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These sorts of extreme costs are inherent to any trustless decentralized system like Ethereum. Storing and verifying contracts across tens if not hundreds of th

These sorts of extreme costs are inherent to any trustless decentralized system like Ethereum. Storing and verifying contracts across tens if not hundreds of thousands of nodes is not free.

anaganisk 5y ago
So merchants have to pay like 1000% in their transactions fees, if we are to setup a payment gateway on ethereum?
inter_netuser 5y ago
why does one need to execute the contact on thousands of nodes, when a verification proof (e.g. pinocchio) would be sufficient?
- disruptalot 5y ago
  Executing the contract takes very little compute. It's the transaction and block ordering which is the most important. For that, you need to distribute and add stake (PoW) to the blocks.
- grey-area 5y ago
  Why does a contract between two counterparties need to use a network with thousands of nodes at all? What enforcement benefit does the network provide? I'd contend it's entirely superfluous to a smart contract system, which could just offer building blocks from a trusted third party instead for constructing contracts, and that trusted third party could also notary the transaction and provide arbitration. All of these complex problems are already solved (trust, arbitration etc) and involve recourse to real legal systems whether you use some distributed contract or a traditional one. The area in business contracts which is a mess and could do with attention is standard clauses for different industries, which are well understood by everyone, diffs between contracts etc etc.
  - inter_netuser 5y ago
    That's because they are not contracts per se, smart or otherwise. They are autonomous agents that act as your counterparty.
    - grey-area 5y ago
      Wow, that sounds fancy and sounds almost like an AI counterparty when you put it that way. Did you mean counterparty (the other person in the transaction) or trusted third party (the third leg of most transactions, like lawyers who negotiate then witness a deal). My understanding was smart contracts attempt to replace the trusted third party with a trusted system. But are they autonomous and do they really have any agency outside the very limited confines of a scripted response to known situations (like if x happens send x ETH)? Are they able to send contract disputes to arbitration or courts in case of disagreement? If not that doesn't strike me as particularly useful. I do really like the concept of standard contracts though which everyone agrees to just use - could save a lot of lawyer fees on contracts for M&A for example which really should have been standard components plugged together with very little customisation but instead take 6 months of bickering and use copy-pasted contracts inherited from 100 former deals at those lawyers with all sorts of archaic language. If I were in that space I'd be trying to attack that problem and partner with a law firm to take on either very small contracts like wills or very large contracts like M&A in a given vertical.
      - inter_netuser 5y ago
        I meant as the other "person" in the transaction. I believe Japanese regulators adopted the term "person-to-machine" or "machine-to-machine" transactions in order to describe "smart contracts", as they are not contracts in the legal sense. The reason I called them "autonomous agents" because they don't really fulfill any part of a standard contract. No choice of jurisdiction, no severability clause etc. More of a judge&jury&executioner all in one. They are rather rigid and somewhat limited today, but I'd guess they are autonomous in the sense you can make them nearly unalterable once deployed. I suppose wih time we will be interacting with AI-agents at some point, there are some rather wild projects trying to do just that. It may not strike you as particularly useful, but some decentralized exchanges (uniswap, dydx) that now clear more trading volume than Coinbase, a 100 billion dollar company. This has to mean something. I have no idea if they could ever supercede legal contracts. Maybe in a 100 years.
- 123pie123 5y ago
  as a complete newbie to this, where does the code actually execute? what's the code writen in? whats stopping malicious code running?
  - hobofan 5y ago
    > where does the code actually execute? what's the code writen in? On every Ethereum node that verifies it. It's usually written in Solidity and compiled to EVM (Ethereum Virtual Machine) bytecode (so it can also be written in other higher-level languages). > whats stopping malicious code running? It's sandboxed and since it's limited to the EVM, there isn't really any "malicious" code that could break out of the EVM AFAIK. Inside the EVM it's probably more of a philosophical question whether any code can actually be considered "malicious".
    - 123pie123 5y ago
      thanks - I'll do some research on this if the code is sandboxed, then what useful things can it do?
      - 3r8Oltr0ziouVDM 5y ago
        It can modify the state of the blockchain based on the inputs.
- baby 5y ago
  It doesn’t but this is how Ethereum was designed: everybody re executes.
hirako2000 5y ago
That isn't true. Other blockchains technology that support higher throughput are providing exactly the same capabilities for a few pennies. Etherum has taken the same place bitcoin has occupied for a while for currency transaction, here for smart contract: expensive. But it has, like bitcoin, huge network effect, so demand sustains and even continues to grow.
- askmike 5y ago
  > Other blockchains technology that support higher throughput are providing exactly the same capabilities for a few pennies There are many networks that claim to do this, but we have yet to see how this is going to play out. A big question here is if these networks are in practice as resistant to attacks and decentralized as (post DAO) ETH.
  - deleted 5y ago
    [deleted]
    - deleted 5y ago
      [deleted]
prvc 5y ago
>These sorts of extreme costs are inherent to any trustless decentralized system like Ethereum. Do you have a demonstration of that proposition? I see no reason why that needs to be true at all. There's a big gap between "free" and "extreme costs".
- 6nf 5y ago
  Every contract has to be verified by every node on the network, usually many many times over. The network is huge.
  - prvc 5y ago
    >The network is huge. That is only one factor in the equation. The cost of performing a calculation is tiny, on the other hand. How you would, even conceptually, be able to arrive at some minimum dollar figure for such a thing, that is large in comparison to, say a person's average income is unclear.
- theelous3 5y ago
  As long as storage, electricity, and network costs are somewhat in the ballpark of where they are now, and interest in eth is sufficiently high, there's no way around it. You can't just put something on thousands of devices, indefinitely, for low to no cost. In fact, it _has_ to be at least more expensive that whatever the cheapest highly reliable storage provider offers. Otherwise I'm going to be using everyone's machines to host all sorts. Same with webhosting, and any other kind of hosting.
  - toomuchtodo 5y ago
    If one wanted to attack the network, and had the resources, could they scale up the network nodes they had control over to starve participants by making it too expensive to perform operations?
    - theelous3 5y ago
      nvm
baby 5y ago
That’s why I’m really curious about Algorand. I think they did two interesting things, although I haven’t really looked at it, but they: - removed execution from consensus. I believe consensus just gets the execution result from elsewhere and thus doesn’t get slowed down by execution (the bottleneck when I was working on libra/Diem) - have a random committee that verifies the execution, as opposed to everyone on the network like in Ethereum
- inter_netuser 5y ago
  so individual nodes in Algorand cannot verify the smart contract execution, they must trust the verification committee to some extent?
  - baby 5y ago
    Yeah that’s my understanding. It should ideally go so quickly that you wouldn’t be able to sync with the blockchain if you were to verify execution.
Aeolun 5y ago
Then they become kind of pointless right? Nobody would get started with this stuff if they didn’t already have a heap of ether from the initial days.
- deleted 5y ago
  [deleted]

These sorts of extreme costs are inherent to any trustless decentralized system like Ethereum. Storing and verifying contracts across tens if not hundreds of thousands of nodes is not free.

anaganisk 5y ago

So merchants have to pay like 1000% in their transactions fees, if we are to setup a payment gateway on ethereum?

inter_netuser 5y ago

why does one need to execute the contact on thousands of nodes, when a verification proof (e.g. pinocchio) would be sufficient?

disruptalot 5y ago
Executing the contract takes very little compute. It's the transaction and block ordering which is the most important. For that, you need to distribute and add stake (PoW) to the blocks.
grey-area 5y ago
Why does a contract between two counterparties need to use a network with thousands of nodes at all? What enforcement benefit does the network provide? I'd contend it's entirely superfluous to a smart contract system, which could just offer building blocks from a trusted third party instead for constructing contracts, and that trusted third party could also notary the transaction and provide arbitration. All of these complex problems are already solved (trust, arbitration etc) and involve recourse to real legal systems whether you use some distributed contract or a traditional one. The area in business contracts which is a mess and could do with attention is standard clauses for different industries, which are well understood by everyone, diffs between contracts etc etc.
- inter_netuser 5y ago
  That's because they are not contracts per se, smart or otherwise. They are autonomous agents that act as your counterparty.
  - grey-area 5y ago
    Wow, that sounds fancy and sounds almost like an AI counterparty when you put it that way. Did you mean counterparty (the other person in the transaction) or trusted third party (the third leg of most transactions, like lawyers who negotiate then witness a deal). My understanding was smart contracts attempt to replace the trusted third party with a trusted system. But are they autonomous and do they really have any agency outside the very limited confines of a scripted response to known situations (like if x happens send x ETH)? Are they able to send contract disputes to arbitration or courts in case of disagreement? If not that doesn't strike me as particularly useful. I do really like the concept of standard contracts though which everyone agrees to just use - could save a lot of lawyer fees on contracts for M&A for example which really should have been standard components plugged together with very little customisation but instead take 6 months of bickering and use copy-pasted contracts inherited from 100 former deals at those lawyers with all sorts of archaic language. If I were in that space I'd be trying to attack that problem and partner with a law firm to take on either very small contracts like wills or very large contracts like M&A in a given vertical.
    - inter_netuser 5y ago
      I meant as the other "person" in the transaction. I believe Japanese regulators adopted the term "person-to-machine" or "machine-to-machine" transactions in order to describe "smart contracts", as they are not contracts in the legal sense. The reason I called them "autonomous agents" because they don't really fulfill any part of a standard contract. No choice of jurisdiction, no severability clause etc. More of a judge&jury&executioner all in one. They are rather rigid and somewhat limited today, but I'd guess they are autonomous in the sense you can make them nearly unalterable once deployed. I suppose wih time we will be interacting with AI-agents at some point, there are some rather wild projects trying to do just that. It may not strike you as particularly useful, but some decentralized exchanges (uniswap, dydx) that now clear more trading volume than Coinbase, a 100 billion dollar company. This has to mean something. I have no idea if they could ever supercede legal contracts. Maybe in a 100 years.
123pie123 5y ago
as a complete newbie to this, where does the code actually execute? what's the code writen in? whats stopping malicious code running?
- hobofan 5y ago
  > where does the code actually execute? what's the code writen in? On every Ethereum node that verifies it. It's usually written in Solidity and compiled to EVM (Ethereum Virtual Machine) bytecode (so it can also be written in other higher-level languages). > whats stopping malicious code running? It's sandboxed and since it's limited to the EVM, there isn't really any "malicious" code that could break out of the EVM AFAIK. Inside the EVM it's probably more of a philosophical question whether any code can actually be considered "malicious".
  - 123pie123 5y ago
    thanks - I'll do some research on this if the code is sandboxed, then what useful things can it do?
    - 3r8Oltr0ziouVDM 5y ago
      It can modify the state of the blockchain based on the inputs.
baby 5y ago
It doesn’t but this is how Ethereum was designed: everybody re executes.

hirako2000 5y ago

That isn't true. Other blockchains technology that support higher throughput are providing exactly the same capabilities for a few pennies. Etherum has taken the same place bitcoin has occupied for a while for currency transaction, here for smart contract: expensive. But it has, like bitcoin, huge network effect, so demand sustains and even continues to grow.

askmike 5y ago
> Other blockchains technology that support higher throughput are providing exactly the same capabilities for a few pennies There are many networks that claim to do this, but we have yet to see how this is going to play out. A big question here is if these networks are in practice as resistant to attacks and decentralized as (post DAO) ETH.
- deleted 5y ago
  [deleted]
  - deleted 5y ago
    [deleted]

prvc 5y ago

>These sorts of extreme costs are inherent to any trustless decentralized system like Ethereum. Do you have a demonstration of that proposition? I see no reason why that needs to be true at all. There's a big gap between "free" and "extreme costs".

6nf 5y ago
Every contract has to be verified by every node on the network, usually many many times over. The network is huge.
- prvc 5y ago
  >The network is huge. That is only one factor in the equation. The cost of performing a calculation is tiny, on the other hand. How you would, even conceptually, be able to arrive at some minimum dollar figure for such a thing, that is large in comparison to, say a person's average income is unclear.
theelous3 5y ago
As long as storage, electricity, and network costs are somewhat in the ballpark of where they are now, and interest in eth is sufficiently high, there's no way around it. You can't just put something on thousands of devices, indefinitely, for low to no cost. In fact, it _has_ to be at least more expensive that whatever the cheapest highly reliable storage provider offers. Otherwise I'm going to be using everyone's machines to host all sorts. Same with webhosting, and any other kind of hosting.
- toomuchtodo 5y ago
  If one wanted to attack the network, and had the resources, could they scale up the network nodes they had control over to starve participants by making it too expensive to perform operations?
  - theelous3 5y ago
    nvm

baby 5y ago

That’s why I’m really curious about Algorand. I think they did two interesting things, although I haven’t really looked at it, but they: - removed execution from consensus. I believe consensus just gets the execution result from elsewhere and thus doesn’t get slowed down by execution (the bottleneck when I was working on libra/Diem) - have a random committee that verifies the execution, as opposed to everyone on the network like in Ethereum

inter_netuser 5y ago
so individual nodes in Algorand cannot verify the smart contract execution, they must trust the verification committee to some extent?
- baby 5y ago
  Yeah that’s my understanding. It should ideally go so quickly that you wouldn’t be able to sync with the blockchain if you were to verify execution.

Aeolun 5y ago

Then they become kind of pointless right? Nobody would get started with this stuff if they didn’t already have a heap of ether from the initial days.

deleted 5y ago
[deleted]