Interview with EthStorage Founder How to Scale Ethereum’s Storage Performance through Layer 2 Expansion?

Interview with EthStorage Founder on Scaling Ethereum's Storage Performance through Layer 2 Expansion

Host: Blair Zhu, Mint Ventures

Guest: Qi Zhou, Founder of EthStorage

Interview Date: July 21, 2023

Interview English Original Link: WEB3 Founders Real Talk with EthStorage Recap

Interview Video: WEB3 Founders Real Talk with EthStorage

Interview Audio: WEB3 Founders Real Talk with EthStorage

Blair: Hello everyone, welcome back to Web3 Founders Real Talk. Today we have a special guest, Dr. Qi Zhou, the founder of EthStorage and the winner of the first prize at the 2023 EDCON Super Demo. Welcome to the show.

Qi Zhou: Hello everyone, I’m thrilled to be here to introduce EthStorage.

Introduction to EthStorage

Blair: Dr. Zhou, could you give us a brief introduction about yourself and your project?

Qi Zhou: Sure. My name is Qi Zhou, and I’m the founder of EthStorage and the Web3 Access Protocol. I joined the crypto field full-time in 2018. Before that, I worked as a software engineer at Facebook, Google, and EMC Dell, and I also obtained a Ph.D. degree from the Georgia Institute of Technology. My previous work was mainly focused on infrastructure. So when I entered the Web3 field, I found that there was a lot of room for improvement in Web3 infrastructure. That’s why I spent a lot of time on Ethereum infrastructure, especially on data availability, sharding technology, and Layer2 technology. EthStorage is possibly the first provider of a Storage Roll Up upgrade solution for Ethereum, so we can meet the storage needs, especially for high-value data on Ethereum. It is built on top of Ethereum’s data availability technology, especially EIP4844. This is a significant improvement for Ethereum in the upcoming Cancun upgrade. I’m excited to share more about EthStorage and what we are building here, and how we can enable new applications on Ethereum.

Blair: Thank you for sharing. The first question is, what factors prompted your team to prioritize the development of EthStorage? Because you mentioned that your goal is to establish a Storage Roll Up upgrade solution on the Ethereum platform, and we would like to know why you chose to build this project first.

Qi Zhou: That’s a great question. The motivation to build EthStorage started about two years ago when there was a craze for NFTs like BAYC, Azuki, and Doodle Punks. At that time, our team conducted some research on all these projects. We were very surprised to see that each of these NFT images could be sold for over 10 Ethereum, which is now over $10,000. But the images themselves were stored on third-party platforms and centralized servers like Filecoin and Arweave, which means these images could disappear at any time. This made us think that as Ethereum is the core of Web3 infrastructure, we need some infrastructure to help it store these data more securely, without worrying that they will disappear one day. So users can not only own those corresponding NFTs with IDs like ERC721 but also have the corresponding images. All this raw data belongs to the users. That’s the initial idea of EthStorage. We have found a solution to this problem. We learned that Ethereum is developing towards some fundamental proof upgrades to fundamentally solve this problem with data availability. So we are excited to be part of Ethereum’s development. We have received two grants from the Ethereum Foundation to support this work and won the first prize at EDCON Super Demo.

Challenges Faced by EthStorage

Blair: Yes, that’s impressive. You have identified pain points, which are the risks of centralized storage. So you propose to build decentralized storage and make some changes. You mentioned that you have been committed to building infrastructure, so the next question is about builders. In such a dynamic industry, as a builder, how do you cope with fluctuations in the environment? For example, have you faced any form of resistance or opposition when building projects? What strategies have you adopted to ensure stability and guarantee the development of the project? I think this is a continuous challenge for everyone.

Qi Zhou: Of course. Take NFTs two years ago as an example. It was super hot back then. We also witnessed some incidents, such as the crash of FTX exchange and Terra. So the whole Web3 frenzy is changing, like NFTs becoming much cooler than a year or two ago. People are asking what we can build on top of Web3, what the future will be like, and what new applications will emerge. I think we are working from a more strategic and long-term perspective. We are thinking about what we should do, or what this industry should do in the next 5 or 10 years. For example, we can imagine a world of computers, and sometimes I joke that the computing power before or now is more like a world of calculators because the computing power is too low. Once we solve all these infrastructure issues, whether it is in storage or TPS computing power, we will be able to execute most of the current Web2 applications on Web3 while bringing the value of Web3 to all Internet users, just like what the Internet brought to users before the Internet and mobile phones. Now, most people can easily enter Web3 and enjoy all the benefits provided by the Internet. So, this is our long-term vision. We firmly believe that this should happen, and we also believe that our technical capabilities can contribute to this blueprint. In addition, we also need to determine our own professional skills because judgment is very dynamic, with many new technologies and new ideas emerging, and we must find differentiation beyond technical expertise. I used to be an infrastructure engineer and have worked for over ten years, understanding all the solutions and understanding this field. With the accumulated knowledge in this field, we are confident that we can solve this problem within a few years. So, from a broader perspective, we first convinced ourselves to stay in this industry and make it better through our contributions.

Competitive Advantages of EthStorage

Blair: You are a group of people with firm beliefs in this industry and have a common mission, which is why you will not be led by trends. I do think that as an entrepreneur, you need to be able to identify trends and know which trends will actually benefit your project. This is very complex, and I am glad to see that you are doing so well. We mentioned some names at the beginning, and they are also working in the field of decentralized storage. We want to know if your project has specific advantages or unique differences that differentiate it from other storage solutions like Filecoin and Arweave.

Qi Zhou: First of all, we don’t want to say like we want to kill all projects like Filecoin or Arweave as we treat competitors. What we want is to add more value to the existing decentralized storage market. From the perspective of system design and architecture, Filecoin and Arweave are more suitable for static, sometimes referred to as cold storage. A large amount of data can be uploaded to decentralized storage, but they are not frequently modified or deleted because Arweave does not allow data deletion. EthStorage is doing a different market category, and we believe that it is becoming more and more important, which is modifiable and high-value hot storage data. Users use smart contract logic, so we can use smart contracts to program the big data, enabling many new applications that Filecoin or Arweave are not good at. This is a major prosperous and unique feature provided by EthStorage. The second point is that EthStorage, as the name implies, is highly integrated with Ethereum. Users can directly use existing wallets, so they can interact with all applications built on storage, whether it is NFTs, decentralized social networks, or decentralized games. We hope to minimize the barriers for users to enter and enjoy EthStorage. They only need to use Ethereum to pay for storage fees, transaction fees, and wallet fees. From the perspective of developers, they only need to be familiar with the Ethereum development stack, including smart contracts, Solidity, Truffle, Waffle, all of these libraries and tools, so they can build applications on EthStorage. These two major differences motivate us to establish EthStorage and fill the huge gap we believe exists in the decentralized industry, so that we can build more good applications on this basis.

How Does EthStorage Lower the Storage Barrier?

Blair: It sounds like you are trying to lower the entry barriers for users and developers. Can you explain in detail? For example, the permissionless feature of storing Layer2 networks, how does it turn individuals with very small storage needs like us into storage providers?

Qi Zhou: That’s a good question. In fact, now not only for storage providers, but also for many Layer1 projects, people are asking a lot of questions about permissionless. Especially for the stakers of the Ethereum Beacon Chain, you must own at least 32 Ethereum. As far as I know, to become a storage provider in Filecoin and Arweave, it typically requires a very powerful machine with advanced GPUs and a large amount of storage space. This is something that I think should be done and can be done better. From the beginning, we designed EthStorage to allow ordinary personal computers, such as my laptop or the desktop computer at my home, to become nodes, and as long as they have the minimum storage capacity, such as four terabytes, they can become storage providers and provide services for the corresponding data, charging users for the storage smart contract fees they pay to us. Based on this, we believe that it can encourage more users or storage providers to provide better resistance to censorship in most decentralized environments. Take the Library of Alexandria, for example, it was destroyed because it was a single point of failure. But now it’s like having a more powerful, distributed, and globally distributed Library of Alexandria, that’s why we are so excited to build this solution.

EthStorage: Achieving High Storage Capacity at Low Cost

Blair: Based on your perspective, I personally have a question. I did see the product you offer, and one thing really amazed me. We can see that through EthStorage, we can achieve very high storage capacity goals while significantly reducing storage costs to one thousandth. I am curious, are there any trade-offs or limitations involved? Because in the world of encryption, there may not be a win-win situation. How did you address this?

Qi Zhou: This must go hand in hand with improvements in the underlying technology. The most important improvement is built on the data availability layer of Ethereum. We all know that data availability is now a very hot topic. So Ethereum is working on scaling, as well as some other ideas. I would say this could be the next major Layer1 protocol feature, gradually supported by all Layer1 solutions. Thanks to these technologies, we are able to significantly reduce the cost of data upload. Basically, we need to upload data to the decentralized network in a way that is open, which means that no one can stop me from uploading data, even a central government. So this is a very important breakthrough. The current goal of Ethereum is to improve this performance by 10 times or even 100 times, which will bring significant value and reduce the cost for users to store data, images, front-ends, or tweets on the Ethereum network. This is not something we built, we received funding from the Ethereum Foundation to help them achieve this goal as soon as possible. Everyone wants to know how to use it. For example, we are releasing libraries to support EIP4844. This is a technological advancement that allows us to achieve significant cost reductions in storing data on Ethereum.

Interaction between EthStorage and EVM

Blair: This is what we just talked about. We need to identify what things may really benefit the project, just as we utilize this amazing technology. It doesn’t matter who brings it, what matters is how to apply this technology to the product. So this is really great. In the first question, you mentioned that EthStorage has done a lot of integration with Ethereum because it is built on Ethereum and aims to be more compatible with the Ethereum stack. In addition, you have also integrated with EVM. I think this is something we haven’t seen in many areas. How does EthStorage seamlessly interact with EVM? Furthermore, what impact does this integration have on the overall functionality and performance of your project?

Qi Zhou: Interacting with EVM requires the corresponding protocol upgrade, but that is still within Ethereum DA. For example, the main feature that first implemented it is called EIP844. From a more technical perspective, it introduces new features to Ethereum that allow EVM to access data hashes. Although the corresponding data is not available in EVM, it is available on Ethereum. So it extracts the corresponding data so that the data hash can be provided to EVM. No one can fake the data hash. Everyone processes transactions with hashes in smart contracts, and we know that the data of smart contracts is available somewhere on the network, providing security guarantees. This is a major upgrade. Although I know many people may be confused by the technical details, it expands the data that can be uploaded to Ethereum. So we no longer tell everyone what the data is, because that is slow, like rumors, like broadcasting all this information I have. I only spread a very short summary, telling everyone that the data is available to everyone. Then I tell them, if you really need this data, go to the validators responsible for this data. It’s like now we have different departments, such as the Ministry of Finance and the Ministry of Justice. If you need data, go to these departments, and they guarantee to provide the corresponding data to everyone. So now we are building a hierarchical structure to distribute data, rather than broadcasting a large amount of data to everyone. This is how we improve efficiency, just like how our human organizations work. For example, when we have a small tribe, people discuss with each other. Now we have more things, such as cities, countries, so we need to do more to separate these different roles. This is what we call data sharding. Sharding is like dividing these roles and data into different storages or different validators. This is how Ethereum solves this problem. It is also how humans solve scalability problems.

Possible Applications of EthStorage on L1 and L2

Blair: There’s a lot of information to digest here. I have to admit, I’m not a technical person. But from your fantastic explanation, I understand that we can now have more direct interactions with smart contracts. This will definitely lower the barriers for users and developers, and also reduce costs. Thank you for presenting these three main features. I think today’s audience will have a better understanding of your project. Let’s talk about the future and vision. We all know that in the past bull market cycle, the collaboration between Arweave and Solana had a significant impact. So, do you have any plans to collaborate with other Layer1s, other chains, or other ecosystems? Given what we’ve witnessed before, we’re curious if you will do something similar.

Qi Zhou: Yes, we are open to collaborating with all Layer1s. This depends on the data availability technology on Layer1. Unfortunately, most Layer1s do not have such functionality, either it’s on their roadmap or still in the planning phase. This makes our collaboration a bit challenging. But first, EthStorage is a modular storage layer, which means as long as there’s an EVM and a data availability mechanism to reduce storage costs, you can run it on any blockchain, even on Layer2. You know, Layer2s like Optimism and Arbitrum are running very well, and smaller Layer2s are emerging. EthStorage can also run on these Layer2s and further reduce storage costs. So these are some of our directions now, besides deploying and upgrading with the corresponding EIP4844 on their Layer1, which we are actively working on to enable more applications to run at lower storage costs. For example, we are currently preparing for fraud proofs on Optimism. Many people complain about Optimism because they don’t have fraud proofs now. So we are considering how to implement fraud proofs on Optimism using our technology. We have also enabled the corresponding data availability layer on Optimism, and this fraud proof is optimized using the ZK technology we built with EthStorage. There are many exciting things to solve at the infrastructure level. We truly believe that with the current computing scalability of Ethereum and the storage capacity provided by EthStorage, we can build many applications on the blockchain or do things that were previously impossible, such as decentralized email, decentralized Mirror, decentralized media, and decentralized Twitter, with all data stored on Ethereum and EthStorage. There are many exciting things because these technology roadmaps have become possible. So, we are now more focused on Layer1, Layer2, and the Ethereum architecture.

Challenges and Potential of Decentralized Storage

Blair: It’s really impressive, especially since Thread has just been released and everyone is discussing how to decentralize the entire social media. People are starting to see the beauty of decentralized storage. I think it’s inevitable, and we will eventually see this trend. My next question is, we all know that this new technology of decentralized storage offers many benefits and advantages, but it also has its own challenges and limitations. What do you think are the main challenges and limitations that decentralized storage commonly faces? Not just for your project, but for the entire field.

Qi Zhou: From a macro perspective, for projects like Filecoin, Arweave, and all those well-known projects, a major challenge is that the user base is still very small, let alone comparing it with Ethereum in terms of Web2. On Filecoin, I know many people complain that there is a lot of meaningless data persistently staying on Filecoin because Filecoin has issued a large number of tokens to reward storage providers, regardless of what they store. This means that many people just create garbage data, claim that they are storing data, and then charge storage fees. However, token inflation is not an organic way for the ecosystem to develop, as it dilutes the value of existing token holders. We need more organic external users who are willing to use tokens to pay for gas fees or storage fees and consume them. So I think this is a very significant problem, not only for Filecoin and Arweave but also for many other Layer1 projects. Once they issue their tokens to maintain the network, I don’t want to list names, but I know some well-known projects are suffering from this problem, how to ensure that tokens have enough organic utility value to attract a large number of users. That’s why we do it differently. Many people say that since you have very good technology and are very professional in understanding DA storage and smart contracts, why don’t you build a single Layer1 that meets all orders, combining the characteristics of Ethstorage and many other features that people are building, such as ZK-snark. The answer is that it would be very difficult to launch this type of Layer2 with a new token at this stage, especially to attract users to organically run the network. That’s the power of Ethereum Layer2. In the head of Ethereum Layer2, such as Optimism and Arbitrum, when they launch the network, they don’t need tokens, they just need to first demonstrate their value. Once the value is well established, then correspondingly, whether it is governance tokens or other types of tokens, they can create value for them and be able to better receive feedback from the ecosystem. And all of this is just choice management like DAO. So I think this is a better way to operate storage projects, especially I believe that this may not only be the biggest challenge for storage projects but also for Layer1 projects.

Blair: Thank you for sharing all the challenges we are facing now, I completely agree with your point of view. I also want to share my opinion here. I think it can all be attributed to market demand, because now people can only see that this is a new industry, seeing the issuance of these tokens and the crowd, and this industry is full of speculation. I think this may be the underlying reason. Let’s talk about some positive things. What do you think is driving the demand for decentralized storage? What could be potential driving factors or catalysts that can truly drive the future growth of decentralized storage? Considering that the main catalysts for DeFi are mining and Uniswap V2, and we also know how many limitations or restrictions there are in traditional finance, that’s why we had the DeFi Summer, which was really crazy, and we have all witnessed that. What are your thoughts on this? What are your thoughts on the potential driving factors for decentralized storage? Also, do you have any other trends you would like to share with everyone?

Qi Zhou: Yes, I think from many applications that we have observed so far, people are increasingly aware of the importance of data ownership, and NFT is a good example. People will say, this is ours, and I can protect it and should always protect it, just like some paintings by Picasso or famous buildings. All these things should be able to be permissionless in the field of digital art, owned through decentralized protocols. This is a growing demand. In addition to this, there is also a need to ensure that we have a neutral internet, or internet neutrality. In fact, this is a topic that I often debated when I was at Google, how can we better achieve internet neutrality, making it a public good rather than being manipulated by power groups so much. I think blockchain and smart contracts, as well as decentralized storage solutions, putting them together, is a very good platform that can provide a better internet and better neutrality. In fact, decentralization is also designed for neutrality, where everyone can participate in the network, whether they are ordinary people, wealthy individuals, or even senior government officials. This is the true amazing aspect of Web3 or the future of the internet. Taking the recent controversy between Twitter and Threads as an example, many people complain about the various restrictions on Twitter. For example, sometimes when I post some technical articles, I don’t know why it gets blocked by Twitter, saying that you cannot publish this article. I think once it is blocked, there is no way to unblock it because it is controlled by a highly centralized monopoly company. And with the use of the internet, we have better ways of organizing, we have DAOs, better ways to communicate with communities, and better ways of censorship, not just censorship, but also solving the problem of spam. With them, we can use tokens and various things, and we are building a better way to organize the entire internet. Democratizing internet resources, rather than being hosted by those centralized companies, such as servers and their websites, we can now build in a better collaborative way on Web3. We believe this will create a lot of demand. In addition, based on the more powerful computing power of the current blockchain, it also creates more demand for storage. So we believe that if there are more and more such demands, people will find better ways to solve this problem on Web3.

Blair: Yes, as you said, I think people are starting to realize that our lives are being manipulated to a large extent, including the ways they use all that big data to collect your information, and they have implemented many policies regarding our conversations and speeches in posting and many other things. I think people are starting to see the beauty of decentralized storage, so I would say decentralization is definitely inevitable, and sooner or later we will see mainstream acceptance of it. Thank you very much for sharing your expertise and insights, especially about the project. I look forward to seeing more innovations on EthStorage. Thank you very much for your time, Dr. Zhou.

Qi Zhou: Thank you for the invitation. I am very happy to share EthStorage in the show. Please feel free to contact me through Twitter, email, or Discord to share your thoughts on EthStorage and help us build it better.

Blair: Definitely, thank you very much.

Qi Zhou: Thank you.

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