Author: Uncommons

1. Supervision under the spotlight:BinanceThe policy landscape behind the incident

1.1 Hidden concerns behind heavy penalties

In 2023,BinanceThe fate of Binance and its founder Changpeng “CZ” Zhao seemed to have entered an inevitable vortex. The investigation that began in 2018 finally reached a major turning point in 2023.

Earlier this year, the U.S. Congress turned its attention to the world's largestcryptocurrencyexchangeElizabeth Warren and other senators' questions not only focus onBinanceThe financial transparency of Binance also involves a series of deeper compliance issues. In March, the U.S. Commodity Futures Trading Commission (CFTC) filed a major lawsuit against Zhao Changpeng and Binance on the grounds of irregular trading and market manipulation. Shortly thereafter, the U.S. Securities and Exchange Commission (SEC) followed suit and filed a lawsuit against Binance with 13 heavy charges, including unregistered securities sales and commingling of customer funds.

As the investigation deepened, senior team members of Binance.US began to leave, which seemed to indicate that a bigger storm was brewing. In the summer, Binance's application for a license in the Netherlands failed, and France also began to investigate it. Binance's image and credibility were challenged as never before.

As the fall approached, the situation became increasingly dire. Binance was forced to stop accepting new customers in the UK, and its global influence and business scope were restricted. In November, Zhao Changpeng finally had to plead guilty to crimes under US anti-money laundering laws and agreed to pay $4.3 billion in fines and forfeitures to settle a long-running investigation of Binance by the US Department of Justice and other federal agencies. He resigned as CEO and was replaced by Richard Teng.

Perhaps this legal battle has come to an end for now, but concerns are already spreading:

Who will be the next Binance?

1.2 The prison of supervision and the mirror of supervision

Hal Finney, an early Bitcoin contributor and cryptography pioneer, once said: “Bitcoin is the first time that an uncensorable financial mechanism has appeared in the world.”cryptocurrencyThe revolutionary nature of censorship resistance stands in stark contrast to the tension between compliance and free-flowing money involved in the Binance incident.

After the global financial crisis in 2008, distrust of the traditional financial system led to the birth of Bitcoin. As the first decentralized digital currency, one of the original intentions of Bitcoin was toBlockchainTechnology provides a financial system that is not controlled by a central authority. After Bitcoin, the launch of Ethereum in 2015 became a milestone in this period. Ethereum is not only a digital currency, but also acontractand decentralized applications (DApps) platform, greatly expandingBlockchain技术的应用范围。新兴的加密货币和技术，增强了整个加密领域的抗审查特性。它们为用户提供了更多选择，使得资金转移和信息交换更加难以被中央化机构控制。这一时期，加密货币开始被更广泛地用于跨境支付和避税，引起了全球金融监管机构的关注。

As cryptocurrency becomes more popular and its application expands, anti-money laundering (AML) and user identity verification (KYC) have become the focus of regulation. For example, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have begun to pay close attention to cryptocurrency.exchangeand ICO (initial coin offering) activities, ensuring that these activities comply with existing financial regulations.The legislation on cryptocurrencies has also begun to differ significantly across countries, adding uncertainty and complexity to the cryptocurrency market.

As the world's largest economy, the United States' regulatory attitude towards cryptocurrencies is considered a bellwether of global regulatory trends. In the United States, cryptocurrency regulation is managed at the federal level by various agencies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Federal Trade Commission (FTC), the Treasury Department (through the Internal Revenue Service (IRS)), the Office of the Comptroller of the Currency (OCC), and the Financial Crimes Enforcement Network (FinCEN). At the same time, the regulation of cryptocurrency sales depends on whether the transaction is considered a securities sale under state or federal regulations, or is classified as money transmission under state law, which would classify the seller as a money service business (MSB) at the federal level. In addition, the CFTC also oversees market manipulation issues for crypto assets that are classified as commodities.

In emerging markets and developing countries, such as Asia, Africa and Latin America, cryptocurrencies are seen as a catalyst for economic growth.Especially in parts of Africa and Asia, cryptocurrencies offer a means of bypassing the traditional financial system and increasing financial inclusion.AfricaMany countries are using cryptocurrencies for cross-border payments and transfers to address the problem of insufficient banking systems. At the same time, cryptocurrencies are also seen as a tool to promote economic growth and innovation.NigeriaYoung people and entrepreneurs in countries such as China and India are using cryptocurrencies to conduct international transactions and investments.VenezuelaIn countries such as the United States and Germany, cryptocurrencies are used to circumvent international sanctions and are also used by non-governmental organizations and dissidents to bypass government financial controls.

Far to the east, cryptocurrencies are seen by China as a confrontation with state regulation. China's attitude towards cryptocurrencies has always been known for its strict regulation. In 2017, the Chinese government banned initial public offerings (ICOs) of cryptocurrencies within the country and closed all cryptocurrency exchanges, citing the need to reduce financial risks and combat financial fraud. This policy move forced many cryptocurrency exchanges operating in China to move overseas, such as Binance and Huobi. At the same time, China was once one of the world's largest Bitcoin mining countries, but due to environmental and energy issues, China began to impose strict restrictions on cryptocurrency mining in 2021. This has led to a significant change in the geographical distribution of global cryptocurrency mining activities, with many miners moving to the United States, Central Asia, and Eastern Europe.

In the context of global politics and economy, the Binance incident is like a butterfly flapping its wings, and the chain reaction it has triggered in the crypto world is still unknown. In this narrative that transcends national borders and cultures, the anti-censorship nature of cryptocurrency has been placed under the global spotlight, and its every beat has caused subtle fluctuations in the political and economic waves. The anti-censorship feature is both its shield and its sword. It protects personal privacy and freedom and protects financial transactions from interference from central authorities, but it also triggers regulators to conduct financialSafetyand stability concerns.This dialectic of freedom and order, innovation and responsibility, is like a mirror, reflecting the most profound dilemmas and possibilities of the era of cryptocurrency.

2. On-chain censorship: the intersection of technology and politics

2.1 The core area of regulation and anti-censorship

Different from the regulatory policies formed by the dynamic balance of geopolitics, national economy, civil society and other aspects from various governments, "on-chain regulation" is located in a battleground, the most direct area where regulatory policies exert influence and produce effects, and the core area that open source values and technology supremacists must defend. There is no buffer zone on the chain.

What is on-chain censorship? Ethereum Uncensored with Justin DrakeIn a podcast, Justin Drake defined two different types of censorship: weak censorship and strong censorship. Weak censorship means that some blocks choose not to include the transaction after censorship, and other uncensored blocks accept it. A transaction is finally included on the chain after a delay; this delay will lead to a poor user experience. In the case of strong censorship, the transaction will never be included on the chain: the network is taken over by the majority and then every transaction is censored, which can also be called a 51% attack. If we follow Justin Drake's definition, most of the discussion in this article is about how to resist weak censorship.

In this context, the history of on-chain regulation is also a history of balance and compromise. Let’s first read some of the most direct examples of on-chain regulation: In addition to CEX, DeFi has always been one of the forefronts of regulatory pressure (“When regulators come knocking, DeFi answers the door.”). Uniswap’s response to regulatory pressure is a good reflection of DeFi’s CommunityTypical symptoms of facing regulatory pressure: July 23, 2021,Uniswap announces delisting of certain tokens, used very careful wording in the official document: the team emphasized that theseTokenIt only accounts for a small part of Uniswap's total transaction volume; the blocking behavior is consistent with the behavior taken by other DeFi interfaces; at the same time, blocking front-end interactions has no effect on the open source Uniswap interface code behind it or other entry portals (including local operation).

Despite emphasizing these three points in the blog post, Uniswap still faces challenges fromCommunityThe most-liked and most-watched response to the tweet read, “This blog post does not adequately explain why theseToken被从前端界面中删除。提到了监管，但是了解是哪种监管，对于读者和Community来说会很有帮助。许多 Synth Token似乎已经（在文章被大众看到之前）删除。”（@LefterisJP）

This response well represents the community's view on Uniswap's decision to release such a decision without fully communicating with community members holding $Uni. This is feared to be a bad precedent for dealing with SEC regulation. The crypto community has always been sensitive to regulation, and the front end is the part that is most vulnerable to regulatory pressure and compromise. In addition to Uniswap, Balancer once hid a $20 million liquidity pool; Metamask and Infura both blocked specific transactions based on Tornado Cash censorship.walletaddress.

2.2 Trust can be reviewed

“Every trust vector is a censorship vector.” Vitalik made this judgment at the censorship.wtf conference in Istanbul. His keynote speech was titled “Strengthening the Ethereum Ecosystem from Different Layers” and covered the interface layer, centralized node providers,L2Sequencer, Cross-L2 The six aspects of bridging, P2P layer, social layer, etc. describe the "censorship attacks" that the Ethereum ecosystem may suffer.

From this, we can sort out the possible threats of regulatory review that Ethereum may suffer in the order of blocks and transactions. First, we will outline the process: users andwallet交互，此时过程发生在前端；下一步是交易被暂存 Mempool，Searcher 对 Mempool 进行搜寻；此后即来到了区块产生的部分，在 PBS 框架下，Builder 将区块打包、进行排序，Proposer 在看到区块主体内容之前，接受 Builder 的出价，在签名后将交易最终上链。在这个过程中，任何一环都有可能成为被监管的对象。

2.3 Overview of Ethereum on-chain censorship

In the front-end part, which is the part that users interact with directly and is the easiest to modify and control, there have been cases such as Uniswap and Balancer mentioned above.contractThere are many solutions to this problem: front-end decentralization, or the use of aggregators such as Zapper and 1Inch; or open source front-end code (Uniswap has been open sourced); using IPFS to host front-end domain names for static content, and The Graph to host front-ends for dynamic content such as social media; and using decentralized domain name services (ENS, etc. instead of DNS).

Following the front-end problem are the problems of node service providers such as Infura. As one of the largest RPC service providers, Infura is the DApp The access point for accessing real-time data on the Ethereum chain greatly reduces the cost of developing DApps and accounts for more than half of the market share. In March 2022, Infura responded positively that due to US regulatory policies, the use of MetaMask in Iran, North Korea, Cuba, Syria, Crimea, Donetsk and Luhansk regions of Ukraine was restricted. Similar service providers, such as Pocket Network and Ankr, have already marked a clear decentralization process in their roadmaps; Infura also stated in September 2022 that it would launch a decentralized version by the end of this year (2023). Given its important position in the ecosystem and the possibility of single point failures, the potential impact of Infura being controlled or attacked is also huge. Faced with centralized RPC endpoints like Infura, one of the solutions is to build a lightweight client, that is, "build a local version of Ethereum" and send requests to those full nodes. This is a more personal sovereignty and more reflective way to bypass Infura's control.BlockchainThe non-custodial native spirit approach and the popularization of light clients are one of the things Ethereum has been promoting, which has an important impact on the degree of decentralization of the entire Ethereum.

We come to the next step: the supervision of cloud service providers during node hosting. Ethernodes.orgAccording to data from Ethereum, about 60% of the nodes on the Ethereum network are run through cloud hosting (such as Amazon). The German company Hetzner once posted in 2022 that they were "unsuitable" for Ethereum node hosting, even though nearly 15% Ethereum nodes were hosted on Hetzner at that time. Although there is no complete ban, the pressure from cloud hosting service providers is still hanging over their heads. In theory, AWS, Hetzner and Google Cloud cloud service providers can stop services at will. But it is slightly reassuring that the exit cost and migration cost of node hosting are relatively low, and they will not be locked to a specific cloud server. After Ethereum The Merge, it is easier to create your own node, such as through Raspberry Pi and Avado (Plug & Play solutions), which is not an irreversible process.

On September 15, 2022, The Merge announced that Ethereum officially moved from the POW era to the POS era, and the name of the blockchain validator changed from miners to stakers. Ideally, stakers will assume the role of neutral participants in validating blocks. As of November 18, 2023, among the 1 million staked validators of Ethereum, 55% came from 6 companies, namely Lido, Coinbase, Kraken, Biance, Bitcoin Suisse, and Staked us. Lido, as the company with the largest share, currently has a total of 29 operating nodes, but 29 seems to be a long way from the decentralization that people expect, which has aroused people's concerns about the centralization of validators.

Image source: Alon Muroch’s speech at the censorship.wft conference

In a discussion In the article about ETH2.0 validator failure, CarlBeek and adiasg proposed the concept of SSV (Secret Share Validator), which later developed into a technical solution for the current verifier centralization, DVT (DistributedValidator*Techno logy, *that is, decentralized verifier technology), the core point is to distribute the private key fragments to different verifiers, so that one node can be verified by multiple parties, thereby reducing the risk of censorship caused by excessive concentration of verifiers. Now a network based on DVT technology is the SSV network, which is becoming the Ethereum infrastructure under the POS mechanism.October 2022DVT tests were performed several times since then and on November 15, 2023Announcing that the proposal to enable the simple DVT module has been passedAnd believes that "this proposal may significantly diversify Lido node operators and drive future innovation in the Ethereum staking ecosystem."

After the front-end, node services, node hosting and other issues, the next step is to enter the Mempool, the database of pending transactions. Here we come to the deep game zone with MEV game as the core. In the process of block sorting, packaging, manufacturing, verification, etc., if a mechanism that can achieve a delicate balance is not formed, the abuse of power and excess returns by various roles will be imminent, and the benefits will eventually flow to the centralized party that has more complex algorithms and more computing power. This is what the on-chain ecosystem does not want to see. The PBS proposal (Proposer-Builder Seperation) is being proposed in this context. It aims to create a dedicated Builder role (or, to distinguish the role of Validator into two independent roles) and separate the sorting rights, bids and signatures on the chain.

Due to the technical complexity of PBS, it will still take several years for it to be applied at the protocol layer. Before PBS is fully applied, MEV-Boost (developed by Flashbots) provides a temporary and effective solution by adding additional Relays. MEV-Boost allows Validators to obtain data from transaction order flows and extract them efficiently, and submit the most profitable blocks to the Ethereum network through auctions, thereby helping those validators who do not meet the conditions of the MEV extraction algorithm. Therefore, it is often considered to create a more equal and transparent profit market and reduce the MEV variance captured by each Validator. The other side of the matter is that since the announcement of sanctions in 2022, a considerable number ofXiaobai NavigationEthereum's relay blocks have been reviewing Tornado Cash transactions according to OFAC standards, most of which come from Flashbots. However, this is not a strong review that cannot be changed, but a "weak review" that delays the time and prolongs the process, and is still likely to pass through those non-censored relays and be on the chain.

The application of PBS does not mean that all regulatory issues are solved in one fell swoop. In terms of anti-censorship, we have also seen other solutions on the roadmap. The basic idea is to limit the power of different roles in the block production process. One is to limit the power of the builder: that is, to formulate a censorship resistance list (crlists), giving the Proposer the right to publish a list of those "thought to be under censorship", and further Forward Inclusion List, by forcing the Proposal to include certain transactions to combat censorship (not forcing the Proposal to include certain transactions directly, but forcing the Builder to use these underused spaces when there is excess block space). This is also called a "Hybrid PBS".

Another restriction scheme is aimed at Proposers, namely MEV Smoothing. The purpose of MEV Smoothing is to only allow proposers to propose those blocks with the highest bids. If the proposer does not propose the most profitable blocks that have been built for them, it means that it is very likely that they do not want to make more profits, but for other reasons, most likely censorship. The "Smoothing" of MEV Smoothing is to make the MEV profits of all Proposers equal and eliminate the Proposer's censorship motivation in a completely effective market.

In addition, in the MEV game, using encrypted Mempools (encrypting the user's transaction content and sending/receiving addresses before entering the mempool, and decrypting them only when on the chain), calling for full altruism (altruistic self-building, not outsourcing block construction), etc. are also ways to fight censorship. The former solution is not yet mature, and the latter is part of the system, which is more about how the blockchain fundamentalist spirit affects anti-censorship. But Ethereum is not a pope who can develop healthily by relying on the spirit of fundamentalism. We still need to work tirelessly on the mechanism.

three,Censorship outside of Ethereum: The ubiquitous sword of Damocles

Turning our attention to cryptocurrencies other than Ethereum, what are the questions and answers about anti-censorship? Among the numerous public chains, we look atThe Bitcoin network has the longest history of censorship resistanceandSolana has been controversial in recent years.

On November 20, 2023, a Bitcoin network developer 0xB10CPublished an article titledSix OFAC-sanctioned transactions disappeared: Asian mining pools were the first to succumb to US sanctions?The article brought the topic of Bitcoin network anti-censorship to people's attention again. The blog post mentioned that F2Pool, a Bitcoin mining pool located in Asia, filtered out four transactions sanctioned by the United States. F2Pool co-founder Chun then responded on Twitter (and then deleted it) "Why are you surprised that I refuse to confirm transactions from criminals, dictators and terrorists? I have the right to refuse to confirm any transactions from Vladimir Putin and Xi Jinping, don't I? Meanwhile, Zhao Changpeng (founder of Binance) sold his soul for money. He deserves it." The words pointed to the recent Binance incident and also showed a strong sense of censorship.

F2Pool in the incident is currently the third largest Bitcoin mining pool, accounting for about 14% of Bitcoin blocks mined in the past year, ranking third, second only to Foundry USA's 30% and AntPool's 22%. Mining pools are the gathering points for collaboration in the Bitcoin network, and the proportion of the top mining pools (as shown in the previous data) and the geographical distribution of miners (as shown in the figure below) both reflect the degree of centralization of the Bitcoin network. The resource threshold required to create a mining pool is high, and the locality of the mining pool makes it difficult to migrate, so the mining pool has become a monopoly industry and a high-risk part of regulatory review.

There are currently some solutions to the centralization of mining pools. For example, miners can easily switch mining pools. If a mining pool faces regulatory and censorship pressure, miners can switch to an uncensored mining pool and continue mining without being affected.Decentralized Mining Pool ProtocolStratum launched v2 to further solve the problem of mining pool centralization, allowing miners to choose transaction sets (previously transaction sets were in the hands of mining pools) and improve decentralization.

Let’s look at Solana. From the “Ethereum killer” at the beginning of its debut to the later “downtime chain” and “reconstruction in the post-FTX era”, Solana was born in the era of the rise of new public chains, but because of the sensational FTX incident and multiple downtime incidents, people have raised concerns about Solana’s centralization and stability, and questions about whether it is censorship-resistant have followed.

Starting with the sword of Damocles hanging over all networks - validator centralization - we can get a glimpse into the current state of the Solana network. In October 2023, the Solana Foundation routinely released aValidator Health ReportThe following chart shows the number of existing validators/Satoshi coefficients/clients for Solana and some chains, among which Solana has the most validators and the highest Satoshi coefficient (one of the indicators to measure the degree of decentralization).

The potential risk for validators is that the operation of Solana verification nodes requires high-performance machines, so many private individuals will rent third-party services, resulting in third parties holding a high percentage of nodes and potentially launching attacks on the network, such as the November 2022Solana Node Blocked by Server Provider HetznerSolana’s response is to split and monitor data based on the Autonomous System Numbers (ASNs) of major data centers and publicly available data, encouraging users to transfer staked funds to other data centers to reduce the control of a single entity over the blockchain; at the same time, Solana’s validators are divided into different groups, each with a leader who is responsible for deciding the order of transactions, and all validators in the group vote to determine the validity of transactions. Each validator takes turns to serve as a leader to ensureSafetySexuality is not influenced by a single malicious actor.

Despite these measures, the proportion of Solana staking nodes in the United States increased significantly from March to September 2023, from 23.5% to 29.2%, and there is still a long way to go for decentralization.

4. Cryptographic Anarchy: Tomorrow’s Third World

4.1 Ethereum, “Origin of the United States”

Geopolitics is the elephant in the room. Since the creation of the world, cryptography has been the art of kings and has been widely used in war intelligence. Blockchain, as a product of the counter-culture hippie movement and the Internet open source movement, is a battle flag against the hegemony and monopoly of the old world. Bitcoin originated from "cypherpunk", an ideological and technological movement that originated in the late 1980s and early 1990s, which aims to use cryptography to protect privacy and personal freedom and fight against government surveillance and data collection by commercial organizations. It is not only a breakthrough in cryptography, but also a symbol of hackers and anarchists. Most of the participants remain anonymous. They are mostly technology enthusiasts who don't care about their identities, backgrounds or geographical locations. These people gather together and share a radical view of the traditional political and economic system.

However, from the development of the initial radical movement to the present, with the infiltration of talents and the advancement of compliance, blockchain has become a technology track with Ethereum ecology as the core and European and American entrepreneurs as the leading force, shaking hands with Silicon Valley capital, the past hostility is gone, and the topic revolves around technological innovation. On the one hand, the path of an industry's maturity will inevitably go through a curve from niche to mainstream. More projects have adopted the path of traditional fund financing in the primary market, and the fuel of capital has made the blockchain entrepreneurial market more prosperous. But at the same time, because VCs are mainly in regions with stronger economic strength, resources have begun to pour into projects in these regions on a large scale. On the other hand, even within the industry, there has been a polarization between the "currency circle" and the "chain circle". The Ethereum ecosystem focuses on technical issues such as capacity expansion and vigorously develops L2, ZK and other directions, attracting many technical elites with professors or doctoral backgrounds from prestigious universities, mainly living in the United States. But on the other hand, the DeFi track with more financial attributes and the token market of major copycat projects belong to the silent majority of grassroots who want to change their destiny.

"A so-called crypto elite," Vitalik Butern said in a recent interview with Magatte Wade, a well-known African activist, "is usually an American with some Chinese friends, or a Chinese with some American friends. It's rare to hear that people have African friends." This is a situation that people tend to avoid talking about, but there is a group consensus. In the era of Bitcoin and exchanges, the Chinese have an advantage by relying on their intuition about finance. In the era of Ethereum, the United States has firmly dominated the discourse of industry development with top technical talents. Blockchain, which was born to subvert the traditional paradigm, has gradually shown the Matthew effect of elites and grassroots. So far, blockchain, like all industries, has gradually followed the rules of the traditional world.

But we know that this is not a vague industry, it has clear edges and corners. The world is turbulent, and various forces are competing for the Central Plains. In this struggle, undercurrents are surging. Cryptocurrency has become a third party in the power game between countries, and it seems that it has never left the field. From the day Ethereum was born, it has been burdened with complex international relations: an elite team from North America, a founder with immigrant status, developing products in Europe, opening up markets in Asia, accepting US scrutiny, and supporting communities in Africa. We will look back to the past to look forward to the future, and unravel the core to understand Ethereum's current community strategy of "entering Asia, Africa and Latin America."

4.2 Ethereum: Why do we need Asia, Africa and Latin America?

以太坊由 Vitalik Buterin 提出。他在2013年发布了一篇白皮书，阐述了一个通用区块链的概念，这个平台不仅支持比特币那样的交易，还能运行所谓的智能contract。主要创始人 Vitalik Buterin 是成长于加拿大多伦多，并于滑铁卢大学接受教育的早慧少年。他的愿景得到了许多专业人士的支持，其中有来自英国的计算机博士 Gavin Wood、也有毕业于藤校就职于投行的 Joseph Lubin 等人。它的创始团队一共有八位成员，皆为白人男性，并且活跃的核心贡献者都来自于加拿大、美国和英国。除了 Vitalik 之外，团队多为经验丰富、已有成就的中年职业专家。可以说，以太坊在团队构成上，符合人们对第一世界精英的想象。

But Vitalik is not a child born and raised in Canada with a vision limited to developed countries. He was born in Kolomna, Russia in 1994. His parents are computer scientists of Russian and Ukrainian background. When he was six years old, his family immigrated to Toronto. On him, the immigrant status left a deep mark. Vitalik showed his talent for mathematics at a very young age, but unlike other geeks who are intoxicated by technology itself, his life experience has given him a sensitivity to political economy. This is why, after exploring many programming fields, Vitalik fell in love with Bitcoin in high school and chose it as his lifelong career: "I discovered Bitcoin halfway through high school. What fascinated me about it is that it combines all my interests: mathematics, cryptography, computer science, open source movement and political economy." After growing up and becoming a thought leader, Vitalik is not shy about making his political remarks, and has been using his personal influence to work hard to speak for vulnerable countries. After Russia invaded Ukraine in 2022, Vitalik publicly condemned Russia's aggression, actively supported Ukraine, and donated cryptocurrency to support the country's projects. On the first day of the hack, he tweeted, "Ethereum is neutral, but I am not," and called the Russian attack a crime against Ukraine and the Russian people. RT editor-in-chief Margarita Simonyan declared that those who are ashamed of Russia's actions against Ukraine are not Russians at all ("If you are now ashamed of Russia's actions, don't worry, you are not Russian."), and he said "Fuck you" (" ") in response to Simonyan's tweet. Vitalik has also supported several projects to help Ukraine through "crypto charity", including UkraineDAOHis father, Dmitry, who was born in the Soviet era, publicly condemned Russian atrocities and was also a member of UkraineDAO As one of the signatories of the Ethereum blockchain, Vitalik participated in the multi-signature encrypted safe. As the soul of Ethereum, Vitalik has fully integrated his belief in decentralization and anti-totalitarianism into the technical architecture of Ethereum.

During the start-up period of Ethereum, they started the life of digital nomads. At that time, Vitalik insisted that Ethereum should be a non-profit organization without hierarchy and commerciality. They compared the tax policies of various countries, and finally registered Ethereum as a legal entity of an NGO in Switzerland, and rented a cabin base nicknamed "spaceship" there. A group of people lived together and worked day and night to develop the public chain of Ethereum. The core products and founding team were determined at the spaceship base. After that, the C++ language technology team headed by Gavin Wood worked in Berlin, Germany, and the Go language technology team headed by Jeff Wilcke worked in Amsterdam, the Netherlands. The development of Ethereum was still mainly based in Europe. It was also born in the Berlin office that Ethereum held its first DevCon (developer conference), and since then it has started its community summit all over the world. After the success of Ethereum crowdfunding and the completion of core development, Vitalik led the team to develop international communities around the world. At that time, it was the peak of blockchain development in Asia. Markets such as China, Singapore, South Korea, and Japan were thriving and became the key battlefield of Ethereum. Vitalik has also experienced personal growth and is no longer opposed to commercialization. In October 2016, Vitalik registered a for-profit legal entity in Singapore, announcing a new stage for Ethereum. Looking back at its past, it is not difficult to see that Ethereum grew in Eurasia and never chose to base itself in the United States.

An important hurdle that Ethereum needed to overcome in its early days was the US SEC. When they were preparing for crowdfunding, the SEC had just convicted Bitcoin entrepreneur Erik Voorhees of selling illegal securities, which undoubtedly sounded the alarm for the Ethereum team. Their lawyers in Switzerland used the decentralized nature of crowdfunding to secure a non-securities position for Ethereum, but the US SEC was clearly a more formidable opponent. At the critical moment, legal counsel Steven Neraoff came up with a quick idea and argued that Ethereum was actually a product rather than a security on the grounds that users needed to pay for computing power (Gas Fee). This battle was a great success, and Vitalik excitedly stated in his blog post: "We didn't give up the US market in the end, that's great!" However, what's interesting is that many years later, Neraoff, the lawyer who helped Ethereum enter the US legally, stood up and used recorded evidence to accuse Ethereum of secretly communicating with the SEC to circumvent compliance, and things became confusing again. Although Ethereum is registered in Europe and Asia and is active around the world, it is not an American company in essence. However, due to the United States' notorious tradition of "long-arm jurisdiction", that is, if its business activities involve American users, the government has the power to exercise international sanctions, so the US audit transcends borders and is everywhere.After FTX and Binance, people are increasingly aware that the long-arm jurisdiction of this "world police" is threatening the foundation of this industry. US regulation is the "Sword of Damocles" hanging over Ethereum.We can conclude that any blockchain company will be at risk of being captured by the US government, which means the founders will be imprisoned, data and capital will be confiscated, and the decentralized blockchain will become a US-owned alliance chain. Combined with Ethereum's origin, it is not difficult to see that it will have North American thinking, and at the same time it will most follow the fundamentalist belief of anti-hegemony. In other words, it can understand the US strategy, so it always maintains awareness and vigilance against censorship.

Therefore, Ethereum needs Asia, Africa and Latin America. Not only does its product need to be implemented, but it also needs to keep a certain distance from the United States in geopolitics. A natural internationalist should not be captured by a single country. Among many blockchain projects, Ethereum has achieved a high degree of decentralization of verification nodes at the technical level at the expense of some performance. Not only that, it has also been committed to building a global Ethereum community in the early stages of its entrepreneurship. On its official website, you can see a line of bold words in the community event column: "Every month, there are major Ethereum events around the world." Vitalik once applied for a gap year to travel around the world and visit Bitcoin communities around the world when he was studying. He also precipitated this experience into Ethereum's unique global community and the "sun never sets" monthly summit, which triggered the imitation of many subsequent projects.

4.3 Asia, Africa and Latin America: Why do we need Ethereum?

As a technology ecosystem, Ethereum remains neutral in political statements, but Vitalik's own opinions are more distinct. Since he founded Ethereum, he has not stopped in any city, drifting between countries like a migratory bird. In an interview with CNBC in September this year, he revealed a further caution about geopolitics: "Three years ago, there were many countries I was very happy to visit, but now I am more worried about these places. Even the countries that the mainstream believes are still relatively normal - I am more worried about these places." With his personal growth and the development of the industry, Vitalik's political sense has quietly become more acute.

For example, the Zuzalu co-living experiment initiated by Vitalik this year is located in Montenegro, a young country that has just separated from Yugoslavia and has been independent for only a decade. Due to the instability of the new regime and the weak position of not having currency sovereignty (Montenegro belongs to the eurozone but not the EU), Montenegro began to seek more radical political and economic bargaining chips. Local politicians contacted Vitalik through their connections and quickly offered him citizenship to show their sincerity, brewing a deeper policy exploration in the field of encryption. Vitalik also gave back to Montenegro with actions, and held this experiment where two hundred people were invited to live together for two months. However, from the "Do you know Montenegro" session at the opening ceremony, it can be concluded through the show of hands on the spot that most practitioners had never heard of this country before participating in Zuzalu. This did not prevent Vitalik from enthusiastically supporting local encryption education, and even organized a group of people to visit universities in the capital to patiently explain the cryptocurrency industry to students.

Also in Zuzalu, Vitalik showed his warm support for the African community. Not only did he personally invite many leaders of the African community, he also took the initiative to try to solve the visa problem for Africans to leave the country (which failed due to excessive complexity and became V's biggest concern in the process of organizing Zuzalu). In fact, as early as 2020, Vitalik had publicly expressed his concern about visa issues, and once said on Twitter: "Global inequality in travel convenience is still very serious. I look forward to the day when Africans, Asians, and everyone else can travel around the world as easily as we in developed countries." In February of this year, he also made a high-profile appearance in many African countries, supporting crypto community projects such as Afropolitan and Borderless Africa that aim to build consensus in Africa.

Taking Montenegro and Africa as examples, we can further analyze why Asia, Africa and Latin America also need Ethereum. In the Montenegro scenario, it represents a country that is in a weak position in the political landscape and wants to use cryptocurrency as a bargaining chip to play games with other countries. Similar countries include Latin American countries that have experienced severe local currency inflation under the hegemony of the US dollar, such as Venezuela, which has set Bitcoin as its national currency, and Honduras, which has opened up a special economic zone that supports cryptocurrency. There are also countries that have been struggling after the bubble crisis and missed the web2.0 Internet, so they want toweb3.0 Japan, which has overtaken the world in the crypto era. According to Reuters, Argentina's inflation rate has reached 124% this year. In its fierce election this year, Javier Milei, who positioned himself as an anarcho-capitalist, became president. Grayscale issued a statement saying that Milei's government will pave the way for the development of Bitcoin in Argentina, and strongly praised the future of cryptocurrency in this major South American country. In this type of country, it is politicians who want to promote the crypto industry to take root in the local area, and they want to bet on a future possibility.

But Africa represents another scenario. In the impoverished southern scorched earth, there is government incompetence and police brutality left over from colonial history, and corruption is a common problem. People's income sources largely depend on their African families in the diaspora, and the huge exchange rate difference makes remittances a rich material guarantee. However, the backward financial system and the government agencies that are lining their pockets have forced Africans to give priority to decentralized payment methods, and cryptocurrency has become their ideal solution. Therefore, in terms of market penetration, African countries rank high. For example, in Statistia's 2019-2023 data, Nigeria has maintained the first place for many consecutive years. The reasons behind this are also mixed with the highly depreciated local currency and the high proportion of young people in the population (53.7% of Nigerians are between 15 and 65 years old). Due to concerns about capital outflows, the Central Bank of Nigeria issued a ban on cryptocurrencies in February 2021. And in order to solve the problem of currency withdrawal, it is actively launching its local digital currency to solve the urgent problem. These actions have aroused people's dissatisfaction, and large-scale protests and riots have broken out many times across the country. Even if the government has banned the circulation of cryptocurrencies, it still cannot prevent people from using them widely. In this type of country, it is the people who want to promote the crypto industry to take root in the local area. They desire a decentralized currency out of real survival needs.

5. Encrypted Black Eyes: The East is Bright

In the blockchain field, compliance and anti-censorship are two important and challenging issues. Gavin Wood, co-founder of Ethereum and founder of Polkadot, once said that "blockchain technology offers great potential in decentralization and transparency."

Anti-censorship and decentralization are a basic consensus and are ranked first in importance. It ensures that all transactions are open and transparent, and no one can modify or delete transaction records. This transparency allows people in it to form an irreplaceable "SafetyIn 2014, Google published a white paper called “BeyondCorp: A New Approach to Enterprise Security”, which describes in detail how they restructured their network based on the “Zero Trust” model.Safety架构和保护用户数据——零信任原则强调不应默认信任任何内部或外部的系统，而应始终验证其身份和权限。此项目不仅提升了网络安全的透明度，也赋予了用户更大的数据控制权。

Openness, transparency, and non-monopolistic authority are extremely important in modern business.

With CZ’s recent resignation and Binance’s change of ownership, it is hard to say that blockchain can still make users feel “at ease” in the United States - when a state machine swings its arms, the solid barrier that once seemed to protect everyone equally can easily be cracked.

We also found that Ethereum’s community strength in Asia, Africa and Latin America and its unique position in China seem to have become the starting point for the development of new possibilities.

In Asia, Africa and Latin America, the international power game is complex and changeable. Whether it is developing countries or underdeveloped regions, there are multiple interests entangled and intertwined, such as the interests of politicians, national economic interests, people's interests, etc. Former South African President Nelson Mandela has emphasized the importance of education throughout his life. His famous saying "Education is the most powerful weapon to change the world" is widely circulated. Blockchain technology, which brings about changes in technological philosophy and social thinking, is also a form of education. From affecting individual individuals to gradually affecting the entire community, it is very likely to accelerate and even change the political and economic landscape of these regions in such a complex environment.

In China, although the government is cautious about Web3, it has a huge Internet user base, strong technical strength, and policy support from Hong Kong and other places, which provides great imagination for the development of Web3 with oriental characteristics.

In the seemingly boundless policy spider web, Asia, Africa and Latin America are less touched areas; the global digital economy is shining like stars under the night sky of macroeconomics, and Asia, Africa and Latin America are dark stars with enough heat to burn; in the high-speed flow of information, Asia, Africa and Latin America have just stepped out of the path that is beginning to take shape.

The road may not be bright, but the path may lead to secluded places. The new flame needs to find a new field for itself. Time continues, and the "black eyes" of the crypto natives are always looking for the first bright and transparent dawn. Will the next dawn be lit in the east?

The article comes from the Internet:The Eastern Solution to the Crypto Regulatory Puzzle: Binance, Geo-Compliance, and the World of Tomorrow

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