Xiao Feng: Ethereum's "Shanghai Moment"

Source: Titan Media

(This article is the preface written by Xiao Feng, the founder of Wanxiang Blockchain, for the book "Point to Everything: Ethereum and Future Digital Finance" published by China Translation Publishing House, exclusively released by Titan Media App.)

On September 15, 2022, Ethereum will welcome another historic moment following the release of its initial white paper at the end of 2013 and the launch of its mainnet in July 2015: "The Merge." Ethereum's consensus mechanism will transition from Proof of Work (PoW) to Proof of Stake (PoS). "The Merge" will reduce Ethereum's energy consumption by 99%, decrease the issuance of ETH by 90%, and the fees for "gas" will approach zero after the integration through sharding and Layer 2 (L2) protocols. While the network's security and health will remain unaffected, "The Merge" will help Ethereum achieve 100,000 transactions per second in the next three years and 10 million transactions per second in the next ten years, providing high performance and extremely flexible scalability. This will further establish Ethereum's position as the universal infrastructure of the metaverse.
"The Merge" is not only an important moment in the history of Ethereum but also a pivotal moment in the history of blockchain technology! After "The Merge," Ethereum will need to upgrade again in six months to restore normal transfer functions. This subsequent upgrade has been named "Shanghai" by the Ethereum community!

In September 2016, following the previous two global developer conferences held in Berlin and London, the third Ethereum developer conference (DEVCON2) was held at the Hyatt on the North Bund in Shanghai. Among nearly a thousand attendees (the current Ethereum DEVCON has grown to a ten-thousand-person conference), 90% were participants who traveled from overseas. Listening to the speeches of global blockchain opinion leaders greatly accelerated the pace of blockchain technology's popularity in China. A Chinese tech media reporter attending the conference wrote on Weibo: "Upon entering the venue, seeing that 90% of the attendees were foreign faces made me think this was a conference held in Europe or America."

Five years ago, this Ethereum global developer conference held in Shanghai, which created a sense of "temporal dislocation," was strongly introduced and fully sponsored by Wanxiang Blockchain Lab. According to the process that began a few years ago for Ethereum's transition from PoW to PoS, each key milestone was named after the city hosting the DEVCON. Thus, Ethereum's "Shanghai Moment" was born.

In December 2014, at the "Sanya Financial International Forum" organized by Caijing magazine, I organized a "Digital Currency Subforum," with speakers including former experts in financial regulation, bankers, and digital currency practitioners. My speech mainly focused on Ethereum, which had just released its white paper a year prior, while the keynote speaker's topic centered on Bitcoin. This was likely the first high-profile forum held by a well-known financial media outlet in China to discuss digital currency topics represented by Bitcoin and Ether, which were not mainstream at the time. This certainly attracted the attention of domestic blockchain and digital currency practitioners.

During the lunch break after the subforum, I received a request to add a WeChat friend. He said he saw my speech content on internet media and was currently sitting in a café at Incheon International Airport in South Korea with Ethereum founder Vitalik Buterin, waiting for their flight. Thus, I finally got in touch with Vitalik, with Shen Bo as the introducer.

Vitalik arrived in Shanghai in April 2015 with a bag printed with a cat. This was not his first visit to China. Upon our first meeting, I was very surprised that he could send WeChat messages in Chinese and even converse in somewhat fluent Chinese, which is quite impressive for a foreigner who has not specifically studied Chinese. Vitalik's level of Chinese is different from that of other foreigners; his written expression is stronger than his spoken ability. He once shared with me his unique secret for learning Chinese: finding translated materials in Chinese, including the Bitcoin and Ethereum white papers, and then studying them alongside the original English versions.

Once, the three of us shared a taxi in New York, and while listening to us chat in Chinese, he would occasionally pull out his phone to check a Chinese-English dictionary, verifying whether the words we mentioned matched his understanding. In 2016, during the Wanxiang Blockchain International Week in Shanghai, Vitalik's presentation PPT was written in Chinese by himself.

During his more than a month living in Shanghai, Vitalik stayed at Shen Bo's home. He had no extravagant demands for living, and almost no requests beyond basic needs; his only hobby might be his love for cats. When I was on a business trip to Hong Kong, I found a photography collection about cats published by a well-known photographer and brought it back to Shanghai as a gift for Vitalik. The collection was heavy, and as someone who travels frequently, he probably appreciated it but couldn't carry it with him. In 2015, Vitalik spent over three months in Shanghai on several occasions. This photography collection might have provided him with some comfort during his time in Shanghai.

We often met to discuss topics related to blockchain and Ethereum, with a focus on how Wanxiang could collaborate with Ethereum to promote the research and application of blockchain technology in China. One morning in April 2015, Vitalik came to Wanxiang Tower looking somewhat tired, clearly having not rested well the night before. Shen Bo pulled me aside and told me that the Ethereum community had held an all-night meeting, and the focus of the discussion was concerns about the cash reserves on the Ethereum Foundation's account, questioning whether there would be enough funds to support the launch of the Ethereum mainnet.

The 20-year-old Vitalik was clearly under pressure from community developers. This foundational technology infrastructure with the potential to change the world should receive strong support from all parties. My intuition told me that this might be an opportunity granted to Wanxiang and to me; if we could actively fund Ethereum's development at this critical moment, we could become participants in this milestone project and use this leverage to implement Wanxiang's blockchain strategic planning.

Thus, I proposed to Vitalik that Wanxiang Blockchain Lab would donate $500,000 to the Ethereum Foundation. If needed, we could continue to provide support in the following year to help alleviate the developers' concerns, allowing them to work wholeheartedly to ensure the timely launch of the Ethereum mainnet.

The Ethereum Foundation is a non-profit legal entity registered in Switzerland, so both parties' lawyers helped draft the donation agreement. The Ethereum Foundation accepted this donation and would later gift a specified amount of ETH to the donor from the ETH unlocked by the foundation after the mainnet launch. Given that Wanxiang Blockchain Lab was still in the registration process and to comply with foreign exchange regulations, this funding was paid by an overseas company within the Wanxiang system, but the blockchain collaboration matters were designated to be executed by the soon-to-be-established Wanxiang Blockchain Lab.

Once everything was settled, Vitalik announced to the community that the Ethereum Foundation had received a donation from an institution with a Chinese background and that this institution had committed to ongoing support for the Ethereum Foundation. Thus, the developer community's concerns about Ethereum's cash flow in the coming months were alleviated. In hindsight, these concerns were unnecessary. However, at that time, facing a global project touted as the "world's internet computer," especially one led by a 20-something tech geek, it was quite normal for people to question "how long can it last."

This event also marked the official launch of Wanxiang's strategic deployment and work process in the blockchain field. In the second half of 2015, Wanxiang Blockchain Lab was established, the first Wanxiang Blockchain Global Summit was held, Asia's first dedicated blockchain investment firm was set up (Wanxiang Company was the sole limited partner), Wanxiang Blockchain Lab launched a "Blockchain Startup Funding Program" globally, published a series of books, and held blockchain training courses in collaboration with Chinese blockchain technology experts, among other initiatives.

In mid-October 2015, the first Wanxiang Blockchain Global Summit, based on blockchain technology and aimed at promoting its adoption in China, was held in Shanghai. Wanxiang fully leveraged the resources of the Ethereum community, widely soliciting cutting-edge blockchain topics from around the world, inviting global blockchain leaders, and mobilizing domestic blockchain practitioners to participate. At Vitalik's call and invitation, many top global blockchain practitioners attended, representing the highest level of blockchain technology at that time.

The first summit lasted two days, with the first day being an open forum and the second day a closed-door discussion by invitation only. The summit's activities received strong support and widespread acclaim from the domestic industry. Eight colleagues from a domestic pioneering enterprise attended the summit, and due to space limitations in the closed-door discussion venue, these eight colleagues were not fully invited. They directly approached me, strongly requesting to participate in all six sessions of the closed-door discussions. Their enthusiasm deeply moved me.

It wasn't until early January 2016 that the first blockchain hackathon was held in Shanghai, marking the perfect conclusion of Wanxiang's first-phase action plan in the blockchain field. The first blockchain hackathon was co-hosted by Wanxiang and Deloitte, with three technical experts from the Ethereum Foundation serving as mentors and judges, and Vitalik also attended the event. Over 120 participants from around the world formed teams on-site and showcased their skills. Among the group that won first prize was a high school student who traveled from Italy at his own expense to participate in the competition.

After 48 hours of intense competition, this high school student asked us if he could join Wanxiang Blockchain Lab full-time. After some persuasion, we managed to get him on a return flight. A year later, we began to regret this decision, as he eventually initiated a blockchain startup project in Europe and took on a core technical role in this popular project. The youthful ambition is indeed remarkable! Reflecting on Vitalik's early entrepreneurial days when he was only in his twenties, one can't help but marvel: in the blockchain industry, the younger generation is particularly formidable!

In May 2016, a group of nine of us set off from Pudong Airport, first to the San Francisco Bay Area, then to New York to attend the "Consensus Conference," detouring through London before returning to Shanghai. This was a blockchain exploration trip in Europe and America planned together with Vitalik, who joined us in San Francisco. We visited many influential figures along the way, learned many new ideas, and saw many great projects.

Another purpose of this trip to Europe and America was to scout a few mysterious speakers for the second Wanxiang Blockchain Summit. We had lunch with "father of smart contracts" Nick Szabo at a restaurant in Mountain View, Silicon Valley, inviting him to attend that year's blockchain summit in Shanghai. Nick was very cautious; arranging the meeting took considerable effort, and after more than two years of invitations, he finally participated in the third Wanxiang Blockchain Global Summit in 2017.

In late September 2016, the second Wanxiang Blockchain Global Summit took place as scheduled. However, this summit had expanded into the "Blockchain International Week." The first three days of the International Week were dedicated to the second Ethereum Global Developer Conference (according to the convention of computer system development, the first developer conference was named DVECON0, and this one was DVECON2, which should be considered the third), the fourth day was for blockchain project roadshows (Demo Day), and the fifth and sixth days were for the global summit. It was due to Wanxiang's commitment to fund the Ethereum community in 2015 that the blockchain global summit expanded into an international week. At that time, in addition to the $500,000 donation, Wanxiang also promised to continue supporting Ethereum's development in 2016 as needed.

After the successful launch of the Ethereum mainnet, the Ethereum Foundation clearly no longer had an urgent need for this support. However, Wanxiang could not let this commitment turn into an "empty check." Therefore, we proposed that if this year's Ethereum Global Developer Conference were to be held in China, Wanxiang Blockchain Lab would sponsor all expenses, and any ticket and sponsorship revenue generated would belong to the Ethereum Foundation. Thus, the "Shanghai Blockchain International Week" was born.

On September 15, 2022, Ethereum's "The Merge" is about to arrive. I can almost see a blockchain protocol stack forming around Ethereum's promising future. In the 1980s, the internet was also filled with various protocols that were incompatible with each other, which were later unified into the TCP/IP protocol stack by market forces. The more foundational the protocol, the more it became a globally unified standard protocol, such as the IP protocol, TCP protocol, and HTTP protocol.

At the application layer, internet protocols began to diversify, with potentially over a hundred different protocols at the application layer. The current multi-chain phenomenon in blockchain is similar to the era when internet protocols had not yet been unified. The market's demand for seamless interconnectivity will undoubtedly drive the integration of blockchain protocol stacks.

Currently, only Ethereum is intentionally or unintentionally architecting a blockchain protocol stack, ranging from L0 (distributed communication, distributed storage, distributed computing) to L1, and then to L2, even L3… On the other hand, after "The Merge," Ethereum can also support large-scale applications in terms of performance and scalability.

According to the Ethereum Foundation, within ten years, Ethereum will be able to achieve a transaction processing capacity (TPS) of 10 million. Based on my personal observations, drawing parallels with the development process of internet protocols, I believe that in the coming years, blockchain protocols will gradually be pushed towards integration into a unified protocol stack by market forces; other public chains besides Ethereum may become Ethereum's subchains, sidechains, or shards, thus achieving an ideal interconnected blockchain world.

Now, standing at this critical moment in the development of Ethereum and even blockchain, the publication of the Chinese version of "Point to Everything: Ethereum and Future Digital Finance" by China Translation Publishing House can be said to be of great significance!