# The current state of blockchains
## Growing success in applications!
* Institutional use
On the horizon: social media?
* Lending, interest
<img src="https://cdn.vox-cdn.com/thumbor/bouCIhEhMramGHZAiQGaa3q43vo=/1400x1400/filters:format(png)/cdn.vox-cdn.com/uploads/chorus_asset/file/22341171/Screen_Shot_2021_03_02_at_3.21.50_PM.png" style="width:300px" />
* Items with real-world value (eg. conference tickets)
<img src="https://i.imgur.com/8XFfuaB.png" style="width:600px" />
eg. `0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045` -> `vitalik.eth`
## Decentralized orgs
* Defi projects (Uniswap, Compound...) managing funds allocation and protocol upgrades
* General Ethereum ecosystem focused (MolochDAO)
* Charity (eg. VitaDAO for medical research)
## Challenge 1: improving security and energy efficiency (with PoS)
The PoS beacon chain has successfully run for over nine months...
So now it's time to retire PoW and let the PoS beacon chain run all of Ethereum.
## What will the merge look like?
* Existing ethereum users (Geth, Besu, Nethermind, Erigon) will need to download a beacon chain client (Lighthouse, Nimbus, Prysm, Teku)
* Instead of the ethereum chain following PoW, after the merge the ethereum chain will be embedded inside beacon chain blocks
* Users should barely notice the transition
## Challenge 2: Scaling
## Why scaling?
We need lower fees!
* Increasing gas limits on the base layer risks centralization
* Solution: layer-2 rollup protocols
## Currently available EVM-capable layer 2s
* **Arbitrum**: optimistic rollup project, available now
* **Optimism**: optimistic rollup project, available for some apps now and for all apps soon
* **Polygon**: currently a sidechain, but with plans to become a ZK rollup
<img src="https://i.imgur.com/7hD1Dnj.png" style="height:500px" />
_These numbers will decrease in the future, as all rollups add better data compression_
<img src="https://vitalik.ca/images/sharding-files/beacon_chain.jpg" style="height:300px" />
* Nodes no longer need to process the whole chain
* Each node only touches a small portion
* Much higher scalability (~20-100x) for rollups, leading to much lower fees
## Challenge 3: user experience
* Before: wait 1-5 min for transaction to get included
* Post EIP 1559: most txs included in < 20 sec
* Rollups: instant pre-confirmations
## Challenge 4: user-side security
* Smart contract wallets
* Social recovery
* Blockchains are getting broader adoption, and from newer communities
* But technical problems still stand in the way?
* They are quickly being solved; solutions that have been worked on for years are finally on the horizon