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ZK-rollups are ‘the endgame’ for scaling blockchains: Polygon Miden founder

Polygon Miden founder Bobbin Threadbare reveals exclusive details about Polygon’s most innovative ZK-rollup yet.
ZK-rollups are the…

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Polygon Miden founder Bobbin Threadbare reveals exclusive details about Polygon’s most innovative ZK-rollup yet.

ZK-rollups are the hottest thing in Ethereum right now, having seemingly appeared out of nowhere in late 2018 to fundamentally reshape the Eth2 plan to scale via sharding alone.

Zero-knowledge, or validity proof rollups, essentially perform the computations for many thousands of transactions away from Ethereum and then write a tiny cryptographic proof back to the blockchain that verifies those transactions were performed correctly. Its much faster and cheaper than using the base layer and has the potential for virtually unlimited scaling.

To an outsider, it looked like the technology went from 0 to 100 in a couple of years, but from the perspective of Polygon Miden founder Bobbin Threadbare, it doesnt seem fast enough.

Your internal perception is that its moving slowly, he says. People say, Were going to be doing this in a year, and it takes longer because people overestimate [how quickly it can be done].

But if you take a step back out of your own bubble, I do think that the tech is moving at an amazing pace. A lot of the things were doing now did not exist 10 years ago or even maybe like eight years ago they were just theoretical concepts.

So, its not often that you see that something goes from pure theory that is probably not practical or maybe we can do it in the long term future to OK, were doing it now, and there are now billions of dollars riding on it.

Polygon Miden at StarkWare Sessions

Magazine catches up with Threadbare at the StarkWare Sessions in Israel. Since Polygon Miden is a competing ZK-rollup solution to StarkWares tech, this is a little like interviewing the CEO of Pepsi at a Coca-Cola convention. But it turns out zero-knowledge proofs are not as cutthroat as sodas.

On the technical side, there is a lot of collaboration, Threadbare explains. If you follow Twitter, you may get an impression that people are at each others throats all the time, but you know, its Twitter more than anything.

He points out that all of the projects are building open-source technology (or plan to make it open-source). Were not building like Web2 walled gardens here, he says, adding that various projects dont necessarily perceive other rollups as their technical competitors; we learn from each other more.

Polygons crack team of co-founders including Threadbare back row, second from the right
Polygons crack team of co-founders, including Threadbare back row, second from the right. (Twitter)

Polygon is the 8th-most valuable project

Polygons MATIC became the eighth-most valuable cryptocurrency in the world thanks to its current Ethereum scaling solution, but Polygons founders knew ZK-rollups could potentially render the network obsolete and spent some of their massive war chest on a ZK tech acquisition and hiring spree.

The Polygon team’s approach is essentially to throw a lot of stuff at the wall and see what sticks. Their zkEVM project has just launched on mainnet in beta, and it enables any Ethereum Virtual Machine-compatible project to scale on its new network.

Other ZK flavors at Polygon include Zero (recursive scaling), Hermez 2.0 (an EVM-compatible solution focused on decentralization and a proof-of-efficiency consensus) and Nightfall (Optimistic Rollups meet zero-knowledge cryptography).

Threadbare, who was working for Facebook at the time, was headhunted to develop his open-source ZK technology into Miden.

This strategy made sense to me; the space is very early, he says. I mean, in all honesty, they didnt even require that I use STARKs, or SNARKs, or anything. STARKs (zero-knowledge Scalable Transparent Argument of Knowledge) and SNARKs (Succinct Non-Interactive Argument of Knowledge) are the two different types of ZK proof systems.

They were very open to whatever technology because nobody had the answer. Hopefully, now we have more of an answer than we did like a year or two years ago.

What is Polygon Miden?

Polygon Miden is essentially the Polygon version of StarkNet. It enables a bunch of transactions to be processed off the main blockchain, and then validity proof demonstrating the transactions are computed correctly, to be written back as a single transaction on Ethereum.

STARKs have some advantages over SNARKs in that less trust is required for the setup, and theyll be resistant to quantum computer attacks. However, STARKs have much, much larger validity proof sizes, which is more expensive to write back to Ethereum.

In another similarity to StarkNet, which uses the Cairo programming language and virtual machine instead of Solidity and EVM, Miden uses its own virtual machine. For both projects, this is a gamble, as it makes it more difficult for Ethereum projects to port over to the rollup. On the other hand, it means Polygon Miden can scale faster and further by enabling it to escape Ethereums constraints.

Within Polygon, we do think about How do we expand Ethereum?, and there are multiple dimensions, Threadbare says. So, scaling is one dimension but also features and other things that are not easy to do on Ethereum, such as privacy and parallel processing, would be another dimension, and this is where Miden comes in.

Magazine later asks StarkNet co-founder Eli Ben-Sasson for his assessment of his competitor, whom hes known since the first StarkWare Sessions four years earlier.

I think Miden is amazing, says Ben-Sasson. I have a lot of respect for all of those working within the framework of general validity proofs.

Having said that, and with all due respect, I do think that, as far as VMs and feature-laden compute frameworks go, I think that Cairo is better. And Ive said so to Bobbin.

Threadbare isnt a cryptographer; hes a hands-on builder and says the instant he learned about ZK-rollups, he knew it would be the answer to blockchain scaling because it removes one of technologys greatest inefficiencies requiring everyone on the network to process each transaction.

Once I learned about ZK tech, it became almost obvious that this is going to be the end game. Because in the blockchain, basically, you have the same computation that everybody has to reexecute. And this is so wasteful. When you see this technology where you only have to execute once and everybody can verify your computation exponentially faster, thats almost like an obvious thing that needs to be done.

Threadbare operates under a pseudonym but is not a shadowy anon coder
Threadbare operates under a pseudonym but is not a shadowy anon coder. (Supplied)

Run smart contracts locally with Polygon Miden

With Polygon Miden, anyone will be able to run a smart contract locally and just send the proof to the network, which enables transactions to be run in parallel, rather than sequentially. If Polygon Miden had stuck with the EVM, that would be very difficult, and that limits throughput.

With Ethereum currently processing a dozen or so transactions a second, thats not a problem, but when TPS ticks over into the thousands, it will be. You need to be able to process transactions in parallel because, in a single thread, theres only so much you can do, he says. I dont think you can go much more than a few thousand TPS without parallelizing things.

Being able to execute transactions locally means you can run arbitrarily complex computation, and it places almost no burden on the network, he explains, pointing out that running a 3D physics engine is impossible on Ethereum right now, but will become possible with Polygon Miden. The design space opens up, he says. That enables a bunch of new use cases, but it also helps with privacy if I dont have to actually reveal the computation.

Like zkSync Era and StarkNet, the plan is to launch with a centralized prover and then gradually decentralize. Eventually, all of Polygons ZK solutions will become interoperable, with MATIC remaining the key token. However, native account abstraction means users could pay with other major tokens, too.

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Who is Polgon Miden founder Bobbin Threadbare?

Threadbare (not his real name) was born in the Republic of Georgia in the dying days of the USSR in the 1980s. He moved to the United States when he was 17 to study computer science in San Diego, later attending business school at the University of Chicago. He was a consultant for five years before he launched a Web2 startup that calculated user trustworthiness and reputation scores for things like P2P transactions. He started exploring blockchain in 2018 as a way to avoid having to store a large database of user information.

Self-sovereign identity is one of the things that was very interesting to me, he says. 

And then I got very deep into the technical aspects and then came across zero-knowledge proofs. Once I understood what they can do, the identity use case wasnt all that interesting anymore. I thought there are much bigger and more interesting things you can do with them.

He stumbled across a blog about STARKs by Ethereum co-founder Vitalik Buterin, and that set him off down the rabbit hole. He actually had a code written that demonstrates a very basic proof-of-concept of how it works and that was, for me, very, very useful.

Threadbare took the code and rewrote it in another language so he could understand how it worked from the inside out. A born tinkerer, he started improving aspects to make them more general. Before long, hed built a basic general-purpose prover for STARKs and posted it on Eth Research.

Threadbares post on Eth Research back in June 2019
Threadbares post on Eth Research back in June 2019. (Eth Research)

A lot of people were interested in zero-knowledge proofs at that time, but there were not a lot of tools, especially around STARKs. And I just got lucky in the thing that I picked to learn and build on because it fascinated a bunch of people.

Even Vitalik himself basically sent me a message on Eth Research, saying, Hey, who are you? What are you doing? It was Buterin who introduced him to StarkWare, and they invited him along to the first StarkWare Sessions four years ago. 

Threadbare started creating ZK tools and libraries. He developed the AirScript and AirAssembly domain-specific languages, which in turn led him to develop the Distaff Virtual Machine in early 2020 so people could code without having to learn those new languages.

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Facebook experimented with ZK-rollups

But as the pandemic started, he took up a job as a core ZK researcher for Facebook, working on the Libra cryptocurrency project. Part of the appeal was working alongside and learning from real cryptographers, and he helped build the open-source Winterfell STARK prover and verifier.

Facebook didnt actually need one or plan to use it. I dont want to say that it was just for the hell of it, he says. The thought was it was going to be used at some point in time. But it was probably fairly clear this is not going to be used in the next two to three or maybe even five years time frame.

Ultimately, regulators did not approve of the social media giant launching a private currency, and Libra transformed into Diem and then quietly disappeared. Around the same time in 2021, Polygon co-founder Mihailo Bjelic was assembling his crack team of ZK developers and remembered the shadowy anon whod posted a bunch of useful ZK tech like Distaff on Eth Research. So, he got in touch, totally unaware Threadbare was working at Facebook.

For his part, Threadbare was totally unaware Polygon even existed but started holding regular calls every couple of weeks with Bjelic to talk about their scaling plans and sketch out a possible collaboration.

Polygon zkEVM? Nope, Polygon Miden is something else

They discussed building a ZK EVM, but Threadbare was keen to use his own virtual machine and combine STARKs with the power of recursion. Thats where you take a bunch of validity proofs, each representing a bundle of transactions, and produce one validity proof that proves all other validity proofs were done correctly. Suddenly, the fact the STARK-proof size is 50100 times bigger than a SNARK-proof size was a lot less important.

Thats one of the reasons I went the virtual machine route because if you have the VM, its much easier to have this infinite recursion because if you think about it, when you have a virtual machine that is Turing-complete, it basically it can execute any program.

You just write a program that verifies itself, and you kind of have infinite recursion at this point in time. And that was appealing to me.

This talk of infinite recursion recalls Declan Fox, product manager for rollups at ConsenSys, who told Magazine last year that ZK-rollups and recursion meant it was theoretically possible for the entire worlds financial system to run on Ethereum.

Infinite scaling is unfortunately still limited by data availability on Ethereum which refers to how much data needs to be, and can be, written back to the chain. The new rollup-focused roadmap will increase the amount of data each block can carry by 160 times. Even that probably wont be enough.

There are still limitations like nothing is infinite, he says. Assuming the blockchain and the crypto space succeeds the demand for TPS will be hundreds of thousands or maybe millions of TPS eventually, so I dont know if the base layer will always be able to provide this much data availability.

But hes very hopeful well see a huge amount of adoption within the next 10 years. 

Hopefully, if we are successful, Ethereum will be the most secure base layer, and there will be a thriving rollup ecosystem that caters to different things, and hopefully, Polygon will be a big part of that ecosystem.

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NY Fed Finds Medium, Long-Term Inflation Expectations Jump Amid Surge In Stock Market Optimism

NY Fed Finds Medium, Long-Term Inflation Expectations Jump Amid Surge In Stock Market Optimism

One month after the inflation outlook tracked…

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NY Fed Finds Medium, Long-Term Inflation Expectations Jump Amid Surge In Stock Market Optimism

One month after the inflation outlook tracked by the NY Fed Consumer Survey extended their late 2023 slide, with 3Y inflation expectations in January sliding to a record low 2.4% (from 2.6% in December), even as 1 and 5Y inflation forecasts remained flat, moments ago the NY Fed reported that in February there was a sharp rebound in longer-term inflation expectations, rising to 2.7% from 2.4% at the three-year ahead horizon, and jumping to 2.9% from 2.5% at the five-year ahead horizon, while the 1Y inflation outlook was flat for the 3rd month in a row, stuck at 3.0%. 

The increases in both the three-year ahead and five-year ahead measures were most pronounced for respondents with at most high school degrees (in other words, the "really smart folks" are expecting deflation soon). The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) decreased at all horizons, while the median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—declined at the one- and three-year ahead horizons and remained unchanged at the five-year ahead horizon.

Going down the survey, we find that the median year-ahead expected price changes increased by 0.1 percentage point to 4.3% for gas; decreased by 1.8 percentage points to 6.8% for the cost of medical care (its lowest reading since September 2020); decreased by 0.1 percentage point to 5.8% for the cost of a college education; and surprisingly decreased by 0.3 percentage point for rent to 6.1% (its lowest reading since December 2020), and remained flat for food at 4.9%.

We find the rent expectations surprising because it is happening just asking rents are rising across the country.

At the same time as consumers erroneously saw sharply lower rents, median home price growth expectations remained unchanged for the fifth consecutive month at 3.0%.

Turning to the labor market, the survey found that the average perceived likelihood of voluntary and involuntary job separations increased, while the perceived likelihood of finding a job (in the event of a job loss) declined. "The mean probability of leaving one’s job voluntarily in the next 12 months also increased, by 1.8 percentage points to 19.5%."

Mean unemployment expectations - or the mean probability that the U.S. unemployment rate will be higher one year from now - decreased by 1.1 percentage points to 36.1%, the lowest reading since February 2022. Additionally, the median one-year-ahead expected earnings growth was unchanged at 2.8%, remaining slightly below its 12-month trailing average of 2.9%.

Turning to household finance, we find the following:

  • The median expected growth in household income remained unchanged at 3.1%. The series has been moving within a narrow range of 2.9% to 3.3% since January 2023, and remains above the February 2020 pre-pandemic level of 2.7%.
  • Median household spending growth expectations increased by 0.2 percentage point to 5.2%. The increase was driven by respondents with a high school degree or less.
  • Median year-ahead expected growth in government debt increased to 9.3% from 8.9%.
  • The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.6 percentage point to 26.1%, remaining below its 12-month trailing average of 30%.
  • Perceptions about households’ current financial situations deteriorated somewhat with fewer respondents reporting being better off than a year ago. Year-ahead expectations also deteriorated marginally with a smaller share of respondents expecting to be better off and a slightly larger share of respondents expecting to be worse off a year from now.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 1.4 percentage point to 38.9%.
  • At the same time, perceptions and expectations about credit access turned less optimistic: "Perceptions of credit access compared to a year ago deteriorated with a larger share of respondents reporting tighter conditions and a smaller share reporting looser conditions compared to a year ago."

Also, a smaller percentage of consumers, 11.45% vs 12.14% in prior month, expect to not be able to make minimum debt payment over the next three months

Last, and perhaps most humorous, is the now traditional cognitive dissonance one observes with these polls, because at a time when long-term inflation expectations jumped, which clearly suggests that financial conditions will need to be tightened, the number of respondents expecting higher stock prices one year from today jumped to the highest since November 2021... which incidentally is just when the market topped out during the last cycle before suffering a painful bear market.

Tyler Durden Mon, 03/11/2024 - 12:40

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Homes listed for sale in early June sell for $7,700 more

New Zillow research suggests the spring home shopping season may see a second wave this summer if mortgage rates fall
The post Homes listed for sale in…

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  • A Zillow analysis of 2023 home sales finds homes listed in the first two weeks of June sold for 2.3% more. 
  • The best time to list a home for sale is a month later than it was in 2019, likely driven by mortgage rates.
  • The best time to list can be as early as the second half of February in San Francisco, and as late as the first half of July in New York and Philadelphia. 

Spring home sellers looking to maximize their sale price may want to wait it out and list their home for sale in the first half of June. A new Zillow® analysis of 2023 sales found that homes listed in the first two weeks of June sold for 2.3% more, a $7,700 boost on a typical U.S. home.  

The best time to list consistently had been early May in the years leading up to the pandemic. The shift to June suggests mortgage rates are strongly influencing demand on top of the usual seasonality that brings buyers to the market in the spring. This home-shopping season is poised to follow a similar pattern as that in 2023, with the potential for a second wave if the Federal Reserve lowers interest rates midyear or later. 

The 2.3% sale price premium registered last June followed the first spring in more than 15 years with mortgage rates over 6% on a 30-year fixed-rate loan. The high rates put home buyers on the back foot, and as rates continued upward through May, they were still reassessing and less likely to bid boldly. In June, however, rates pulled back a little from 6.79% to 6.67%, which likely presented an opportunity for determined buyers heading into summer. More buyers understood their market position and could afford to transact, boosting competition and sale prices.

The old logic was that sellers could earn a premium by listing in late spring, when search activity hit its peak. Now, with persistently low inventory, mortgage rate fluctuations make their own seasonality. First-time home buyers who are on the edge of qualifying for a home loan may dip in and out of the market, depending on what’s happening with rates. It is almost certain the Federal Reserve will push back any interest-rate cuts to mid-2024 at the earliest. If mortgage rates follow, that could bring another surge of buyers later this year.

Mortgage rates have been impacting affordability and sale prices since they began rising rapidly two years ago. In 2022, sellers nationwide saw the highest sale premium when they listed their home in late March, right before rates barreled past 5% and continued climbing. 

Zillow’s research finds the best time to list can vary widely by metropolitan area. In 2023, it was as early as the second half of February in San Francisco, and as late as the first half of July in New York. Thirty of the top 35 largest metro areas saw for-sale listings command the highest sale prices between May and early July last year. 

Zillow also found a wide range in the sale price premiums associated with homes listed during those peak periods. At the hottest time of the year in San Jose, homes sold for 5.5% more, a $88,000 boost on a typical home. Meanwhile, homes in San Antonio sold for 1.9% more during that same time period.  

 

Metropolitan Area Best Time to List Price Premium Dollar Boost
United States First half of June 2.3% $7,700
New York, NY First half of July 2.4% $15,500
Los Angeles, CA First half of May 4.1% $39,300
Chicago, IL First half of June 2.8% $8,800
Dallas, TX First half of June 2.5% $9,200
Houston, TX Second half of April 2.0% $6,200
Washington, DC Second half of June 2.2% $12,700
Philadelphia, PA First half of July 2.4% $8,200
Miami, FL First half of June 2.3% $12,900
Atlanta, GA Second half of June 2.3% $8,700
Boston, MA Second half of May 3.5% $23,600
Phoenix, AZ First half of June 3.2% $14,700
San Francisco, CA Second half of February 4.2% $50,300
Riverside, CA First half of May 2.7% $15,600
Detroit, MI First half of July 3.3% $7,900
Seattle, WA First half of June 4.3% $31,500
Minneapolis, MN Second half of May 3.7% $13,400
San Diego, CA Second half of April 3.1% $29,600
Tampa, FL Second half of June 2.1% $8,000
Denver, CO Second half of May 2.9% $16,900
Baltimore, MD First half of July 2.2% $8,200
St. Louis, MO First half of June 2.9% $7,000
Orlando, FL First half of June 2.2% $8,700
Charlotte, NC Second half of May 3.0% $11,000
San Antonio, TX First half of June 1.9% $5,400
Portland, OR Second half of April 2.6% $14,300
Sacramento, CA First half of June 3.2% $17,900
Pittsburgh, PA Second half of June 2.3% $4,700
Cincinnati, OH Second half of April 2.7% $7,500
Austin, TX Second half of May 2.8% $12,600
Las Vegas, NV First half of June 3.4% $14,600
Kansas City, MO Second half of May 2.5% $7,300
Columbus, OH Second half of June 3.3% $10,400
Indianapolis, IN First half of July 3.0% $8,100
Cleveland, OH First half of July  3.4% $7,400
San Jose, CA First half of June 5.5% $88,400

 

The post Homes listed for sale in early June sell for $7,700 more appeared first on Zillow Research.

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February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

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By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

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