Bankless - 125 - Ethereum's Hidden Power Structures | Matt Cutler

Episode Date: June 27, 2022

Matt Cutler is the Co-Founder and CEO of Blocknative and a gigabrain when it comes to Ethereum’s hidden power structures and all things blockchains. As Ethereum approaches the merge, these power structures are going to change. What will this post-merge future look like? Will users get paid to use Ethereum? Matt explains everything from first principles and it helps illustrate the complexities of everything discussed in this insightful episode. By the end of it, you’ll have a better understanding of the purpose of blockbuilders, the new post-merge roles, all things MEV, and so much more. ------ 📣 NOTIONAL | Real DeFi Yield https://bankless.cc/Notional  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum  ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🏦 ROCKET POOL | STAKE YOUR ETH https://bankless.cc/RocketPool  👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave  ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido  🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger  ------ Topics Covered: 0:00 Intro 6:27 The Reason for the Merge 10:07 The Values PoS Preserves 13:45 Blockbuilding Explained 16:35 Mining Pools & Incentive Categories 30:25 Why Decentralizing Power Matters 33:40 The Future State of Ethereum 39:21 The Post-Merge World Roles Explained 45:25 MEV Searchers vs. Blockbuilders vs. Stakers/Validators 55:45 PBS & MEV Boost & Who Are the Blockbuilders 1:03:50 Economic Rewards for Blockbuilders 1:17:19 Ethereum Will Eventually Pay Users? 1:19:40 Can Ethereum Stay Decentralized? 1:26:22 ETH The Asset 1:31:39 Where MEV Exists 1:35:16 How Blocknative Fits into All of This 1:37:30 Closing & Disclaimers ------ Resources: Matt Cutler https://twitter.com/mcutler  Blocknative https://twitter.com/blocknative  End Game with Vitalik https://youtu.be/b1m_PTVxD-s  Ultra Scalable Ethereum https://newsletter.banklesshq.com/p/ultra-scalable-ethereum  The Guide to the Ethereum Roadmap with Jon https://youtu.be/xuLyZaty9iI  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome to bankless where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Excellent episode for you today. We're talking about Ethereum's hidden power structures. Some of the power structures you didn't know existed but that do and how those power structures are going to change post-merge. This is coming down the pipe really soon. and you need to know about it. Some things to look out for in this episode with Matt Cutler,

who guides us through and educates us through these new power structures. Number one, what the power structures in Ethereum are today. Number two, how are they going to change post-merge? Number three, what this future world will look like? Is there a future world, as Matt says, where users might actually be paid to use Ethereum? No gas fees. Instead, Ethereum pays you.

And number four, why the value of this new power structure, this new economy flows back to ETH the asset. Yep, that's right. Back to ETH the asset. We talk about all of those things with one of the people who's most educated and most articulate in expressing it. David, what were your thoughts in this episode going into it? In post-merge Ethereum, ETH pays you for gas. I thought that was like one of my favorite parts in the show. And we really go through how the supply chain of block creation is what that looks like in post-merge Ethereum. You might think, think it's simple, people add blocks to the blockchain. It's not that simple. It's not. There's way more moving parts. And as we go further into Ethereum's roadmap, they become even more moving

parts. And Matt does a really good job illustrating the supply chain, illustrating this how this works, but also just talking about this at first principle's perspective, where modularity creates flexibility. And as soon as we have flexibility in how Ethereum is designed, we can start to tinker with how we think that it should be designed. And ultimately, it's in the Ethereum ethos to make sure that the user has the most amount of power and sovereignty and optionality. And Matt walks us through how this concept

of proposer-builder separation and MEV boost and MEV searchers and block proposers and validators, how all this modularity ultimately flows back into enabling the individual ETH staker and ETH the asset. And so Matt is just a gigabrain of what we call the pre-chain layer, aka the mempool. And the mempool is this very dark and disorderly and chaotic place where it's not very friendly to individuals, but it's really a scary place.

That's where the monsters lie. It's where the MEV lies. But what Matt is building up Block Native is helping illuminate the mempool and helping us reason about it and turning the mempool in a place of chaos into a place of order that we can reason about and have a dependable ecosystem. And so he just walks us through all of these details. And I think it's going to be a really fascinating episode for people that care deeply about the protocol layer or just want to understand how everything flows back to Heath at the end of the day, either one. Look, these blockchains are economic computers and Ethereum is an economic computer. And the best way to understand an economic computer is by going through and understanding the motivations of all of the economic agents. And there is this new economic agent, brand new agent being born post-merge called the builder.

the builder, and I absolutely had to understand more about the builder class of economic agent going into this. And so Matt certainly scratched my itch there. I feel like I have a far deeper understanding of all of the economic players in this economic computer and the builder class specifically. So stay tuned if you want to listen to all of that. We're going to get right into our conversation with Matt Cutler. But first, we want to tell you about the fantastic sponsors that made this episode possible. The layer two era is upon us. The theorem's layer two ecosystem is growing every day and we need bridges to be fast and efficient in order to live a layer two life. Across is the fastest, cheapest, and most secure cross-chain bridge. With a cross,

you don't have to worry about the long wait times or high fees to get your assets to the chain of your choice. Assets are bridged and available for use almost instantaneously. Across bridges are powered by Uma's optimistic Oracle to securely transfer tokens from layer two back to Ethereum. A token proposal is being deliberated as we speak in the across forum where community members will decide on the token distribution. You can have your part of Across's story by joining the Discord and becoming a co-founder and helping to design the fair, fair launch of Across. If you want to bridge your assets quickly and securely, go to across.tto bridge your assets between Ethereum, Optimism, Arbitrum, or Boa networks.

Arbitrum is an Ethereum layer two scaling solution that's going to completely change how we use Defi and NFTs. Over 300 projects have already deployed to Arbitrum and the Defi and NFT ecosystems are growing rapidly. Some of the coolest and newest NFT collections have chosen Arbitrum as their home, all the while, Defyreux protocols continue to see increased usage and liquidity. Using Arbitrum has never been easier, especially with the ability to deposit directly into Arbitrum through all the exchanges, including Binance, FTX, Hwbe, and Crypto.com. Once inside, you'll notice Arbitrum increases Ethereum speed by orders of magnitude for a fraction of the cost of the average gas fee.

If you're a developer who wants low gas fees and instant transactions for your users, visit Arbitrum.com. To start building your DAAP on Arbitrum. If you're a Dgen, many of your favorite DAPs on Ethereum are already on Arbitrum, with many moving over every day. Go to bridge.arbitrum.io now to start bridging over your ETH and other tokens in order to experience defy and empties in the way it was always meant to be. Fast, cheap, secure, and friction-free.

The era of proof-of-stake is upon us, and Lido is bringing proof-of-stake to everyone. Lido is a decentralized staking protocol that allows users to stake their proof-of-stake assets using Lido's distributed network of nodes. Don't choose between staking your assets or using them as collateral in defy. With Lido, you can have both. Using Lido, you can stake any amount of your ETH to the Lido validating network and receive STEth in return. SCEs can be traded, used as collateral for lending and borrowing, or leverage on your favorite

defy protocols, all this without giving up your ETH to centralized staking services or exchanges. Lido now supports Salana, Kusama, and Polygon staking. Whatever your preferred proof-of-stake asset is, Lido is here to take away the complexities of staking while enabling you to get liquidity on your stake. to stake your east, soul, ormatic, and get liquidity on your stake, go to lido.fi to get started. That's L-I-D-O-F-I to get started. Hey, bankless nation, super excited to get into this next topic. It's kind of geeky, and that's why I love it.

And we are bringing to you Matt Cutler for this episode. We're going to talk about power structures in Ethereum. Matt is the CEO and co-founder of Block Native. Block Native is a team looking at the pre-chain layer of Ethereum. this thing called the Mempool. I don't know if you've ever heard about it. But what he does with BlockNative is listens to every single transaction that's ever broadcasted for chains like Ethereum uses that data to predict the future. So it's right down deep into Ethereum's computer at the firmware layer. But what we're going to talk about in this podcast is something that I think affects all of us.

This is a post-merge topic, an Ethereum 2.0 topic, if I can say that, if that's still a loud, and we're going to predict the future of Ethereum based on the new power structures that will arise in the post-merge, post-proof-of-stake world. And this is going to be super important for you to tune into so that we can predict the future of Ethereum and the future of the crypto economy. Matt Cutler, how are you doing, man? I'm doing great. It's wonderful to be here.

Thanks for having me. Can you help us with this topic? Because there's a lot of pieces here. There's a lot of terminology. Some of it sounds a little geeky. Can you break it down for us in layman speak? Is that what you can help with? Yeah, I would love to.

There are definitely a lot of moving parts. There are a lot of abstract concepts, but they all come together in some pretty compelling ways, and it's a super fun topic to explore. Okay, can we start with this? Because we are emerging for a reason. We're getting rid of proof of work and going to proof of stake for a reason. But let's kind of start from the beginning, because there are some reasons we're doing this. There are some flaws in the existing Ethereum system that we're trying to correct.

And by transitioning to proof of stake, I feel like maybe some new flaws that we introduce. I'm not sure. Take us through this, Matt. Sure. So I like to frame this up as, hey, look, I've been building companies for a long time. And in the 90s, the whole world went from being offline to being online, the world that we live in today. And that required a huge amount of infrastructure buildup because the internet in 1995 was no way ready for the type of things we enjoyed today, like streaming video and social media and all that sort of jazz, right? Similarly, right now in 2022, we're in the beginnings of this transition from going from an off-chain world to an on-chained. chain world. And as we look into the future, there's just massive demand for scalability, throughput, data storage, and blockchain systems. And the existing proof of work chain, you just can't get there from here while preserving decentralization. And so the merge and the transition of proof of stake is the necessary foundation for Ethereum to really start to stretch its legs and scale to the on-chain future that we're all anticipating. And so it's very much sort of foundational and core frameworks. It has a bunch of really interesting consequences and non-obvious sort of elements to it, but it does

set us up for the next generation of Web3 growth. And Matt, just to really double down on this, let's talk about why proof of stake, why the merge preserves some of the values that we want it to preserve. Before we get into the conversation of how blocks come to be, because that's ultimately where this conversation will lead. I just want to really get into when we live on-chain lives and eventually the metaverse will come if we're using the metaverse as a way to describe this on-chain future. When we live our on-chain lives, why is proof of stake and why is the merge an important component in preserving the values that we want to preserve in the crypto ecosystem? So fundamentally, you know, the basis of Ethereum is a decentralized smart contract platform. And so this core theme of decentralization

where basically anyone can participate in securing the network is really quite critical. However, as you embrace smart contracts, all sorts of additional overhead comes into play. It's harder to reach consensus. It's harder to do execution. There's a lot of computation requirements. There's a lot of data storage requirements. And sort of the shortcut here is just say, well, you need a larger and larger computers to be part of the network. This has a fundamentally centralizing force because it pretty quickly gets out of the domain of your average

consumer with the average laptop. And so what the transition of proof of stake does, and in particular, the very aggressive move towards modularity in this transition is its preservation of decentralization through modularity. And what this does is get a lot of the benefits of, hey, we can break the pieces apart. You can decentralize them individually. Folks can participate in many of these layers with different capabilities. And the net result is a much. more capable network with much fewer externalities or external dependencies that still has a very low threshold for participation where basically any consumer with any consumer-grade laptop can participate equally. And that's really core if we're going to have a truly equitable Web3

and Metaverse future. So I think this is critical stuff and it's super exciting to be a part of it. Right. And just to remind people, we have this thing called the Ethereum virtual machine. And what that means is there is a virtual computer in the cloud that is created out of the shared resources of all of the computers of the Ethereum network. But in order to keep this thing decentralized, those shared resources have to be balanced and have to be inclusive. But we also want this super high-powered,

decentralized finance, metaverse future that requires all of this infrastructure. And people that have been listening to the bankless podcast, they know they probably ever heard this modular design structure before, Ryan and I have done a few podcasts on it. And our first modular podcast was really all about the separation of the execution layer from the consensus layer. This is putting all of people's transactions and their speed, all their defy activities

to have very fast transactions with low transaction fees by putting that on the L2, thinking of L2 as modules, where you have the consensus layer as the beacon chain, the proof of stake layer. But I think people that might have just listened to that podcast might not be aware of how further the modularity of Ethereum goes, because there's so many other components of modularity that are about specific parts of Ethereum. And this is, again, what this podcast is ultimately going to be about. But Matt, can you walk us through the parts of the Ethereum ecosystem that Block Native really has expertise in where it is now? And that is in the process of block building,

because they ultimately want to go to how block building becomes modular. But let's talk about the current state of block building. If we can also as well, define block building, talk about the current state of how a block is built and added to the blockchain. Can you just walk us through that process for us? Sure. So the existing model is proof of work. And it's a fairly monolithic model, meaning everything is sort of all tied together in a fairly small and compact set of software and a fairly small and concentrated set of actors who are called miners, but are actually more likely mining pools. Okay, so basic proof of work consensus algorithm is you build what's called a block template, which is basically a candidate block with the transactions. And then you try

to solve for the golden knots where you try to do a bunch of computation. To do the computation, you have to pour energy into computers. And so you have this externality of you need energy that you pay for in Fiat. You need computers that you pay for in Fiat. And you solve these problems. And the first one to solve the problem basically says, hey, I have a block. they broadcast it to the network and the other miners in the pool or the other nodes basically inspect that, validate it and say it's okay. That's the top level. Underneath the covers, it's a little bit more nuanced, which is you typically have what are known as mining pools. And so you have folks who contribute computing resources to a sort of a collective set called the mining pool. And the mining

pool operator, the one who's sort of in charge of that pool, has a very critical function, which is they specify the block template. So the mining pool operators of which they're not that many, there's just a handful, really, are the ones who are basically responsible for block construction. They pick block templates, which they think are sort of the most valuable block possible based on the current contents of the mempool and other external factors sometimes. And they say, this is the block I want to mine and confirm, and then they send that out to their pool,

and all the various computers in the pool churn on that to try to solve for the golden knots. Now, what that means is block building and consensus are kind of combined in this world, and that this idea that you have a fairly small number of people who determine what goes in a block and what the sequence of those transactions in a block is perhaps a bit more centralized than we would like over the long term. And so that's some of the design objectives and sort of design consequences of what's happening around the merge and some of the other external factors there to address. and to create additional layers of decentralization at all levels of this process. Hey, Matt, can you just walk us through? I think a lot of people listening are probably fairly distant from the actual process of mining and like don't even know when you say mining pools. I don't know that they have a vision for what that is in their head. What are these mining pools? Who operates them? Like, what kind of entity are we actually talking about

here? If these are the folks doing the block building and also like part of the consensus, and you're saying they're all one, what kind of entity are we looking at? This isn't an exchange. Are these the mining operators that are out there that are kind of underneath the protocol? Yeah, so these are the mining operators. So one of the major ones is called Ethermind, and you could read about them. And what these do, rather than Ethermind itself, buying and controlling all of the GPUs necessary to do the mining, they basically operate software that lets anybody with a GPU participate in their pool. And so imagine I have a bunch of GPUs, which I don't, but they're under my desk.

And I can say, well, on my own, I could mine, but I don't have a lot of hash power. And so I don't win very much. So I don't get a lot of income. It's not great. What I can do is I can take my GPUs and I can join them to a mining pool. And then I participate in all of the victories of that mining pool, all the blocks that they win, as a share of sort of how much hash power I devote to that. So what it does is it makes my life a lot easier in terms of my income because I spread it across

everything that's happening in the pool. And what it also does is I have less things to think about because I don't have to do the hard work of figuring out how to build a block. I just get a block from ether mine. They tell me what to do and then I spin my GPUs up behind that. So this is the mining operators underneath the network who are aggregating compute power, who are aggregating, hash and have this sort of interesting role. There's a bunch of these, but they're really less than you might expect. I'm not sure how many mining pools there are in operation today, but there's not thousands, that's for sure. Yeah, five takes up the vast majority of all hash rate. Yes. And so the five, you have five block builders, five entities which specify

these transactions are going to go in a block. And critically, this is the order of those transactions. And so, hey, one of the things that's critical about any public blockchain network is transaction sequencing matters a lot, and modifications to that sequencing can have pretty significant economic effects. And so you're in a situation where we would like to see more decentralization of block building, and we'd like to see perhaps more diversity of block building strategies than just the few that a couple of private actors can deploy today. Okay, so we got these mining pools. These are doing the block building. By the way, Bitcoin works the same way. They have mining pools. They have block building works the same way. In Ethereum, we have these,

five entities plus, one of which is ether mine. I bring my GPUs to a mining pool and it kind of smooths out my revenue and, you know, so I'm happier than doing it on my own. There are benefits from economies of scale and the block building function. Just refresh us really quickly on like the incentives here. The reasons for doing this. How am I getting paid, Matt? So I guess as a mining pool or I guess contributing GPUs, a miner in that mining pool, I think I have three sources of revenue. I got the block fees, the block rewards, and then I have transaction fees, what remains, anything that's not burnt by EIP 1559. And then I think I have this other thing from all the block ordering you're talking about. And we call that M.EV, minor extractable value

or maximum extractable value. And that is basically some sort of fee that I get because I am ordering the blocks in a specific way. And someone has kind of pay. paid me and sent it to order it in a specific way. There's some kind of arbitrage there. Can you explain those three categories in a bit more detail for us? Sure. So the core of proof of work is when you mine a block, with each block comes a reward, which is called network issuance, where basically new ether gets created and whoever wins the block receives that ether. And the same is true of Bitcoin and many others. Now, notably, post-merge, that issuance rate goes way, way down. And we can talk about it.

that later, right? Two, the block is consisting of a series of transactions. Those transactions have network fees associated with them, and under EIP 1559, the regime that we're in today, the fee is split into two parts. There's the base fee, which is set by the network, and then there's what's called the priority fee, which is up to the person creating or entity creating the transaction. It's also referred to as the minor tip. So you take all the fees that are in the block, and the base fee gets burnt. It literally goes away. And so that basically has a deflationary effect on the circulating supply of ether, but those priority fees, all of them go to whoever won the block. So the mining pool operator who won the block receives those as well. Now, typically these are

pretty small. I mean, it's enough to sort of incent them, but it's not a big thing. But under specific circumstances, these priority fees can get quite lucrative. And there can be a lot of competition to make sure these transactions are included in your block and that you win those blocks because there's some juicy blocks that are out there. Now, as a result of the nature of the financial systems and games that are played on these Web3 systems, sequencing matters a lot. And so, for instance, there's arbitrage opportunities where a user conducts a trade and on a decentralized exchange like Uniswap. And that puts a pool out of balance, right? That there's slightly more and slightly less of a certain asset and that, hey, if I could get transactions

surrounding that or just behind that, I could capture that little imbalance. Or, hey, this transaction over here is going to move the price of this asset on this exchange, but it's not going to move on the other exchange. So if I get right behind that, I can basically buy over here and sell over here and take a little bit of arbitrage. There's many of these types of strategies. Now, the challenge is only one or two people might participate in that, and they need to be in exactly the right spot in the slot. Okay, so exactly the right sequencing in order to capture that opportunity.

Well, in the past, what this resulted in was like spam behavior. Folks would sort of just hammer the network with transactions to try to sort of crowd in and get there and crowd other people out, which was really bad for the network and really bad for bloat and bad for fees. And so what started to happen was the miners would themselves say, hey, if you really care about being in a specific order in a block, you tell me separately off line. Don't broadcast your transaction. Just whisper it in. in my ear and I'll process the rest. Whisper it to me, but tell me specifically where you want it and then tell me what it's worth

to you. Okay. Now, this is this notion of MEV or minor extractable value is by expressing your preference for ordering, you can get beneficial outcomes for you versus somebody else. Now, this was starting to happen privately and darkly. There wasn't any transparency or visibility into it. And there's all sorts of negative problems here like the minor themselves. could theoretically say, you know what, that's a great idea. I'm just going to do it myself and

censor your transaction and sort of steal the opportunity. And so a research collective and company emerged called FlashBots, which is very well known in the ecosystem. And they basically built an open marketplace for this MEV. And so where you have actors called searchers who identify these opportunities, searchers submit what are called bundles, and they provide a fee and say, hey, if you include my bundle with certain conditions, I'll pay you, hey, the minor, this fee for doing so. And it turns out those fees can be quite significant. And so this becomes a third source of revenue for miners under proof of work. You have the issuance for winning the block. You have the priority fees of the transactions included in the block. And then you have this

sort of sidecar MEV for actors who specify specific ordering. And when you can deliver that ordering, they pay you an additional amount. And real quick, just to be clear, when you were saying the miners just then, are you talking about the mining pools themselves? Are they the primary beneficiaries of the MEV right now? Are they like in the secret whisper chats? Yeah. Well, so what's interesting is most of the value associated with the sequencing winds up aggregating to the miner. And so, or the mining pool. And this is because they're the ones ultimately who have control over sequencing. And it turns out that the privileged actor in the network, he who can control or she who can control the sequencing of the block, stands in this really powerful position.

And so therefore, if you want to take advantage of that, you've got to give them almost all of the opportunity that's there. And so this value and this power accrues, by the way, this MEV is specific to block building itself, not to mining. And so we said before there's a small number of actors who actually build blocks. There's five of them who control the vast majority of hash power. So those are the five that receive or the beneficiaries of this MEV. And in a pretty significant percentage, there are certain estimates that some class, of MEV, 97% of the value of what's there winds up going back to the miner. The minor or the minor pool?

The mining pool operator, who then probably distributes that to the pool itself. But yes. I just want to say this, because this was kind of a breakthrough in my understanding of things, and as part of the big theme of this episode, is that there is this hidden force. We've talked about called MEV, but there's also this hidden actor. You just called it the one with the power to sequence the blocks. You've also used the term block builder. And I think we're going to use those terms synonymously.

But right now, the block builders, the mining pool. And so often, like, we don't really talk about the mining pools or the block builders in Ethereum, right? Everyone knows that there's miners. Everyone knows, you know, that we're going to have stakers in post-merge. Everyone knows the other parties and the other actors, people that run nodes and this sort of thing. But we don't talk about this economic agent that is very much at play. And these are the block builders, the sequencers, the mining pools for now. but in a post-merge economy,

they're not going to be the mining pools anymore, and we'll get to that later. But I think, David, you wanted to follow up on this. Yeah, just a fun quick story. I got into Ethereum via GPU mining. So this part of this story, I actually have very close to my heart. And the way that you described this earlier, Matt, is like I had like something like 24 GPUs.

And so if I mine solo for the about 12 to 18 months that I was mining, with my 24 GPUs, I might not, probability-wise, It was like 50-50 where I was going to mine a block in like a three-month time span. It was a total gambols. Like I might have mine a block. And if I did mine a block, I'd win two ether. It's actually three ether at the time. But in order to smooth out from my returns, I would just donate my hash power to a mining pool.

Like all the small fishes in the big, big sea would all come together and we'd pool our hash rate into the mining pool so that we could share our dividends amongst all of each. other and it would smooth out this very bumpy, inconsistent rewards of the hash power. And so it's like if all of your friends all bought a hundred lottery tickets rather than 100 friends buying one lottery ticket, you're more likely to win and then you just spread out the returns. And over time, it's like smooths out their ROI. But what we are accidentally doing, and this was really before MEV was really a thing, but what we do know now is MEV is huge. And so when we give up the right of our own ability to be our own miners, we're giving that power up to a mining pool. And so mining pools, maybe we don't

really talk about them a lot on bank lists because we're more focused on the future of Ethereum. But mining pools and staking pools are largely the same thing. They're the same type of players, same kind of flavors. And so in one part, I was giving up my hash power to join a larger pool, but that was also giving up my ability to construct the transactions inside of the block. I was giving up that power to somebody that had more power than I have. And the same thing you could say is also true of something like Lido, where you're putting your ETH into the Lido staking as a service app, but you're giving Lido the power to order those transactions, the Lido validator. So this conversation is the same, whether or not we're talking about proof of work hash power or proof of stake ether supply. And so

just wanted to go through this story. And so as a result of me giving up my hash power or me giving up my ether, I'm delegating this power to somebody else who is able to extract M-EV from the defy ecosystem and perhaps not pass it along to me. I just wanted to compare and contrast the proof of sake and proof of work side of things. And so Matt, like, can you kind of just like give us the bad scenario as to what happens if we don't solve this problem of the centralization of power with technology? Like, what happens if we were to let the mining pools just go ramp it with MEB or the future staking pools or large stakers just go ramp it with MEV if we gave them too much power. Why do we need to decentralize this power? Well, again, determining which

transactions go in a block and the sequencing is a privileged position and it has huge economic value associated with it. And so the issue here is the level of reward, the level of value grows over time with these blockchain networks, with the opportunity to determine which transactions go in and go out and those sequencing. And so there's ever greater incentives to have corruption at that layer. And corruption can be, I favor one party over another party. I favor my own transactions versus the market's transactions. And you wind up with a system which is supposed to be, you know, fair and balanced and equal and is actually not that, that you have halves and have nots. And this is something we think a lot about at Block Native is sort of information asymmetries that

exist in this ecosystem and sort of how everybody having access to the same set of capabilities is actually really beneficial. And so what the focus is as part of a certain dimension of the merge is to move to modular decentralization of block building and to create new actors in the core of the network. And therefore, there's probably going to be some pretty interesting power dynamics that emerge from there. We've often on bankless called, if you are the person who gets to construct the next block. And right now, in proof of work, it's random. You don't know when the next block comes, but you still are constructing every single block as if it is going to be your block. And in proof of sake, you actually will get to know when it is your turn to construct the block.

And so in that moment where you as a validator, you as the miner who's proposing the block, you have what we call God mode. You have God mode over that one block. You know, blocks added to the blockchain in a serial order. And if it's your turn to produce a block, You get to determine the future state of Ethereum. For that one instance of time, you have God mode. And that's powerful. God mode is powerful. You get to actually determine the state of Ethereum.

You get to bend the transactions. You can accept those transactions, but not those transactions. You get to embed your friend's transactions ahead of your enemy's transactions. And so it's nice that we get to distribute God mode across like an array of proof of stake validators from all across the world. And those can get to be individuals who are staking their ether at home. But if we accidentally have a part of our system that creates higher returns on capital faster than the individuals, then that God mode will accrue to one single entity faster than we would otherwise like. And so this is the conversation that we're having today is like the technology.

Don't worry, Bankless Nation. We have the technology to fix it. And that's what this podcast is about. And that's what the second half of the show is. And so, Matt, can we get into the future state of Ethereum in the post-merge world? How do we solve this problem of preventing one central entity from having God mode too much? Where does that conversation start? Sure.

So the transition from proof of work to proof of stake is rather than proving that you've done some work, i.e. burn energy through computers to solve a block, you stake your ether. So you need 32 eth to be an independent staker. And what you basically do is you commit to tell the truth. And if you tell the truth, you get a little bit back. And if you don't tell the truth, in fact, if you promote alternate truths, then you get slashed. And the economic properties of this are such that it's highly secure and it requires vastly less energy. And it creates sort of room for a whole bunch more scalability of other levels of it.

Now, this proof of stake is the consensus mechanism. It's how the network agrees on what reality is. But what's happening is we're beginning to split apart the block building aspects, the execution layer. And so by default today, a validator will run a validation client. There's a bunch of them out there. There's like six major ones. And they'll also run an execution client like Geth. But what they'll do is they'll say, hey, Geth, give me a block. And Geth will give them the block. And it's pretty straightforward. They can manipulate that block if they want. They'll validate that, pass it along. And that's kind of the end of it. It's a fairly easy thing to do. But as you mentioned,

And when you combine execution and consensus into the same actor at the same time, it creates room for corruption. It creates room for weird things to start to happen. And so what's occurring at the merge is this idea of block building where a new set of actors will be enabled in the ecosystem who all they do is build blocks and propose them to validators. And those block builders – I'm sorry, Matt. When you say build blocks, I just want to double down on this definition. Building blocks means I'm a block builder. I listen to the mempool. I listen to all the available transactions.

I order them up to the size of all the transactions that can fit into a block. And I have, with that order, I have built that block. And then I pass that block on to the validator who's going to validate this block. Is this correct? Yes. So the block builder's job is to assemble the block. And what they do, which is quite interesting, is they bid. to win the block. They say, hey, I have this block. Hey, validate or if you use my block

template, i.e. the block that you've created, I'll pay you a 0.2eath. And then David, you're running a block builder as well, and you build something and you say, I'll pay you 0.3 because I've built a better block. Well, there's various theories here, right? One could be there's more value in your block and so you can bid higher. The other is you'll take smaller margins. There's all sorts of interesting mechanics. But from the perspective of the validator, they just get a bunch of people who are saying, hey, pick my block that I've created for you, and here's the bid that I will give to you. And that value accrues pretty cleanly for them. And so it simplifies the job of being a validator. The validator now can run on very low-end hardware.

There's no sort of advanced sort of capabilities that they need or access to special compute power that the network sort of serves to them what the optimum block template should be. And they accept it and they get rewarded for doing so. And so what it does is it splits out the act of validation and the act of block building between two separate parties, which is a form of modular decentralization for the network. But it requires this new class of actors called block builders to do this job because, as we said before, there's only a handful of people who do block building today. And so the cool thing about this is that it is creating a process of block building that creates a competitive market. And I don't expect there to be.

a few block builders or maybe a medium amount of block builders. I kind of think in the future, there's going to be a very, very large array of block builders that are all highly competitive. And for the listener who has listened to Bankless and has got really, really excited about staking ether and participating in the network validation, and you should be, I'll have to ask you, listener, do you also know how to extract MEV? Because I'm going to go ahead and guess the answer is no. But the cool thing is, all of a sudden, you don't have to worry about that because through the process of separating block building and forcing block builders to pay bribe you to accept their block, all of a sudden you do know how to accept MEV because it's built into the protocol. Am I tracking on this, Matt? Yes, it democratizes access to MEV. Again, what's interesting about all of this is the value still accrues to the validator, just like today value accrues to. the minor, but it can do so in a decentralized fashion, and it creates all sorts of new possibilities

for value to move in new and different ways for members of the ecosystem who don't participate in this value, potentially to participate in this value. And also there's some pretty interesting sort of ethical decisions to make as well as a validator. And so we're about to see, you know, something brand new, the network's never seen, new actors, new behaviors, new possibilities, with new outcomes. And so that's pretty exciting consequence of the merch. So I want to go back to just kind of establish this, like, in a post-merge world, what the rules will be, right? And so we've talked about validators a little bit, and we've talked about block builders. I do want to get back and just hammer home what those economic entities are actually like, right? And then I also want to

talk about this third group, which we really haven't talked about too much so far, which is kind of the MEV searchers, right? These are the market makers. These are the people that actually want the blocks to be built in a certain way, are exposing the arbitrage type of opportunities from one uniswap pool to another, for instance. Can we go through each of these roles on the new Ethereum post-merge world and explain each of them? Maybe starting with the MEV searchers and then working our way towards a block being built and a validator approving it and saying, yes, this is the one. Thank you for the bribe. I select this one. Let's walk through those from an entity perspective. So tell us first about the MEV searchers. Who are these people? Searchers are a class of actors who evaluate pending

transactions and determine are there mechanisms to extract additional value from them, right? So this can be front running, this can be back running, this can be sandwich attacks, this can be liquidations, this can be arbitrage, and others. There's sort of many, many forms of MEV. But it turns out this is not the sort of thing that you just sort of write a script and it does for you. It's a fairly specialized skill set that requires fairly deep expertise. And so you have searchers. There used to be individual searches, but it's so competitive now that generally there's not a lot of individual searchers. They're more small teams all the way up to quite sophisticated organizations. And they do things like look at the transactions in the public mempool or block native specializes and say every single

transaction is there a way to extract value out of this. And if there is, they say, yeah, this one is amenable. There's some MEV. So by the way, not all transactions. have MEV associated with it. So if I have a simple ETH transfer, I'm going to send 0.1 ETH to David, there's no MEV associated with that. And so that transaction, in fact, the majority of transactions don't have this effect. But if I'm doing certain things in DFI, if I'm, you know, trading on a decentralized exchange, you know, if I hold a collateralized debt position that falls below a certain threshold, if I'm even trying to participate in a major NFT drop, that there's games that can be played with the sequencing of transactions and with constructing

specific transactions in specific ways to extract value from that. And what the searcher does is a few things. They first evaluate as MEV there. They then create companion transactions that have to either go before or after or before and after. That's called the sandwich. And then what they do is they bundle these together and they say, hey, they pass it along to a third party. If you include this bundle, which includes the original transaction, which they didn't create at all, some user and maybe in their Metamask or Ledger sets a transaction. The bundle includes that and the searcher transactions in a specific sequence. They wrap that together and they say, if you include this in a block, I'll pay you this price. Okay. And what happens is there are many

searchers who compete for many of these opportunities. So sort of a classic, you know, typical ARB opportunity, which is pretty obvious. You'll have many searchers compete for that. And they'll bid up the price until almost all of the value of that ARB is in the bribe to the minor. And that's why it becomes minor extractable value. And the minor gets paid, but the ARB is basically worth, with a small amount left over for the searcher. And who are these people? Are they like high frequency traders? Is there a traditional finance analog to who these people are? Do they have capital? Are they like funds? Are they just, you know, super geeky people at home just like typing stuff in on their computers? All of the above, right? They're shadowy supercoters. They are large, existing

you know, the HFT funds that are moving into the space, they are independent developers to folks who really know how the infrastructure works, you know, at a pretty low level. Mainly they're building bots. So I always think about searcher as a bot builder. And these bots are quite sophisticated. They require a lot of compute to sort of calculate various outcomes. And what happens is searchers tend to specialize in specific strategies. So you'll have a searcher and all they do is arbitrage, right?

That's all they focus on all day long. and they're looking at all sorts of unique and unusual things in arbitrage. You have a different searcher that focuses on sandwich tax, right? And there's something that's worth saying here about searching an MEV is a lot of the MEV is benign, meaning there's value that gets created and they extract that value and sort of no transactions are harmed as a result. But there are plenty of forms of MEV, which are not benign, which as a result of the MEV, a user might have more slippage, or might have to pay a higher fee, or might get a different exchange rate. And so there are certainly consequences to this that many people who participate in these networks may not be aware of or exposed to and realize that their transactions being sandwiched and therefore they have less favorable settlement for what they're trying to do.

Right. M.V can certainly span the spectrum between just an actor that is making DFI more and more efficient on the good side of things to perhaps what some people have called actual theft on the other side of things. and the full range of everything in between, good or bad. Matt, there's something you said that I want to clarify on. You said the searchers will create these transactions. They're specialized. And then they will bid up to the value of the MEV that they will create. And they will send that over to the minor validator. But that also sounds like the block builder that we talked about earlier.

Can you differentiate between an MEV searcher and a block builder and overall how a block is constructed? Sure. So before I do that, it's worth noting MV is a function of, all transaction systems, not just blockchain systems. So MEPV exists in their stock market today. So it's just, it's an unavoidable consequence of an ordered transaction system and all transaction system not to be ordered or the ordering counts. Any ledger has MEP. Exactly. MEP is a fact of life. Okay. So it's not do you avoid it, it's more like what can you do about it. Okay. To your question, David, so the searcher basically specifies a sequence of transactions

for inclusion, right? They basically communicate that preference to to a block builder, i.e. a mining pool operator and proof of work. And they do so via a variety of mechanisms. One of them is the flashbots has a marketplace for this. There's a group called Eden Network. There's a Block Shrout has some of this stuff. I think ether mine, one of them has their own private mechanisms for these things. And so you have multiple marketplaces for searchers to submit their bundles to specify what they would pay for inclusion in that way. And there are certain trust assumptions that are built into that because each actor in that value chain can sort of see what's going on. And so you've got to make sure everybody is doing what they say they're going to do and not playing further games.

But the searcher is submitting transactions. The block builder, the mining pool operator and proof of work, is ordering transactions into a block. And basically what this allows is the searcher to say put these set of transactions in this sequence, maybe in this specific. civic slot, specific order, for this price. And then what the block builder, or mining pool operator, chooses whether or not to accept that. And again, there's many factors that go into that, how many bundles go into a given block? Because remember, there's only so much block space. And all of this MEV requires unique transactions to do it. So the MEV begins to crowd out regular transactions that can have some negative externalities. And you may have multiple bids for the

same thing. So it's a dynamic real-time marketplace. People need to make decisions very quickly. And it's a pretty complicated domain today. Rocket Pool is your friendly, decentralized Ethereum staking protocol. You can stake your ETH with Rocket Pool and get REath in return, allowing you to stake your ETH and use it in Defi at the same time. You can get 4% on your ETH by staking it with Rocket Pool, but you can get even more by running a node. Rocket Pool is the only staking provider that allows anyone to permissionlessly join their network of validating notes.

Running a rocket pool node is easier to set up than running a solo node, and you only need 16Eth to get started. Why would you do this? you get an extra 15% staking commission on the pooled east, so your API is boosted. So if you're bullish-eastaking, you can increase your API and get some extra tokens by adding your node to the decentralized rocket pool network, which currently has over 1,000 independent validators. It's yield farming, but with Ethereum nodes.

You can get started at rocket pool.net, and also join the rocket pool community in their Discord. You can find me hanging out there sometimes in the chat, so I'll see you there. Avee is the leading decentralized liquidity protocol, and now AVEV3 is here. AVEV3 has powerful new features to enable you to get the most out of DFI, including isolation mode, which allows for many more markets to be launched with more exotic collateral types, and also efficiency mode, which allows for a higher loan-to-value ratios, and of course, portals, allowing users to port their AVE position across all of the networks that Avey operates on, like Polygon, Phantom, Avalanche, Arbitrum, optimism, and harmony.

The beautiful thing about Avey is that it's completely open source, decentralized, and governed by its community, enabling a truly bankless future for us all. To get your first crypto collateralized loan, get started at AVE.com. That's AABE.com. And also check out the AVE protocol governance forums to see what more than 100,000 Dow members are all robbing about at governance.aVE.com. Living a bankless life requires taking control over your own private keys. And that's why so many in the bankless nation already have their ledger hardware wallet.

And brand new to the ledger lineup of hardware wallets is the Ledger NanoS plus, a huge upgrade to the world's most popular hardware wallet. With more memory and a larger screen, the NanoSplus makes it easy to navigate and verify your transactions. And the paired Ledger Live desktop app gets you increased transparency as to what is about to happen with your NFT. What you see is what you sign. The NanoS Plus gives you the smoothest possible user experience

while you're doing all of your crypto things. So go to the Ledger website to check out the features of the new Ledger NanoS Plus and join the wait list to get yours. And don't forget about the Crypto Life card, also powered by Ledger. card is a crypto debit card that hooks right into the Ledger Live app, right next to all the Defi apps and services that you're already used to doing, like swapping tokens and staking.

So if you don't have a Ledger hardware wallet, go to Ledger.com, grab a ledger and take control over your crypto. Okay, we have three parties here. We have MEV searchers. We have block builders, and we have stakers and validators. And this happens in a serial order. I think the best way to view this is kind of like as a funnel or as a pyramid, depending on what your orientation is.

there's only one validator for every single block. So there's only one of those entities per block. And so that is the conclusion of all of these efforts of these other two parties. So they're at the top. They're out there at very end state. They're the last thing that happens before a block is added to the blockchain. Searchers are on the other end of the spectrum where there are so many searchers. And imagine for a second, let's fast forward into 10, 20 years in the future where Ethereum defy economy has taken over the world. At least that's where I'm, I expect the world to go. We know we don't have just like AMMs and like, you know, money markets. We have the full entire world economy being built on a blockchain technology. And so all of the world's financial ecosystem, all of the world's finances built on blockchain. And in this world, imagine there is not going to be one type of entity that is an expert in ordering the world's transactions. And so what searchers are doing, what I'm hearing, Matt, is that searchers are

specializing in one specific domain of the economy to make that economy hyper-efficient. Let's make sure all the AMMs are perfectly balanced, and searchers will arbitrage between sushi swap, uniswap, balancer, all the other AMMs, and they will balance those things out, and they will extract that MEV, and they will be hyper-specialized at doing that. And then there's going to be different searchers who are good at liquidating money markets to make sure those are super efficient. So we got Ave, Compound, Marari Fuse Pools, Uler, We have searchers that are optimizing for liquidations on those, and they're highly competitive to optimize to make that happen. And so pick your flavor, pick your part of the economy, and searchers will find a way to make that part of the economy hyper-efficient.

And so if searchers will bundle up those micro parts of the economy, and then those bundles, I'm sure we've all seen a transaction on an ether scan that has like 15 different ins and outs. And this is kind of like what a searcher would look like, at least if I'm imagining it correctly. And then the searchers bundle up all these transactions, and there's a ton of searchers, but then they send them to the block builders. And so the builders take all of the bundles from the searchers, and then they are the ones that construct it into a block. And there's fewer block builders, I'm guessing, than there would be block searchers or MEV searchers. And so we're starting to consolidate and funnel down all of the transactions in the mempool down to a fewer parties. So the searchers bid to block builders to accept all of their bundles. And then the block builders compete with other block builders to bundle up all of the searchers transactions.

And then to finally submit it to the person that is their turn to have God mode, which is the validator. Matt, did I get all that correct? Yes, largely. So first off, MEV bundles are multiple transactions. So you have transaction A submitted from the user. You'll put transaction B right behind it from the searcher. So instead of one transaction, you have two, that's your bundle. Okay.

And so you can actually look in EtherScan. You'll see there's a little flag. I think it says non-traditional ordering. I think it's something like that. And those are examples of MEV transactions where they appear in an unexpected sequence in the block. And that's the clearest indicator that there is some MEV there. So yes, searchers look at sources of transactions. They create responses, group those up into bundles.

They submit them to various. locations for inclusion in block building. Now, this is this new thing under proof of stake, and in particular some new sort of sidecar capabilities through what's called M.E.B. Boost, which is also from FlashBots, enabling sort of a new class of actor to be a standalone and specialized block builder. And this new role, which doesn't exist in the network today, is that anyone can build blocks. Anyone can look at the mempool, can look at other sources of transactions, can receive bundles, from searchers and can try to build an optimum block. And an optimum block is a block which occupies the maximum amount of gas that's available, and that has the maximum value associated

with all the various transactions, and then can say, well, this juicy block, I want to propose up to the validator whose turn it is, is to have God mode. By the way, significantly, when the validator is in that position, they're known as what's called the proposer. Okay. So this will matter in a second. So the block builder creates a template based on all these transactions, including bundles from searchers. They then push that through MEV boost to the proposer, who's a validator, and the validator says, this block looks great to me, and I'm going to suggest that to the network. There are some interesting nuances in how the various pieces work, but sort of the punchline to all of this is standalone block builders have not been a thing in Ethereum to

date and immediately post-merge, it's going to become a thing, and that's going to be a pretty interesting set of activities and actors. And now that you have independent block builders, they can start to do things that haven't been possible before. They can start to move value around in ways that haven't been possible before. And they can start to express sort of values in ways that haven't been possible before either. And I think there's going to be a lot of interesting possibilities that emerge from that. So we want to talk about the block builder new character class that's like sort of entered the list of economic agents, right? And I guess, before in the existing Ethereum today, block builders and kind of validators have been one and

the same, have been these kind of these mining pools. You know, like as David was talking about the kind of the efficiency and the specialization of these setups, particularly around the MEV search, it's so interesting to me because it's starting to, for example, a very organic system. Do you know, like in the ocean, like cleaner fish? We have these like fish that go clean other larger animals like clean their gills or they'll pick out the bacteria of a whale's teeth, you know, and they're just chomping away for all of the energy, right? They go take the energy. Well, this is how we sort of extract all of the economic energy from the Ethereum ecosystem, right? It's kind of a symbiosis. It's like a mutualism between different organisms.

And that's what these MEV like bots to me are. You describe them as bots. It's like these little nanobots, these little cleaner fish going and finding all of the economic energy and just like, biting it and cleaning things up. But this new character class, the block builder, okay, can you talk about what this entity might be? And I wasn't entirely clear, Matt, on why this new entity has entered the picture. You mentioned something called MEV boost from flashbots, but I don't think that's part of the core Ethereum protocol. That is something else. That is something third party. And yet it establishes this new block builder economic agent. So how? and then who are these block builders going to be?

Like, we haven't had them in the past. Who's going to step up and say, I'm going to be a block builder, and what is the benefit for them? Sure. So, as we said, there's a lot of moving parts here. So the general, if you're interested to learn more about this, the term to search on is called PBS, Proposer Builder Separation. Okay, that's the broad umbrella, where you're going to separate out proposer, the validator who's proposing the block to the network, from building, right?

Now, in the Ethereum roadmap, there's a notion of what's called in-protocol PBS, so that in the protocol itself, proposer, builder separation will be enshrined. But that's at least the year and maybe further out from the merch. So this is in the future. There's a bunch of research. We need a hard fork that in. There's a ways to go before we get to in-protocol PBS. However, there is this addition of a sidecar, which is known as MEV- Boost, which significantly all. All of the consensus clients support the MEV Boost APIs.

And so if you're a validator and you're running your PRISM or other consensus client, the consensus client needs to get a block. Okay. Now, you could do that yourself. You could run your own local copy of Geth and say, Geth, give me a block. And it says, hey, here's your block template. Go propose that. Or you could say, hey, MV boost, give me the block.

And then that outsources, that creates the avenue, for an external party to suggest a block to you. And so this is opt-in. So validators are going to need to enable these APIs and choose to participate in the system. But the economic incentives are such that it would seem that most validators and potentially all validators would do so because they make more money if they do. And is MEV Boost the only game in town for this? M-EV-Bose is the primary game in town. There certainly is some interesting possibilities for someone forking or creating alternates to it. But at the end of the day, the APIs are now enshrined in the consensus clients. And so there is this mechanism of an outside element communicating into the consensus clients.

What's nice about this, by the way, is it's completely client agnostic. So it's not like one consensus client can do it and the other one can't. And so therefore, you have this reduction of consensus client diversity. So it's pretty cool that it's something completely independent. and flashbots themselves have been working quite closely with the Ethereum Foundation to ensure that this is not something proprietary or that gives any one actor, including themselves, some sort of unique advantage because they were the ones who helped construct that. So the interesting thing is this relatively small piece of software called MV Boost is a sidecard to these consensus clients, and it enables third-party block builders to exist. There's some multiple pieces to the infrastructure that's required underneath there, which has some very interesting consequences like these things called relayers that have certain functions to do. There's block building itself. There's searchers.

There's other forms of simulation. So underneath the covers, there's even more complexity happening or even more sort of moving parts. But at the end of the day, MEV Boost is the secret here that allows block building at the merge. So that block building as a capability, as this class of actors, you know, will be enabled by this piece of software. So MEV boost comes post-merge, but then basically something like MEV boost becomes enshrined in the protocol in a year, two years, some future hard fork, and it becomes this thing that you just call PBS, proposer builder separation, right? And then it becomes enshrined in the protocol, and we don't need MEV boost anymore. Exactly. Okay.

These block builders themselves, all right? This is a new economic agent. We've had the MEV searchers before. We know what validators are, of course, and stakers and miners. Who are these block builders going to be? So it's an interesting question. So the honest answer is nobody knows who's going to be a block builder. But it would seem that those entities, so block building will be resource intensive.

You'll require a lot of compute. You'll require a lot of network bandwidth. You'll require a lot of data to be an effective and competitive block builder. And so block building will probably emerge from groups that already have those capabilities. So this would be existing infrastructure providers inside the Web3 ecosystem, like BlockNative as an enabler to all of this, like FlashBot certainly, like maybe some of the big HFT shops that have a lot of resources, like maybe some of the node operators, whether you're an alchemy, Infura, QuickNode, some of those may enable these sorts of capabilities as well. And so this is one of the things that's super interesting about it is it's a brand new market. It's a brand new game. and it's not at all clear what different actors will bring to the table and sort of what sort of unique advantages they'll have.

The desire of the ecosystem is that it be highly decentralized, that there be many block builders who are participant in the network and are winning blocks. It's actually a negative situation if you have one master block builder who builds all the blocks and then they're the force of centralization. So the setup is such that you'll have many different actors who participate in block building. So you want many different actors to participate in block building, not sure who they're going to be, but there are some possible candidates. And how are they economically rewarded? And how much is the economic opportunity for these block builders? Again, we'll have to figure that out. But the way that the economic rewards go is the block builder receives all of the value of the fees of the transaction of the block. So all of the priority fees will go to the block builder. The MEV, bundle bids, right? The bribes go to the block builder. Okay. And so the block builder, what they're trying to do is build the maximally valuable block that is valuable in the form of the priority fees that are included in the transactions and in the form of the various types of

MEV that are in that. Then what the block builder does is say how much of that profit, that margin in the block do I choose to share with the validator? Okay. And so one might imagine if Matt, David, and Ryan are all block builders, and we're all looking at the exact same data source, the public mempool, and we all have basically equivalent capabilities, we will build pretty close to identical blocks with identical value, and then the only way that one of us wins the block is whoever takes the lowest margin. And so what winds up happening is most of the value of those commodity blocks

will probably go to the block proposer, right, which is much how it is today. But maybe there's other modes here. Maybe there's other ways to create block differentiation. Maybe there's other ways to express preferences in the blocks that get created that validators can say, you know, maybe I don't want just the most money, the most value. Maybe I want the best block in the form of how it relates to my personal values and what I think is in the health of the Web3 ecosystem. So there are many ways to construct blocks. You could construct a block that's naively ordered, what they say today, which is highest gas price at the top, lowest gas price at the bottom, that's it. Okay.

The nice part about that is it's totally transparent and fair. And you could run a validator who says, I'm only going to accept blocks that are ordered this way. Okay. And this is where relays come in. You could say, I know these relays only have this form of ordering, so I'm only going to accept blocks from them. And I'm going to do so because I think that's better for the network than all these other things going. that, right? Or you might have a block builder who says, I'm going to include MEP in my blocks, but only benign MEP. I'm not going to include blocks that have any, you know, sort of negative

consequences for the transaction. So, yeah, I'm going to produce maybe less valuable blocks, but there's going to be no harm done, right? They're going to be ethically sourced blocks, if you will. And as valid you can say, oh, I'm going to subscribe to relayers that have those sorts of, or you could say, you know, maybe I'm going to decide, you know, maybe most of the time I'm going to take an ethically sourced block or a fair ordered block. But you know what? If there's a really juicy opportunity that I just can't say no to every now and again, I'll take one of those too. There's all sorts of interesting possibilities for how blocks get constructed. And this is one of the things that's really exciting about the emergence of block building is that there's now a marketplace

and there's ways to express things in new creative fashions. And it doesn't necessarily have to be this sort of linear, whoever bids the most gets the block and hell with the consequences, if you will. And so you do want this differentiation and you definitely want this competition, right? And ideally you want some sort of commoditization of this layer so that the block builders don't become a rent collector on the system and so that they pass the maximum profit to the validators, which is what we want, or block proposers. But you have a question mark face.

Is that what we want or no? Well, maybe because today the value flows. up. But like, if you think about it, like most of the value is originated with whoever started the transaction that has the MEV, right? So guess what? Regular everyday users are doing transactions on Ethereum just like we want them to do. And on L2 is just like we want them to do. And as sort of exhaust from what they're doing, there's other value that gets created that they don't participate at all today. Because the users themselves are not aware of the MEP and don't know how to capture it if they did. Okay. Oh, okay. So you're talking about this

fourth party that we have even considered, which I forgot about, but there's a user of this Ethereum transaction at the end of the chain. Hey, that's me. We talk about searchers and builders and validators and stakers, but there's actually a user. Now you're introducing that persona. There's a user. There's a wallet. There's a DAP.

There's a protocol, all of which you could sort of look at and say, these are the sources of transactions of which MEV results. And gosh, wouldn't it be a more level playing field if, they were to participate in this as well. Wow. And so now you can have block builders that provide rebates, right? So I always like to say, imagine instead of you having a wallet that you add money to to pay for your gas fees, your wallet pays you to use it.

Okay. Where do I sign up for that? Well, we think these are coming. And we think that this is why this is such an interesting opportunity for someone like us because we build enabling infrastructure that could make this a reality, right? where the wallet itself is aware of MEV or is connected to searchers who can evaluate, and that the wallet itself could then participate in this economic flow, okay? And then the wallet could return value back to the user.

And one might imagine different wallets with different techniques and how much they capture versus how much they share, and then users now have all sorts of new possibilities to select which wallet provides the greatest rate of rebate, right? So one, there's this sort of new, there's a possibility of value flowing in new directions, of big economic opportunities being created in areas of the ecosystem, which had less of that, that will then create all sorts of new innovation. And so if you're a DAP developer, you can participate in this. If you are a wallet developer, you can participate in this.

If you're a protocol, you can potentially participate in this as well. And so now as a block builder, you have the opportunity to take that reward, in the block. And instead of just giving it all to the validator, you could say, oh, I want to share some of it with the user. I want to share some of the wallet. I want to share some of it with the DAP. And so these sorts of eddies and currents and recirculation of value, we think is highly constructive and quite interesting, and we're quite excited to be a part of enabling them. And the block builder is only sharing the MEV portion. It's not sharing the block rewards, not sharing the other priority fees. It could be. It can share block rewards too.

Absolutely, right? Of course. So each block has a a certain amount of value with it, that value gets a portioned, right? So I win the block, right? I'm the block builder. I got to give some of that value to the proposer, to the validator, because they're got to pick mine, right? And that other value left over, I'm going to give some to the MAB searchers who found the value. I'm going to give some to the wallets who originated it and maybe directly to the user, maybe enable the wallet to give it to the user, and I might even give it to the debt. And so one could imagine this pie and it gets sliced up in all these different fashions, and the block builder themselves might take a relatively small percentage of the

overall reward that's in line with where the value is, you know, who's responsible for which aspects of the value. But if I'm a validator who with rational self-interest and I'm like greedy, I want to maximize my profits, I don't want you as a block builder to give that to other stakeholders. So I'm going to not pick your block. I'm going to pick the block that maximizes the value to me, maybe hypothetically. Won't validators, lean in this direction? Potentially. I mean, again, there's certainly be a class of validators who just say, I'll just pick the one that's most valuable to me and move on, right? There'll be others who say, hey, I want blocks that reflect my values and what I think is the best thing for the ecosystem

and I'm going to select those. You know, it's quite possible that this dynamic could emerge and still be the most competitive block that because of basically go pretty far up the value chain and sort of what is the source of those transactions, that you're going to have, you know, blocks that certain people can build that certain other people can't build. Okay. So for instance, you're going to have like HFT shops that have their own order flow. Are they going to capture the MEPV associated with their own order flow? Are they going to build their own blocks in order to maximize that? Are they going to share that with others? There's these weird, you know, not weird, but there are centralizing forces where you have a vertically oriented stack, which

starts to look like a big HFT shop like we have today. That's probably what's known as MAB dystopia. You're going to have decentralized layers. And so I think the reality is there's a lot of moving parts. There's a lot of very interesting possibilities that I don't think, my anticipation is it's not just going to pin to the simplest case, that it's going to be a pretty complex and varied environment for block builders and for how these rewards circulate through the ecosystem. I don't think it's that crazy to think that people that will be entities in the future of Ethereum that have some sort of like wild garden or like monopoly upon. their users and the transactions that they want to embed into Ethereum. And if they have control over users transactions, they don't have to broadcast those transactions to the mempool. They can go

straight to the source, right? And so they kind of have deal order flow, which is a phrase that we all learned with Robin Hood and Citadel in a negative light. But there's no reason why this has to be negative. This can just be a result of this particular vertically integrated construction where somebody has an app and they just receive transactions for their users and then they go through this process. There's totally reasonable to think that one entity has just like a bunch of transactions that they are their users transactions and it's their duty to get their users transactions into a block. And so Matt, I am very much reminded of the number of credit cards that I have in my wallet. A few of them give me 2% cash back. A few of them give me airline points. They all have,

well, I guess it's Visa that has like my order flow. But I'm, wondering if I'm on to something here, like this cashback, this rebate, because I am in a transaction originator from my Apple credit card and my United Airlines Miles credit card. Am I on to something here? Is this the right comparison? It's a very apt comparison. My senses in Web 3, those rebates could be dramatically better than what you get from a credit card company for all the reasons you might expect. I had a feeling. And this is one of the big benefits of decentralization and of modularity and of competitive marketplaces is that the value can begin to move in a much more efficient fashion. And so, yeah, we think this is super exciting. And we started out this conversation

in terms of power structures, right? And so I look at the post-merge landscape and my sense is transaction originators wind up in a fairly powerful position. Okay. And if we think today about sort of what is the true point of origination, they're wallets. And there are. And there's a handful of wallets that are pretty well positioned that have certain market share advantages in the marketplace. And they're probably going to exert significant influence over the trajectory of these sorts of things. And proprietary order flow is a little bit problematic, but that's going to start to emerge.

There's probably going to be standards for these candidate transactions to be shared among parties. So you can have maximum searcher awareness because, quite frankly, the more searchers that are looking at a transaction, the more likely it is to be most efficiently. understood and then things like that, you're going to have actors like block native who are really good at real-time simulation, who are able to be able to understand the consequences of these things and make decisions really quickly, sort of help all the various actors sort of navigate through this. And oh, by the way, all of this complexity, under proof of stake, there's a new block

every 12 seconds. Okay. That's five blocks a minute, 300 blocks an hour, 7,200 blocks a day, 2.6 million blocks per year. Every one of these is a real-time auction. Every one of of these, all of this mechanic is happening all at once. And there's a lot of things to worry about, which is why we as an infrastructure operator, we as Block Native who's sort of specialist in the mempool and sort of the easy button for dealing with us real-time data, we see a lot of opportunity to simplify this whole ecosystem as well so that various participants can play in the ways that they choose to. So again, there's going to be some interesting new actors and interesting new economic opportunities that get created for infrastructure providers like us.

So the Ethereum Protocol has so much development left, and especially in the era of 2021 Ethereum, gas fees were super high. People just felt very excluded from the Ethereum ecosystem because we had just an inefficient block space auctions. It wasn't really the most efficient marketplace. FlashBots came in, and part of this story started to develop with flashbots. That's a part of the story. And when they did, gas fees came down and pretty, pretty big.

decent amount, but still made Ethereum generally unusable in 2021. And just because I have to pay to use Ethereum, I have to pay gas, use Ethereum. And as a result of that, like, money leaves my wallet. And Matt, you're telling me, after the Ethereum protocol matures, we go through some of, we actually get PBS into the chain, I'm still going to have to pay gas fees. But Ethereum as an ecosystem is also going to pay me to use it over time. I will say that is one potential future. is much more efficient extraction of MEV at the core of the network by this new class of operators. And that value then recirculating back through the various actors in that, you know, who is

responsible for the origination? Well, you need adapt to use, right? You need a user who wants to do something. You need a wallet to compose that. And that those actors could all participate in this flow. We think that's quite constructive and quite in line with the ethos of a level playing field and of decentralization. And you're literally decentralizing the power.

Instead of all this power accruing to mining pool operators, which exist today, and therefore all the structures that sort of blend out of that, you break apart the blockchain, you break apart the infrastructure, you make it more modular. And in doing so, you break apart the value. Then value can now move in this much more modular fashion, which we think is really exciting. Now, again, there is a lot to figure out. There is a lot of unknowns, and this is all happening literally in real time. and these standards are being developed. But it's a time for optimism, I believe, for the potential

of the network and how it can incent the right sort of behaviors and participation in the network. There's a nice balance of power, I guess, in what you're describing if this comes to fruition. And I really like the idea of transaction originators being a recipient of some of this MEP, because if you're a transaction originator, you are kind of closest to the customer, aren't you? And like if you're a wallet or you're trying to get a customer's order in some way, you have to fight to provide the best user experience for those sets of users. And that is a good thing ultimately for the user, right? Because you have to compete for their love and their business. And maybe you have to provide them rebates in order to earn that.

Maybe you have to provide a better user experience. So that is a nice decentralization lever too. And I really like that idea. I'm very hopeful it comes to fruition. I got to say coming into this conversation, I knew about the block builders, not in the depth that you've just described it, Matt, but I was a little bit worried that that would become a centralization vector for Ethereum. And what you've just said gives me some hope. And I want to bring this up to the protocol level as well, because the reason the protocol itself is creating this new economic agent class of block builders is so that we don't centralize all of the stake. If we didn't do that, then we would keep validation and block building combined, and then no individual would actually be able to run their own validator because it would not be economically competitive to build blocks

and run a validator at the same time. But what we've done here in this new design of Ethereum, MEV boost, and again, as Matt said, that comes out post-merge. So post-merge will be in this environment, even if it's not enshrined at the protocol layer, then validators can still run an Ethereum validation, give the final sign-off on a block from a consumer-grade laptop, okay? Not in a data center.

And that is the check on power. That is the balance of power to keep this protocol decentralized at the validator level. So I really like that design. Can I ask you structurally, how hopeful are you that Ethereum remains decentralized? Because to me, decentralization, the thing that it does, the technology that provides, It's an anti-corruption tool, right? And centralization means potentially more room for corruption. So we've got to keep this thing decentralized.

In this new design, how confident are you that we're going to be able to do that? My sense is the path that we're on is a technologically progressive approach to enable orders of magnitude scalability while preserving and even extending the decentralization characteristics that exist today, okay? though it is no foregone conclusion. I think it is really a function of the various actors in the ecosystem and the decisions that they make, both economic decisions and also ethical decisions along the way. My sense is, you know, for instance, with the realization that if you had validators, building blocks, it creates a centralization force. The team at Flashbots is really pretty proactive about saying this is a big risk, and then creating a spec and standards and working

with the ecosystem to create a solution for this. Okay. And so I think that behavior is probably what's going to be most important to preserve decentralization over the long haul. Not like, oh, this little trick or this little piece or that. It's more like smart people at the center saying, hey, these are ways that we see risk for centralization and these are mitigations against it. The forces of centralization are economic forces. So they're very real. And so the combat against that is what you're seeing here. And it's playing out in real time. I am quite optimistic on that we will live in a highly scalable, highly decentralized Ethereum of the future. And it will be based on a lot of the ideas which are being pioneered today. We are super excited to be a part of that,

to be a contributor to be in the conversation and to be, you know, operating infrastructure that enables us to happen. And we see a huge amount of opportunity moving forward. And we certainly hope that others do as well. You know, it's super cool about this. It's striking as like, thank God for FlashBots. You know, sometimes I think my old view of the world is the Ethereum Foundation and some of the client teams are the only ones actually focusing on the protocol. Like these are the core researchers. But now here's another entity called FlashBots. And they are building a off protocol kind of system that is so important to the future of the protocol that the protocol is going to actually embed it. and they've done this almost as a public good. And the stuff that you're doing, a block native, is kind of providing some public good infrastructure as well.

And so I'm back to, like, peding theme on bankless, of course, is how do we ultimately preserve decentralization? It's actually at the layer zero, because it's people who have to care about this and build the systems that keep this entire ecosystem decentralized. We can't just say, oh, it's Vitalik's protocol design, he's got to be the one that saves us or the Ethereum Foundation, like all of us inside of this ecosystem,

if we actually care about this future, we need to take steps to preserve it. And that's sort of what I see happening. And so as long as the layer zero stays true to the mission, I feel very optimistic about our success chances as well, Matt. I agree. Layer zero matters a ton and the values and ethos of the ecosystem being expressed in working code and in working infrastructure

and in choice, right, that every actor on this value chain has ability to make discriminating choices towards decentralization or towards centralization. So yeah, completely. And there are a number of teams that are out there that are doing really important work, often below the radar, often mischaracterized, or often misunderstood that really are advancing the state of the art. And also, I think you have people that view the risks as real and debate the risks and debate alternatives. And again, it's the most interesting part of the world to be involved in and some of the smartest people in the world who are working on this stuff as well. And that's what it's going to take to live in the

on-chain future, which is truly decentralized and truly open in the ways that it needs to be. Matt, I think there's actually one component of this conversation that we have left out, that we have not yet touched on. And I want you to check my reasoning on this because I think that one last component is ether the asset itself. We're talking about the ways that the postmerge Ethereum and post-proposer builder separation, how this changes the power structures around the Ethereum landscape. And so it's going away from central entities like mining pools or staking pools or whoever can run the best MEV bots. And it's going somewhere else. And if my conclusion is correct, I think it actually ultimately, the pinnacle of where all the value flows actually is

ether the asset. And here I want you to check my reasoning on this. So we have the MEV searchers. They're highly optimized for specific parts of the DeFi economy. They're arbitraging between all the AMMs, the money markets, all the various parts, what they can arbitrage. And then they submit their bundles up to the block builders. And they bid up to the basically the value that they can extract out of their transactions. So basically what that means is that the value of the MEV from MEV searchers gets passed to the block builders. And the block builders do the same thing. It's the same process twice. The block builders take the bundles from the searchers and they organize them so that they can extract as much

MEV as possible. And that tells them how much they can afford to bid to the stakers, to the validators. And so ultimately, through the searcher, collapsing down to the block builders, collapsing down to the validator, it's the validator that gets the value of all the MEP through that flow of value. But the validator only gets to, become a validator if they are staking eath. And so the value of MEV turns into an increased ETH stake rate, which you actually can only get if you are staking ETH. And so if we are bullish on the proposer-builder separation and bullish on the total amount of MEV service area there is going to be on Ethereum, I think the answer of where does that bullishness ultimately come to settle on is

ether the asset. Matt, can you check my thinking on this? Is this correct? It would see, it seems to me that the move to proof of stake further puts ETH at the center of the security model, of the economic model, and of the end sort of value flows. And so as the value of the network accrues, i.e. increased scalability, increased throughput, increased applications, increased egalitarian characteristics, a more level playing field, the value will accrue to the core asset, which is ether. So ultimately, yes, I think that this is all highly constructive. for ether as an asset, for Ethereum as an ecosystem, and for the participants in that network.

So, yeah, I think that the net vector here over a long time horizon, short-term time horizons being what they are, is for value accrual to ether the asset. And I think that just even more illustrates why the Ethereum community, the Ethereum ecosystem, the Ethereum ethos has always been the ability for individuals to self-validate on laptops in their own homes and to obfuscate the need to have mining hardware, allowed expensive mining hardware with connections to supply chains, or like obfuscate all of that away with proof of work. And we're obfuscating the work of proof of state

or proof of work physical supply chains because we don't need physical ASICs anymore. But with proposer-builder separation, we're also obfuscating the intangible supply chain of block proposing as well. Both of these things are abstracted, making the process of being a part of the Ethereum consensus still exactly where it's always been, which is you, the individual with your laptop, and some ether stake at home. I feel like I'm on the right track here. Is that right? Yeah, absolutely. It's enabling individual sovereignty and participation on a level playing

field and, you know, sort of equal action. And these forces of composability, you break things apart, you make them more modular. And making them more modular, you make them more programmable. As they become programmable, they become flexible, they become expressive, they become competitive. And it enables innovation to occur in, again, a decentralized fashion. We as an independent software developer can build our own strategy, build their own infrastructure, build their own economic model. And we can go out there and we can suggest, hey, you should use our infrastructure versus somebody else's. And that creates competition, that creates alternatives, that creates choice.

And ultimately, we all seek a more perfect solution, a more optimal outcome. And I view all of these changes, all of these individual elements as just deeper and deeper, at the functional level, at the incentive level, and at the sort of conceptual level. You know, again, it just creates a universe of opportunity for those who are participating in the network. One last thing, Matt. I used to think kind of this MEV problem was sort of Ethereum's problem to solve. But then I noticed a whole bunch of the other alternative blockchains weren't even talking about MEV, weren't focused on solving it at all. And yet they still, at scale, will have these same problems. I'm curious.

about MEV, is it just an Ethereum problem where do other chains have it? Like, why don't we talk about MEP on Bitcoin? Is that because, like, Bitcoin's MEPB happens almost at the crypto bank layer inside of a blockfire, inside of a Celsius, inside of a NXO, and it doesn't happen on chain? Can you talk a little bit about this? Your impression that it's Ethereum's problem to solve, or does this exist everywhere? Again, MEV exists in all ordered transaction systems, which is therefore all transaction systems, because you can't have a transaction system without ordering. So, So MEV is a fact of life. And again, in the stock market, you have HFTs who pay for order flow.

And what they basically are trying to do is aggregate orders before others have it and make micromanipulations and extract value out of that. That's an example of MEV in a completely non-crypto-related context. Yes, every blockchain has MEV, as long as there's two characteristics. Value and generally some form of smart contract. If you're just doing transfers, like is the core of Bitcoin, there's not a lot of MEV to be extracted other than, you know, in certain opportunities, someone getting in front of somebody else. But as all these other blockchains add additional smart contract capabilities,

whether it's at their core or as an add-on, MEV emerges almost immediately as soon as value starts to flow through it. By the way, there's a whole emerging category of cross-chain MEV. So, MEV involving transactions on multiple chains simultaneously. And this is a, it's just a fact of life. and what the opportunity here is to explore this in the open, to discuss it, and to expose people to it. This is something I think is super important. We believe an informed user is an empowered user. And so do you just tell the user like, press this button

and a bunch of things are going to happen and don't worry, you're pretty little head about it? We say, hey, user, you know, how do you want to set your transaction fee? Because, hey, this will happen faster, but it'll be more expensive. This will happen slower, but it'll be cheaper, right? we block native offer things like transaction preview or simulation. If you press the submit button right now, here's what's likely going to happen so the user can see the likely outcome before they get it.

Where we want to go with that is like, shouldn't the user be alerted to, hey, there might be some MV here? Do you want to evaluate that? Do you want to participate in that? And so this idea that exposing all of this stuff completely to the entire ecosystem, and providing tooling with equal access is by far the best solution here because, you know, you want to light up the dark forest, as we say, and you want all this stuff to be out in the open and not, you know, behind closed doors, some smoke-filled room, some backroom deal,

where values accruing sort of under the covers and people can't really see it. And before you know it, you have the root of centralization happening. So, yeah, we think this is a fact of life regardless of where you are, on-chain or off-chain, Ethereum or otherwise, and the tooling that we're building today and the infrastructure that we're building today allows us to mitigate. Matt, you just touched on it how Block Native fits into this whole structure, but I'd like you to double down and keep going with that because we have so many different chains, and I think we're going to have a hundred times more than what we have now, which means we're going to have a hundred times more mempools.

And I dare say, I think we're going to have thousands and thousands of times more transactions. How does BlockNative fit into this whole proposer builder separation, transaction routing, transaction origination? How does BlockNative as infrastructure fit into this whole thing? So we as BlockNative specialize in the pre-chain layer. So all the things that happen to transactions before they go on chain. And often that means capturing, normalizing, and enriching mempools across various chains. Today, we support seven or eight and we're adding them constantly. One of the big reasons why we do that while we capture this mempool data and we provide programmatic access to it,

is to level the playing field so that everybody in those ecosystems that we support have access to the same information so that they can be informed in their behaviors, right? I often say, like, if you don't have access to the mempool, it would be like playing soccer against a team that could see 10 seconds into the future. It'd be a pretty frustrating soccer game because you'd never get to the ball. And in fact, in many ways, that's sort of what the state of the art is some of these Web3 systems is you have sophisticated actors who have access to this data. You have everybody else who does it, and you create, you know, an unbalanced situation. So this is what we do today, and we have a whole bunch of advanced capabilities as it relates to transaction simulation and preview, gas pricing, and things like that.

And fundamentally, we think these capabilities are quite relevant to post-merge. And so we're really focused on helping our customers get ready for the merge to implement infrastructure into what they're building right now so that they can become part of this ecosystem that we're just talking about. And we're looking at adding new capabilities that we don't have today or that are going to be necessary moving forward so that, we can participate here. Now, I would say we're obviously thinking quite deeply about these matters. We're pretty open-minded about exactly which elements we choose to take on and when. But, you know, again, we think that what we do today is quite valuable and quite necessary for the ecosystems that we support, and it will be more so post-merge. Matt, thank you so much. This has been immensely helpful. I feel like I understand the power dynamics and the new Ethereum economy so much better. And yet we all have to

see how it'll all play out. And you've given us a lot of optimism and certainly some explanation. And it's coming soon, right? I mean, we're talking about the merge, right? In a couple of months, I'm not going to hazard to put a date on this. But this is all going to start happening soon. So now's the time to get prepared and to start understanding this. We appreciate your time, Matt. My pleasure and really a pleasure to be here. And for your listeners, if you'd like to learn more, our blog is a great resource. There's plenty of other great resources out there. You can find us At BlockNative on Twitter. We're blocknative.com.

My name again is Matt Cutler. You can find me at M. Cutler on Twitter. And I regularly published stuff. I just posted some stuff this week about new and interesting things you can do. And my DMs are open. I look forward to hearing from folks. Matt is a wealth of information. So I encourage you guys if you have follow up questions, take them up on that offer.

Certainly we'll include links to the Block Native resources he just mentioned in the show notes. A few other action items for you, Bankless Nation. Of course, this is the build market, all right? not the bare market, so you've got to level up. One of the things you should be leveling up on, I think, is the Ethereum roadmap. So much is changing, and there's so much to get educated on. I've had to get educated on this over the past probably year or two, and feel like I'm still getting educated as well.

A few episode resources for you to go do that. One is Endgame with Vitalik, where he goes through the three to five-year Ethereum roadmap, absolutely essential listening, if you're interested in that. also our episode on ultra-scalable Ethereum, where we talk about the new modular design for Ethereum into the future. Dave and I did that episode. And David did a recent episode I thought was fantastic called The Guide to the Ethereum Roadmap with John from Delphite Digital, absolutely essential listening to you. It goes a bit more into the different roles and categories and proposer builder separation. So good pairing episode with this one as well. As always, guys, risks and disclaimers. Crypto is

risky so is Ethereum, so is Bitcoin. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.