From Vitalik to Devcon: how Shanghai came into the fold of the Ethereum story

The following is the preface, written by Dr.Xiao, Chairman and CEO of Wanxiang Blockchain, to the Chinese translation of “The Infinite Machine: How an Army of Crypto-Hackers is Building the Next Internet with Ethereum” (Chinese Version: 点对万物: 以太坊与未来数字金融). In this piece, Dr. Xiao shares his interaction with Vitalik Buterin during the early days of Ethereum, and how the city of Shanghai played a key role in the history of the world’s second largest digital asset by market cap.

Dr.Xiao, Chairman and CEO of Wanxiang Blockchain

On 15 September 2022, “the Merge” happened, which was Ethereum’s most significant milestone since the publication of its Whitepaper in 2013 and the launch of its mainnet in July 2015. The Merge meant that Ethereum’s consensus mechanism would shift from Proof-of-Work (POW) to Proof-of-Stake (POS), and it would reduce Ethereum’s energy consumption by 99%, ETH issuance by 90%, and gas fees would approach zero the implementation of Sharding and introduction of other Layer 2 protocols. While network security would remain almost the same, “The Merge” lays the groundwork for Ethereum’s transaction speed to reach 100,000 TPSin the next 3 years, and 10 million per second in the next 10 years along with high performance and extreme scalability. These will further fortify Ethereum’s position as the universal infrastructure of the Metaverse.

“The Merge” was not only an important occasion in the history of Ethereum, but also a consequential moment in the history of blockchain technology. A couple of months after “the Merge”, Ethereum will go through another upgrade called the “Shanghai Upgrade”, a name coined by the Ethereum community, to enable staking withdrawal and lower fees. This is an anecdote of how Vitalik and I met during the primitive days of Ethereum, and how the city of Shanghai came into the fold of the Ethereum story….

In December 2014, at the Sanya Finance International Forum held by Caijing magazine, I organised a sub-forum on digital currency and the speakers included former experts in the field of financial supervision, bankers and digital currency practitioners. My presentation focused on Ethereum, whose whitepaper had been published a year ago, while other keynote speakers focused on introducing Bitcoin. That should be the first time in China the topic of digital currencies including Bitcoin and Ether was brought up and discussed at a high-level forum organised by a such a well established financial media organisation. This, of course, attracted huge attention from local blockchain and digital currency practitioners.

On the day of the Sanya forum, after lunch, I received a WeChat friend request. His name was Bo Shen, and he said that he had seen my presentation online and was with Vitalik Buterin in a coffee shop at the Incheon International Airport in South Korea, waiting for their plane to take off, and asked if I’d like to be connected with Vitalik. And that was how I got in touch with the Founder of Ethereum.

Vitalik, carrying a cloth bag with a cat printed on it, came to Shanghai in April 2015. This was not his first time in China though. When we first met, I was very surprised that he was able to send messages in Chinese over WeChat and have conversations in the language, which is very impressive for a foreigner who had never formally studied Chinese. Vitalik’s Chinese proficiency level was different from other foreigners, and his written Chinese was better than his spoken Chinese. He told me his secret to learning Chinese: find any blockchain and digital currency papers that were translated into Chinese, including the Bitcoin and Ethereum whitepapers, and then study them against the original English versions. I remember when the three of us (Vitalik, Bo Shen and myself) were taking a cab in New York, Vitalik would occasionally take his mobile phone out and look at the dictionary while listening to our conversations, and then he would cross-check whether the words we had just spoken were the same as the ones he had known. In 2016, at the Shanghai Wanxiang Blockchain International Week, Vitalik’s keynote presentation would be entirely in Chinese — he wrote the speech himself.

Vitalik lived at Bo Shen’s house for more than a month in Shanghai. He’s a man of simplicity — he is never looking for luxury and material needs other than food and clothing. And the only thing that interests him are cats! When I was in Hong Kong for work, while visiting a bookstore, I found a book published by a well-known photographer that had lots of cat pictures in it. I brought the book back to Shanghai and gave it to Vitalik. The book was very heavy, so it didn’t make sense that he would actually be willing to physically carry the book around with him. In fact, during Vitalik’s three-month time in Shanghai in 2015, I’d like to think that this book brought him solace to his life in Shanghai.

Vitalik and I would often meet to talk about blockchain and Ethereum, and of course, how Wanxiang could work together with Ethereum to promote the developments and applications of blockchain technology in China. One morning in April 2015, Vitalik arrived at the Wanxiang headquarters looking slightly tired; it looked that he did not rest well the night before. Shen Bo pulled me to the side and told me that the Ethereum community had a night-long meeting the day prior, and the meeting mainly revolved around the fact someone had seen the cash reserve on the Ethereum Foundation’s account and doubted whether there would be enough funds to support the launch of the Ethereum mainnet.

20 -year-old Vitalik clearly was facing huge pressure from the community developers. This infrastructure and technology, which had the potential to change the world, really deserves strong support from all parties. So I thought to myself, if we could actively fund the development of Ethereum at this critical moment, we would not only become a major participant in this revolutionary project, but we could also leverage this opportunity to guide and implement Wanxiang’s blockchain strategic planning.

I proposed to Vitalik that we would donate US$500,000 to the Ethereum Foundation under the name “Wanxiang Blockchain Labs”. The Ethereum Foundation accepted the donation. And if necessary, to “dispel” the developers’ doubts, we would continue to fund the foundation over the next year, so that the developers could focus on their work to help the Ethereum mainnet go live as scheduled.

After the dust had settled, Vitalik wrote to the Ethereum community, announcing that the Ethereum Foundation had received a donation from an organisation, which had also pledged continued support for the Ethereum Foundation. In this way, the concerns and uncertainties within the developer community about Ethereum’s cash flow in the coming months had calmed down. In hindsight, these fears were unwarranted. But at that time, in the face of a project proclaimed by some as the “world’s Internet computer”, especially one with a 20-year-old technology geek at the helm , it was normal for one to question how long the project can survive.

The beginning of Wanxiang Blockchain and Ethereum’s partnership also kickstarted Wanxiang’s strategic deployment and development in blockchain. In the second half of 2015, Wanxiang Blockchain Labs was established, and the first Wanxiang Blockchain Global Blockchain Summit was held. Around the same time, Wanxiang Blockchain Labs launched its “Blockchain Entrepreneurship Project Funding Program” and it began to partner up with blockchain technology experts to hold blockchain training courses and seminars, amongst others.

The first Wanxiang Global Blockchain Summit was held in Shanghai in mid-October 2015, and its theme centred around advocating and popularising blockchain technology in China. To bring the Summit to life, Wanxiang worked closely with the Ethereum community to widely promote cutting-edge blockchain topics on a global scale, and invited blockchain experts around the world and mobilised local blockchain practitioners to participate in the blockchain discourse. Responding to Vitalik’s invitations, many of the world’s top blockchain practitioners were present at the Summit, which was later touted as an assemblage of the world’s most prominent and well-known blockchain technologists at the time. The first Summit was held over two days — an open forum on the first day and an invitation-only closed-door discussion on the second day. The activities during the Summit were strongly backed and widely praised by the local sectors and industries. One of such companies, which was an industry pioneer in the sector it was in, brought 8 company representatives to the Summit, but due to the space constraints of the venue, these 8 participants were not allowed into the closed-door discussion, so they came to me directly and strongly requested to participate in all 6 closed-door discussions. I was sincerely touched by their enthusiasm.

It was not until early January 2016 when we organised China’s first blockchain hackathon in in Shanghai — which marked the culmination of the first phase of Wanxiang Blockchain’s strategic development initiative in blockchain. The first blockchain hackathon was hosted by both Wanxiang Blockchain and Deloitte, and the Ethereum Foundation sent 3 technical experts as the adjudicators. Vitalik was also present. More than 120 participants from all over the world formed their own teams. One of the winners from the team who came in first place was actually a high school student who came all the way to China from Italy. After 48 hours of intense competition, that high school student asked us if Wanxiang Blockchain Labs could bring him on board in a full-time position; after hours of deliberation we eventually turned him down. A year later, we began to regret this decision, because he had recently participated in the launch of a blockchain project in Europe where he had played a key part as a member of its technology team. There’s a saying in China that describes how young people tend to have huge dreams and ambitions. To think that Vitalik was only 20 years old when he started Ethereum! I couldn’t help but ponder: the future of the blockchain industry lies in the hands of the younger generation!

In May 2016, I, along with 8 colleagues, embarked on a “blockchain expedition” in Europe and the United States — one that I had planned with Vitalik. Our first stop was the San Francisco Bay Area, where we met the Ethereum Founder, then we went to New York to participate in the Consensus conference, detoured to London, and then returned to Shanghai. During the trip, we visited a lot of big names in the industry, met some great projects and learned a lot of new concepts. Another purpose of this trip to Europe and the US was to identify potential speakers for the second Wanxiang Blockchain Summit. We had lunch with Nick Szabo, the “Father of Smart Contracts”, at a restaurant in Mountain View, Silicon Valley, and invited him to attend that year’s Blockchain Summit in Shanghai (2016). Nick is a very cautious man, as I remember that it was quite difficult to schedule that lunch meeting with him. After more than two years of invites, Nick finally agreed to attend the third Wanxiang Blockchain Global Summit in 2017.

In late September 2016, the second Wanxiang Blockchain Global Summit commenced. This time, the summit had expanded into an entire week of events, known as the “International Blockchain Week”. The first 3 days of the International Week was the second Ethereum Global Developers Conference (also named Devcon2); the 4th day was a blockchain project roadshow (“Demo Day”), and the 5th-6th days were the actual summit. As I mentioned above, in addition to the US$500,000 donation, Wanxiang Blockchain in 2015 promised to continuously support the development of Ethereum as needed. After the successful launch of the Ethereum mainnet in 2015, the Ethereum Foundation clearly had no urgent need for additional funding, but we were keen to keep our promise.. Therefore, we propose to the Foundation that if the Ethereum Developers Conference is moved to China, Wanxiang Blockchain Labs will sponsor the entire event, and any ticket revenue and sponsorship revenue generated will go to the Ethereum Foundation. Hence, that was the beginning of the annual “Shanghai International Blockchain Week”.

The Ethereum Devcon held in Shanghai 5 years ago in 2017 was also sponsored and backed by Wanxiang Blockchain LabsThe talk about Ethereum transitioning from PoW to PoS began at approximately the same time, and the community decided each key node would be named after a city where a DEVCON had been held, and that was how Ethereum’s “Shanghai upgrade” was coined.

Fast forward 2022 — Ethereum Merge happened successfully on September 15 2022. Looking ahead, I foresee a scenario where a blockchain protocol stack will converge around the Ethereum network, like what happened with the Internet in the 20th century. In the 1980s, the Internet comprised a variety of protocols that were not interconnected, but these were later merged into the TCP/IP protocol stack. The more base layer a protocol is, the more recognised it will be by people around the world as the global standard protocol, such as the IP protocol, TCP protocol and HTTP protocol. Internet protocols begin to diversify at the application layer; for example, the Internet may have more than 100 protocols at the application layer. The current multi-chain phenomenon of blockchain is similar to the era when Internet protocols had not yet been not “unified”.

Market demand for seamless interoperability will also drive the integration of the blockchain protocol stack. Among all blockchain protocols, only Ethereum has the architecture of acting as that blockchain protocol stack — whether designed intentionally or unintentionally — from the base layer (distributed communication, distributed storage, distributed computing) to layer-1s, layer-2s and even layer-3s. The Merge puts Ethereum in a strong position to be able to support large-scale applications from a performance and scalability perspective in the future. According to the Ethereum Foundation, within 10 years, transactions on the Ethereum network will be able to reach 10 million transactions per second. I predict that, in the next few years, similar to how Internet protocols came to be, blockchain protocols will also gradually be prompted and influenced by industry players to merge into a single unified protocol stack. Other public chains interconnected with Ethereum may act as side chains, or shards and partitions of the Ethereum network, as we strive to achieve an ideal world of interoperability and interconnectivity in the universe of blockchain.

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