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Tokenizing Billions in Burned ETH with BETH - Yield Talks
Recorded: Sept. 3, 2025 Duration: 0:27:49Space Recording
Full Transcription
Music Thank you. Thank you. hey there everyone hey we will get started in just a minute i just want to do a quick sound
check so zach uh nomadic see if you can unmute yourselves. Hey. Hey, there we go. Hey,
Zach. Nice to officially meet. Yeah, great to have you on. And Nomadic, can you hear us okay?
Yeah, can you hear me? Hey, Zach. You sound great. All right. Well, I know we were eager to get you on here, Zach. So I'll go ahead and kick us off. And yeah, just excited to have you on. So everyone, thank you for joining us. This is Yield Talks on the Edge podcast. I'm DeFi Dad here with Nomadic.
DeFi to spotlight what we believe is an on-chain opportunity more of you should know about.
Today is Wednesday, so we're a few days ahead of time. We were so excited to talk about proof
of burn and tokenized burned ETH that we are a few days ahead of schedule. So today we are joined
by Zach from the Ethereum Community Foundation about their recently announced proof of burn protocol and what I just referred to as
tokenized burned ETH or Beth or Beeth. We'll find out how you're supposed to pronounce that.
I really want to know, what is the point of tokenized burned ETH? Who's it designed for?
How is it different from an ETH LST or LRT? And how can we use it as DeFi users. So Zach welcome. Could we
start out with just a little bit more about you and the Ethereum Community Foundation?
Yeah hey how's it going? Yeah my name's Zach. I've founded a few different companies that have built on Ethereum.
Early days, I worked on ETH2 core development, specifically on peer-to-peer networking stack, before moving into DeFi around 2020. And we recently launched the Ethereum Community Foundation
at ETHCC.
And our mandate is pretty simple.
It's to pump the price of ETH and maximize burn.
Isaac, can I just ask you a follow-up about the ECF?
So, I mean, I love your mandate, Pump the Price of ETH, but what sort of initiatives or plans or strategies are you kind of working with to make that happen?
Like, can you maybe just give us a little bit more about what goes on at the ECF?
Like, I don't even really know how it was formed, where you're getting financial backing from.
Sure, yeah.
So some of the initiatives that we've started are,
we developed BlobKit, which is an SDK that allows users
to easily read and write arbitrary data to blobs.
So before it would probably take about 700 to 1,500 lines of code to write to a blob, including KZG commitment and all the additional haveyots that are required to interact with blob space.
So BlobKit reduces that to a single line.
So that allows us to essentially use leveraged blobs for arbitrary data storage that are a single line. So that allows us to essentially use leverage blobs
for arbitrary data storage that are ephemeral.
It's kind of experimental,
seeing what we can do within the protocol landscape.
Another initiative we're working on
that will be kind of kickstarting DevConnect
is the Ethereum Validators Association, and that specifically provides something of a forum for validators who don't really have any are running the network and taking all the risk to signal support for which EIPs and protocol initiatives and changes they want to see and what they want to support.
So we're working on that. That's probably one of the bigger ones. Another thing is the Ethereum Policy Institute, and that's going to be focused primarily on interacting specifically with U.S. regulators and government officials to present a good use case for Ethereum as a technology in the future of financial infrastructure.
So we're working on that.
That's probably one of the bigger ones.
future of financial infrastructure. I think that's a big thing that a lot of that no real
organization has been tackling. I know we have Etherealize, but most everyone is focused on a
more global scale. So we're focusing primarily on America. That's awesome, man. Yeah, it's just
great that there's more groups like yourselves and Etherealize that you mentioned kind of just getting behind the Ethereum machine and just more people helping to push it forward.
But I want to get into the announcement that we saw back on August 28th.
So Ethereum Community Foundation came out with this blog called Proof of Burn.
You introduced the,
do you pronounce it Beth, B-Eth, or how do you pronounce it?
I like to pronounce it Beth, because I like to think of it as an old woman.
All right, let's go with Beth. But yeah, can you just explain the vision here? Why do we need Beth?
Yeah, yeah.
Would Beth function, like how would Beth function for DeFi users? All of that stuff.
Yeah, so Beth is kind of like Weth, but for burning ETH instead of wrapping it.
So when you send ETH to the Beth contract, it just permanently destroys that ETH and it gives
you Beth tokens as proof of burn.
So it's really just a receipt.
But it's the first standard way to represent burned ETH.
And it provides composability as
a tradable asset as well, potentially.
So it's the receipt for destroyed value and it can be
used in DeFi governance,
or anywhere else an ERC-20 would work.
Why should anybody care about this?
So if a protocol wants to burn ETH right now,
they have to build custom verification.
That standardizes that,
kind of like
WET standardized draftees.
So it turns burning from like a one-time event
into a composable building block.
And I think that's kind of what, you know,
the foundation of DeFi is really.
So kind of use cases, you know, like imagine governance
where voting power comes from like proven sacrifice.
And another use case is, you know, civil resistance, like anti-spam systems where bots have to like burn real ETH.
So Beth makes all of that possible with a simple ERC-20.
Zach, who is Beth designed for?
Like who's the target, you know,
who's going to want to accumulate Beth?
We saw Joe Lubin tweeting a bit about this
and had us thinking of, you know,
folks like ETH treasury companies
or basically anyone that's holding ETH.
Well, anybody that wants to contribute
to the monetary premium of Ethereum
is going to be using Beth.
But also, I think there's a lot of novel use cases
that we haven't even thought up yet.
I think there's a lot of opportunity for fun games
that incentivizes burning ETH.
I think it could also present new economic models that aren't as dilutive in terms of just launching a bunch of shitcoins. a much cooler and, you know, positive sum token,
as opposed to just launching more meme coins.
So those are the few that come to mind.
Yeah, Zach, let me just read this tweet that Joe posted
the day I think you sent out that announcement.
He seemed pretty fired up over it.
So let me just read kind of the main point of what he was talking about.
He says, we will be adopting and building on Beth,
Be Beth, Be Be Beth, Be Be Be Beth.
Burning ETH is going to be a very lucrative thing to do
as it will spawn industries and a very fun thing to do
as it will become a popular a very fun thing to do
as it will become a popular mechanic in Web3 games.
This is one way people will get paid to play in Web3.
So there's just a few things in that tweet
that I want to unpack too.
All these different variations of Beth
that he's calling out.
Like, I have no idea what he's alluding to
with these Beth, be Beth.
Can you break any of that down for us to start?
Yeah,
I think that's just kind of like a riff on nesting tokens and like the meme
potential of like burning burnt ETH and then burning that burnt ETH kind of
like the exhibit meme from back in the day, like, yo dog,
I heard you liked burning ETH.
So we burned your ETH to burn your eath i think it's just trying to like push more memetics around burning eath um and and then just like a little bit more on the Web3 gaming stuff. To me, it's still abstract.
What more can you explain about how Burned ETH could work into Web3 gaming?
Yeah, I think that's a cool mechanic for status progression or unlocks.
You can use it as an in-game currency.
I mean, the same as a lot of other tokens as well but
i mean the point is is like we want to incentivize burning eat and we want to like create mechanics
that make it cool and also you know somewhat incentivized and this is like the first step
in figuring out how to do all of that so we're building a few games that leverage these mechanics just to try it out.
And I don't know if this is going to be successful or not.
I have no idea.
We're just out here in the trenches trying to build.
So we'll see what works and what doesn't. And we're also going to open up a round of grants through the ECF.
So if anybody has anything they want to build or has any ideas for something cool that could leverage these mechanics,
yeah, please apply for a grant.
We're willing to put our money where our mouth is to experiment and figure it out.
Yeah, I just want to reiterate, I don't have all the answers. I don't know. We need to figure this
out together as a community. If it's cool, it's cool. Let's build it. And if not, at least we
tried. So when we talk about burning ETH, normally we're referring to EIP 1559.
And so one of the rallying cries over the last few years
was as more economic activity picked up on chain,
we would see more transaction fees ultimately paid
by more users and to a fraction of the fee being burned.
And so this is putting like a deflationary pressure on ETH.
So this has been a part of the reason that Wall Street is super interested in ETH as a store of value.
This is also a part of, I think, understanding the complexity of how the ETH supply grows and shrinks. And so
that's why this idea, I think for me, of having tokenized burned ETH is compelling.
If you are an ETH holder, it would make sense that you might want to hold this tokenized burned ETH
because to your point, you're contributing to reducing the supply
of ETH over time. I think one thing that I'm not certain of or haven't really thought as much
about, and I'm wondering if you and the team have an answer for this, do you think that
Beth should trade one-to-one with ETH? Should it trade at a premium or a discount? Yeah, that's an interesting question.
I mean, technically it should really be valueless because it's just burnt ETH.
So, I mean, this is really introducing a whole new
layer of complexity. I think that it should
reasonably probably trade
somewhat at the same close to ETH but yeah with its own premium and
discount dynamics I think there could be some arbitrage opportunities assuming there's demand
for it I mean but that's you know like any other. If applications and protocols leverage it and it has some sort of redeeming quality,
then it should, I suppose, trade similar to ETH.
But I don't know.
What do you think?
My gut is it's going to be pretty close to zero eventually.
But if you find utility for it um that's obviously going to
be the catalyst for yeah price appreciation or price discovery like if people actually start
uh integrating beth as a standard into different mechanics in defy like you said in gaming
um yeah it just comes down to utility if there's If there's a reason for it, then sure, I think
price can go. For the record, when I wrote this contract, I didn't think about it trading at all.
So I don't really have any clue. I don't intend on seeding an LP pool or anything like that.
end on, you know, seeding an LP pool or anything like that.
I haven't, I never, we didn't even really think about it.
It was mostly just, you know, receipt based.
So yeah, I have no idea.
Looking forward to seeing what sort of dynamic plays out there.
Can I just ask you a bit more about you writing that contract?
So when you're going back into that headspace,
what was the thing that was exciting
you most about this when you were excited?
What gets you excited?
And then maybe has that changed?
Are you even, is there something else
that you think has this led to something else?
Yeah, so primarily what I'm thinking about is like L2s
and how we can sort of force alignment economically between L2s and Ethereum and using ETH as like the base layer for the economics of the network um i think having some sort of burn receipt that l2s can prove that they
contributed to the monetary premium of ethereum is going to be pretty valuable for just demonstrating
alignment so that's what i have in mind like like linnea or linea however you say it they're burning
eth right i think that's great. So how are they
going to prove that? What are they going to prove that they've burned? And how are we going to
easily account for that in a transparent way that anybody can access? There's not really any tool
that allows you to just easily and simply look at that. So I think looking at it primarily as a unit of account and an infrastructure tool that helps ease the accounting, that helps me evaluate the technical feasibility and kind of like the allegiance, so to speak, of an L2 toward Ethereum as the L1 and also as the economic layer.
I think that's important to me as a user and an investor.
So I think that that's just another tool in the toolkit
that allows me to further conduct due diligence on these ecosystems.
That's really interesting.
So for the few entities that would have burned ETH,
I guess what is the standard nowadays?
Is it just having folks savvy enough to look at Etherscan or create a Dune dashboard?
It's hard.
It's prohibitively difficult because most L2s operate as a single sequencer.
It's fairly opaque.
It's not necessarily a black box,
but it isn't entirely easy to look into, right?
So each one has a different,
you know, its own different economic system.
So it's pretty hard.
And a lot of these L2s don't even burn their ETH.
I know that at the beginning everyone was like,
oh yeah, we're going to burn ETH,
we're going to do this, we're going to do that. But then what they end up doing
is just rerouting all of that Ethereum into their own treasury or into a multi-sig or into some
pipeline where they're, you know, some crony pipeline where they're just paying themselves
and double dipping essentially. So I think it's really important that we kind of like have visibility into that um this is kind of a way to
force the hand of other l2s as well to say like hey what are you doing um where'd that eath go
zach how about what conversations have have you had at the ecf and with other major ETH holders about Beth versus, let's say, taking a whole treasury of ETH and just staking it.
I believe when we interviewed Linnea recently and we were walking through their newly announced tokenomics,
and I could have this wrong, my understanding was that the majority of ETH that would be bridged over to Linea, that they would ultimately stake all of that. And then I believe the staking rewards will then be allocated according to some governing consortium of folks.
folks are potentially going to use it, let's say for grants or something for developer activity.
So I'm thinking about like, those are the types of folks, an L2 with a major ETH treasury that
could clearly lean into Beth, but I'm also thinking about the advantages of them just
staking ETH. So yeah, anyways, I'm not sure if you've got any thoughts on LSTs
or basically staking ETH versus BATH for some of these larger ETH holders.
Well, I mean, I think staking ETH is great.
You should definitely stake your ETH,
especially if you have a large, you know, treasury of Ethereum
because, you know, we want to reduce cell pressure um and they have to
keep the lights on like the ef should be staking all their eath right and dumping less eath and
if they're selling eath they should be selling to the you know the the dats right um but uh
specifically like the correlation between that and death i I'm not really, I'm not really sure.
I know that there's, I'm not, I don't think everybody needs to just burn all of their ETH, right?
So, I mean, it's not like all or nothing, but, you know, like gas fees should be burned, right?
And you should be using Ethereum as the native gas token on an L2.
And that should just be burned.
That shouldn't be put into a treasury.
I think that's like the main problem statement that I'm trying to address, or at least that's
what I had in mind as I was writing the contract and thinking through the infrastructure and
what the most practical use case is for it. Because this isn't a complicated contract at all.
is for it because this isn't a complicated contract at all like you send it if it forwards
that eth to zero address it gives you one beth token yeah it's very clever i mean to the point
of what joe lubin was making and what you were making there there's something very uh memable
about it and uh like i said there's multiple players here who I think could lean into this,
the types of folks that, you know, really want to increase the monetary premium of ETH and,
you know, further reduce the supply of ETH. So this is all making sense to me. It's just early.
And so I guess aside from like wanting to know like what's next and when does this go live,
I'm also curious. It's live. this go live i'm also curious it's it's
live it is live okay so that's it's live right now it took me a day to write this i got it audited
i it's i wrote it last week we talked about it for like a month and then i had some time and i
was like oh i'm just gonna write this contract and i I pushed it. It's live. It's good to go.
It's been audited.
Um, there's already some, uh, activity on the contract.
Um, yeah.
So it's good.
Zach, if someone isn't able to like navigate something like ether scan or able to
like interact directly with a smart contract, is there an app to take advantage of that or to play around with that?
There is not yet as of this moment, but maybe I'll just spin one up today.
I don't know.
And if somebody else wants to build it and wants a grant, then please reach out to me.
Very cool.
One final question for you.
Have you had any interest from
DeFi builders? I guess it remains to be seen, based on our conversation here,
what the value of Beth will look like. I'm wondering though, have any DeFi builders reached
out? Maybe someone who's building vaults or cdps i don't know maybe someone
would lean into this as like a yeah an experimental defy app that's focused on
catering to bath holders yeah no no one yet uh but also i think that a lot of people i just based
on what i've seen on twitter and uh like in the DMs and in Telegram and in group chats and stuff,
I think people are still trying to understand what this is. It's not like I didn't really do
much marketing or anything around it. I didn't create an explainer site. Like I have a GitHub
with a readme and then we have etherscan and that's pretty much it. So I think people are
still trying to figure out exactly what this is. i think i published this contract i just deployed it on like maybe friday or over
the weekend or something like that like like a few days ago so y'all are like the first people
i'm talking to about this and this is the first podcast that i'm on about this so now this is
great we appreciate you coming on so early.
And this is exactly what we wanted to do is just kind of ask all the dumb questions that we were talking through.
Yeah, no, those are good questions.
And I didn't really prepare for any of this either.
I wasn't, I just kind of like yeeted it and was like, all right, we'll see.
We'll see how this goes.
Well, we really enjoyed having you zach and like i said thank you
for coming on um i want to remind our listeners that they should learn more about the ethereum
community foundation by going to ethcf.org follow ethcf.org on x follow Zach's account as well, which is 0xzach, Zach, Z-A-K. And then just a reminder
to folks here listening live, thanks for tuning in. Again, we do these once a week. However,
we will edit this just a bit to clean up the audio, and then we'll republish this in podcast
format. So if you go to the-edge., Z, you can subscribe to the newsletter, which
sends you real time notifications or just go to our link tree.
It's edge underscore pod.
And that's how you subscribe through Apple or Spotify or YouTube.
But otherwise, Zach, thank you so much for coming on and really look forward to seeing
how this continues to grow and develop.
And yeah, thanks so much.
Yeah, thank you for having me.
And yeah, if anybody wants a grant
or has any good ideas,
just reach out to me.
It's all about collaborating.
I love it.
All right.
Well, everyone, have a great week
and we'll see you next time.
Thanks, Zach.
Thanks, Don't Have It.
Bye, guys.
Cheers.
Bye.
