Today, we will explore the "Holographic" property of the Ethereum Virtual Machine. The EVM is described as a world computer, it doesn't have any specific physical location that holds the entire system. However, it exists as a single entity maintained by thousands of connected Ethereum clients. EVM has a state that hold all the accounts and balances and pre-defined set of rules that changes the state from block to block.

In other words, the EVM is a cohesive, coherent and (quasi) turing-complete computer. But why do we call it a world computer? How can it be compared to an hologram? Let's look at it from a bird eye view.

According to the dictionary, a hologram is a picture of a "whole" object. Every piece of it is identical to the whole. You can see the comparison. The EVM is machine where its subcomponents is a complete copy of the larger machine. In fractal manner, every smaller piece looks like the first iteration, the EVM itself.

You get the picture. Each Ethereum node has the copy state, execution layer and all the blocks. They all work together to create the "Holographic" World computer through consensus. There are two types of consensus mechanisms: 

Proof of Work (PoW), where the miners compete to create new blocks of processed transactions by solving a cryptographic puzzle and the winner will earn minted ETH. It is secure as it needs at least 51% of the nodes to change the network to the next global state.

Proof of Stake, where the validators who have staked ETH are chosen randomly to create new blocks. It is safe, consumes less energy and highly anticipated in the Ethereum community.

All these described mechanisms allows the individual machines (nodes, validators) to coordinate and project the much bigger Holographic World Computer.

Thank you for reading! It's my first piece on Vertical. I hope it helped you understand Ethereum's architecture.

If you want to dive into the EVM, I highly suggest Noxx's posts: 

Chrisv2

EVM: The Holographic World Computer

Seahorse - Onboarding Python developers on Solana

I want to take this time to explore a serious topic; Bridges, the interoperability between chains and a certain trilemma. I think this the most impactful domain within the space as we keeping seeing new ecosystems growing and onboarding users. New chains are popping off everywhere promising new innovations such as low fees, faster transaction speed, more secure, private, etc. While it's a good thing to see a diversity in blockchain solutions, the need for connecting these different chains in a secure manner is of the highest priority.

A bridge is a connection that permits the transfer of tokens and other form of data to another chain or network. Allowing you to interact with other dApps on other chains or network. You need to know that every chain has their own assets circulating in their ecosystem. For instance, if I want to buy an NFT on Polygon I will have to transfer the required token to purchase it onto the network. In the case I have to buy with WETH but if I'm on Mainnet, I'll have to bridge my WETH on there. The price of the token transferred keep the same price. 

Bridges are needed because the ERC20 tokens used are native to Mainnet, meaning you'll have to convert them in a form that can be useable to on the other network of your choice. Moreover, if you wish to use new networks that are faster & cheaper (i.e rollups, polygon, L2s, etc.) you'll need a bridge to transfer your assets. It also allows developers to reach new users by building dApps on other chains. 

, meaning it ables diverse operations and exchange of information between networks. However, this interoperability should be trust-minimized. Networks should pass messages/data in a trust-minimized manner. Networks are also called domains. Bridges are supposed to trustless, secure & decentralized. In order to make it trustless, they have to answer this question:

 Who is verifying the system, and how much does it cost to corrupt them?

 Threat models has to be adapted in order counter-attack security breach. If you decide to use a small bridge that have a small set of verifiers, your funds will not be secure. 

There's 3 options for interoperability approaches:

You can see that there's a trilemma here as bridge have certain trade-offs. You can have generalized message passing and an extensible bridge but not fully trustless. You can have a trustless and generalizable bridge but not easily extensible and so on. You can only have 2 properties and not all 3.

In another article, I'll explore further bridge security and demonstrate how 

Bridges, interoperabilty & a Trilemma

Let's think about the long term of the Ethereum Protocol. We'll dive into the infrastructure, the consensus, etc. What to expect for the future? What has to be prepared in advance to have the Ethereum we want? Ethereum will undergo several upgrades to become a more powerful system.

. The only testnet left is Ropsten which will happen in the coming weeks.  6 to 12 months after the merge, the protocol will enable withdrawals of the ETH staked and new ETH issuance on the Beacon Chain. Long-term extras are:

Here, the Proto-DankSharding will lay the ground work of the full Sharding. The EIP-4844 is a new sharding design that will introduce a new transaction type, called blob-carrying transaction. Blobs will allocate more storage (approx. 125 kb). The standard will allow change on the gas pricing to create a multidimensional fee market, avoiding load mismatch. This will also  add more space for rollups to use making them even more cheaper.

Ethereum will continue to improve to DankSharding which will add even more space by adding the Data Availability System. In the end, Ethereum will be a much more scalable system capable to process 100,000 TPS (transaction per second).

Statelessness will allow blocks verification and even be a validator without having allocating hundreds of gigabytes on your hard drive. Making Ethereum even more decentralized. This will be made possible through Verkle trees and Stateless clients.

"The key property that Verkle trees provide, however, is that they are 

 in proof size. If a tree contains a billion pieces of data, making a proof in a traditional binary Merkle tree would require about 1 kilobyte, but in a Verkle tree the proof would be 

 finally viable in practice. " -  From Vitalik Buterin's 

The Purge will cut down even more the space needed by not requiring nodes to store transaction history. It will also eliminate technical debt and add more improvements to the EVM.

The Splurge is about keep upgrading Ethereum in order to make it more powerful and a more accessible system to the average user. Possibly making it attainable and incorporated in our daily lives.

All these upgrades are not happening periodically, they're happening in parallel. The protocol is currently undergoing an important transition. It will make Ethereum highly scalable, lower fees, and faster transaction times. We're in this for the 

In Parallel - The Ethereum Roadmap

Financial instruments come in many forms. Some allow you to trade cryptocurrencies without holding any. Derivatives make this possible. But what are they? Why are they important? How can you use them yourself? We're going to take a look at its applications in Decentralized Finance (DeFi) more specifically. We'll focus on Futures and Perpetuals.

In mature financial systems, derivatives play an important role. Derivatives derive their value from an underlying asset such as; a stock, a bond, a commodity, etc. Hence, crypto derivatives derive their value from cryptocurrencies. Picture them as financial contracts between two parties (i.e user & an exchange) to speculate on the underlying cryptocurrency's price at a future time or date. Derivatives offer easy exposure to particular assets that are normally hard to access. This practice is important as it provides liquidity to the market. This, in turn, allows users to buy derivatives by hedging their portfolio by easily entering and exiting the market.

Derivatives drives the whole financial industry since the 1970s. Its total market size is valued at 1 Quadrillion dollars dwarfing any other market.

Futures are agreements between two parties to buy or sell an asset at a certain price in the future. For example, imagine we have two traders: Alice & Bob. They both decide to enter into a futures contract when the price of ETH is $1,400. Alice is bullish on ETH and believes that ETH will be over $1,400 in a week (the expiration date of the contract). Bob thinks the price will drop below $1,400. Fast forward a week from now, if Alice is right and the price of ETH is $2,000. She'll purchase the ETH from Bob at the agreed price of $1,400, making a profit of $600. If Bob is right and the price falls. Alice will still have to buy the ETH from Bob at the agreed price regardless, making Bob a profit.

These are similar to futures contracts however they do not have an expiration date. This allows investors to hold their position as long as they see fit. Also called perpetual swaps, they eliminate the need to constantly change a long or short position. To achieve that, perpetual swap use price pegs equal or almost equal to the spot price of the asset. This price anchoring system is named funding premium, it is paid by the contract sellers & buyers to help keep the price in harmony with the market. Funding premiums balance the short and long positions of perpetual swaps by either incentivizing or disincentivizing trades. For instance, exchanges use moving price markers to determine whether long or short traders need to pay the premium or receive it. If Bob buys 3 ETH/USDT perpetual depositing $6,000 as collateral ($2,000 each). When the price of ETH rise to $3,500 the following week, Bob can decide to close his position and make a $1,500 profit on each (3) perpetual swap bought. 

//The profit can be calculated this way the following way, "a" being the underlying asset.

 the number of perpetual swaps purchased 

Comes in leverage opportunities. This allows you to open a trading position that can be bigger than your trading capital. This strategy permits traders to multiply profits. For example, Alice can take advantage of a 10x leverage on the same trade as Bob. Assuming she closes her position when ETH is at first $2,000 and reaches $3,500 the following week, her position would be $60,000 (or 30 ETH/USDT) making her a profit of 

 while keeping the same collateral ($6,000). 

//Here, the profit can be calculated this way the following way, 

//"a" being the underlying asset & "l" being the leverage factor.

Beware, just as leverage amplifies profits, it also amplifies losses. There's a high risk of being liquidated meaning you could lose all your collateral. Trading perpetual swaps come with 

 and should NOT be taken lightly. To illustrate that, let's picture the two different scenarios assuming ETH price falls to $1,000:

//In this case, the exchange will automatically close the Alice's position when the loss exceeds her collateral

We can see that Bob has a loss of $3,000 and Alice lost her collateral by trading with leverage. 

This article intends to showcase the pros & cons of the types of derivatives in crypto. These trading strategies can help you grow your portfolio but also damage it. The volatility of cryptocurrencies scares many users outside of crypto, however, they should be aware that they can take profits when the price goes down as much as when it goes up using these methods. Nonetheless, you should always perform due diligence and DYOR before attempting to trade crypto derivatives.

Crypto Derivatives - What are they?

The Ethereum Merge is the fruit of tireless core developers labour. It is the most significant upgrade in the history of Ethereum. The final preparations are taking place to make the Merge as the center piece of the blockchain movement. But what is it? Will it happen seamlessly? What is at stake? We're going to try to answer these questions.

PoW & the search for a better form of consensus mechanisms

A consensus mechanism is how blockchain systems agree on whether an event happened (i.e transactions, account balances), a fault-tolerant mechanism. Currently, Ethereum uses proof-of-work, the underlying algorithm that allows decentralized Ethereum network to come to consensus and sets the difficulty rules for the work miners. In other words, miners use expensive hardware to compete to solve complicated mathematical problems to win a block reward. However, this consumes a lot of energy, over 100 TwH per year at current usage. It becomes harder to mine a block over time as the difficulty increases. The equipment is specialized and you need constant source of cheap electricity. All of which are barriers to entry and not great for decentralization.

Proof-Of-Stake, staking ETH to show good faith

Enter Proof-of-Stake. You stake 32 ETH to activate a software that verifies transactions in exchange for a transaction fee. The selection of validators is random. The probability of selection proportional to the amount of ETH staked. No discrimination on who can stake or not, purely driven by the need of decentralizing the network further more. Seems awesome, right? Yeah, but 32 ETH is a little over 50 thousands dollars at the time I'm writing this article. "That's a lot of money!" you would say. Luckily, there's solutions such as 

 if you're looking to stake with less than 32 ETH.

Pooled staking isn't ideal, but it is much closer to a web3 implementation than other centralized alternatives.

We do not talk about ETH 2.0 anymore. The core developers stop using that terminology. They now mention two layers: the 

. The Merge represents the joining of the Mainnet we use today with its new proof-of-stake consensus layer, the 

A good analogy that explains the Merge is:

Imagine Ethereum is a spaceship that isn't quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it's almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.

The Beacon Chain was created in late 2020 and has since operated as a separate blockchain to Mainnet, running in parallel. It has not been processing Mainnet transactions, it has been reaching consensus on its own state. The Beacon Chain will be the consensus engine for all network data (transactions, account balances). Picture it as a new engine of block production. The Merge will be a safe process, meaning the entire transactional history of Ethereum will be present & no loss of funds.t.

Yes, in some way. It's much easier to design a new system from scratch when you have no users, it is a far harder proposition when there are billions of dollars of value relying on the network to function properly. That's why the developers have been tirelessly testing any outcomes to make the PoS transition will run smoothly. The Beacon Chain allows users to stake ETH on the network. To date, there's 13.1m ETH valued at 19.8 billion dollars at the time writing this article. Keep in mind the Beacon Chain isn't processing Mainnet transactions, but it has a little over 410000 actiive validators.

Merging won't be easy. However, there was multiple announcements on successful run on Ethereum Testnets. There's only one last public testnet left which is the Goerli Testnet. It will be the final step before The Merge. You can see below a tweet from one of the core developers celebrating the Sepolia merge:

The timeline isn't final, but we have an idea of when The Merge will happen:

It is scheduled to happen around September 19th as you read above.

The transition to Proof-of-Stake promises to reduce energy consumption by 99.9%. Issuance and inflation will also be radically lowered as well. Supply will contract at 0.2% yearly while new ETH produced will reduce to just 0.6M per year:

Notice that the merge won't affect the burn rate meaning the cost of transaction on Mainnet. The gas fees will be equivalent to what we experience today. In any way, The Merge means a lot more than two chains becoming one. It'll make Ethereum the foundational building block for more web3 implementations and helping it reach its vision - more scalability, security, and sustainability.

"Wen merge, bro?" A quick explainer on the Ethereum merge.

How many times have you read the 3 letter word "MEV" on your timeline? You're probably curious about how it works. In any case, you're certainly interested in the topic if you reading this article. Well, you're in luck. I have been researching on them in my free time and gathered enough info to get you started.

 paper published in mid-2019, where the term 

The paper enlightened on the possible behaviours from miners that could result in profits outside of transaction fees and mining block rewards. In fact, miners could capture additional rewards by reordering transactions and earning Ordering Optimization fees. This results in Priority Gas Auctions (PGAs), what we know as "gas wars". However, the term "Miner" Extractable Value only applies in the context of proof-of-work. After the transition to proof-of-stake via The Merge, validators will be in charge. The value extraction methods will remain but the term has been adapted to 

Era of MEV, the new High-Frequency Trading.

In reality, bots are actively looking for the opportunities and competing against each other to extract any value. Users compete for MEV extraction by searching for opportunities in the mempool (memory pool), a sort of waiting room for pending transactions. These users are named MEV searchers. In general, searchers and bots operators look for: arbitrage, liquidations, front running & back running opportunities.

You can see below, close to $700m in total have been extracted on Ethereum.

Nearly $430m of which went to MEV searchers.

In the case of 2 different DEXs (Decentralized Exchanges) are offering an asset (token) at different prices, the opportunity here is to buy the asset on the lower-priced DEX and sell it on the higher-priced DEX within the same block in an atomic transaction.

Liquidation happens when the value of a borrowed asset (borrowing balance) is greater then your borrowing capacity (collateral factor). 

Frontrunning bots identify extractable profits by cutting you in line and offering higher gas price to their transaction included in the block first.

This strategy consist of having a transaction next in line right after a transaction that will benefit you but within the same block. This way, a bot can profit of an oracle price update. (i.e getting an asset at a lower price due to a liquidation that just happened).

This kind of attack is rather common. It consists of watching the mempool for large DEX trades and calculating the price impact of the large trade of 2 assets pair and execute an optimal buy order immediately before the large trade, then sell the asset after the trade at a higher price. For instance, if a user wants to 20,000 ETH on Uniswap with DAI, this will have a great impact on the ETH/DAI pair, raising the price of ETH compared to DAI substantially.

Time Bandit attacks happens when a miner sees an arbitrage opportunity in a previous block and decides to rewrite the blockchain history by reorganizing the blocks to capture that MEV opportunity. This, however, destabilizes the consensus mechanisms.

A searcher might want to have an NFT from an upcoming drop so he'll design a bot that will send a transaction to be first in line so he can get the NFT before anyone else. This results in gas-wars in most cases. I like to refer to the tweet below to illustrate this strategy. 

 MEV can be profitable in both bear and bull markets. The trading strategies are broad and relatively unexplored. Despite the recent collapse of the Terra Ecosystem, there was a spike of Gross Profit of Daily Extracted MEV on May 12, 2022 around $8.14m:

In more specific way, MEV are also good for DeFi protocols that rely on economically rational actors. DEX arbitrage allows users to get the best price for their tokens, and lending protocols rely on speedy liquidations to ensure lenders get paid back. Rational searchers seek and fix economic inefficiencies in protocols' economic incentives. Therefore, they do good in some way.

Some form of MEV opportunities affect users, like sandwich attacks which affects slippage and can make the execution of their trades difficult. Generalized frontrunners can also cause gas prices to increase significantly making the network unusable for some time because of the congestion (i.e the BAYC's Otherside NFT drop clogged up the entire network). Finally, block re-organization can result in consensus instability.

No. there's a prominent space for MEVs on Solana as well. Most of the MEV extracted on Solana goes to MEV Searchers. The cost of transactions on Solana is extremely cheap, running bots is an easy strategy to capture MEV opportunities. Check out 

 for more info. They built a dashboard to make MEV more transparent on Solana:

Follow these link to get you started in no time: