracized from the financial system. The average participant was not aware of banking restrictions (to learn more read Crypto Crackdown Regulators Mount Up).
A special thanks to all the ETH Denver organizers. That was a huge event!