Bankless - 157 - Will Solana Make It with Anatoly Yakovenko

Episode Date: February 6, 2023

✨ DEBRIEF | Unpacking the episode: https://shows.banklesshq.com/p/debrief-anatoly-solana  ------ ✨ COLLECTIBLES | Collect this episode: https://collectibles.bankless.com/mint  ------ In today’s episode, we have the creator of Solana and the Co-founder of Solana Labs, Anatoly Yakovenko. We brought on Anatoly to ask: is Solana going to make it? Price is down. A major public backer…SBF is down for the count…will Solana make it? Will it survive the bear market? Anatoly shares his thoughts. In addition, he also shares the full Solana story, back to its earliest inflection points all the way to the current state of Solana today. ------ 📣 MetaMask Learn https://bankless.cc/metamaskshow  ------ 🚀 JOIN BANKLESS PREMIUM: https://newsletter.banklesshq.com/subscribe  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken  🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap  ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  🚁 EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi  ------ Topics Covered 0:00 Intro 7:58 2022 & 2023 10:05 Solana Origins 14:40 Passage of Time as Data 25:30 Bandwidth Trade-offs 29:29 SOL as Money? 32:04 Security 36:24 Continuing the Solana Story 44:10 Early Day Solana Vibes 48:20 Solana Growth Acceleration 51:31 2021 Solana Price 53:12 The Crypto VC Narrative 54:37 Solana Haters 59:55 FTX & SBF 1:07:16 Solana Critique 1:09:35 Cultural Debt 1:14:46 The State of the Solana Community 1:19:37 The Future of Solana 1:24:36 Solana VM 1:26:39 Will Solana Make It? 1:31:15 Final Solana Questions Closing & Disclaimers ------ Resources: Anatoly https://twitter.com/aeyakovenko  Firedancer https://jumpcrypto.com/firedancer/  ----- 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://www.bankless.com/disclosures 

My guess is if you looked at all the product launches from inception of crypto to now to what's going to happen in the next like 12 to 18 months, the next 12 to 18 months is probably going to be way more than everything else combined up to this point. And if people are launching products, they're grinding for product market fit, they're going to get users, means crypto's going to survive. It's just like that's going to happen. 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 office. opportunity. This is Ryan Sean Adams, and I'm here with David Hoffman, and we're here to help you become more bankless talking about Solana today. The chips are down, prices are down, a major

public backer of Salana. SBF, he's down for the count as well. He's definitely not helping the sentiment. So we brought on the Salana co-founder to ask the question, is Solana going to make it? A few things to look out for in this episode. Number one, we go through the full story of Salana back to its earliest moments. Number two, we talk about the state of Solana today, both post-F-T-X, pre-FTX as well, and at the bottom of the bear market that we find ourselves in. Well, might not be the bottom yet. We'll see. And number three, Anatoly's reaction when he first heard the news of SBF. And lastly, we asked the question that I think is on a lot of people's minds in this market. Will Solana survive the bear? And if it does, how he thinks it will make it out. David, you

really wanted to have this podcast. Tell us why. I really think the timing for this episode is right. I see currently a lot of parallels between the moment that I decided to grow a bunch of conviction about Ethereum and the state of the Solana ecosystem right now. I've wanted to bring Anatoly on for a long time, and I think right now is the best moment to do that. And that's because of really where Solana is as it relates to its community, its builders, and its leadership. I think right now the Solana ecosystem is going through a moment of self-reflection as it looked back upon its own absolutely insane bull market throughout 2021 and 2022. And I see a lot of parallels to how Ethereum progressed through 2017 to 2018. I kind of think Solana is taking a lot of the same paths that

Ethereum took. A crazy, crazy adoption story of a bunch of what ultimately ended up to be a lot of hot air, like Ethereum had ICOs in 2017. Solana had a lot of hot air in the this last 2021 bull market. And at the end of this very bad year of just downward price action, a big pillar that really held up the Solana ecosystem, FTX and SBF, turns out to be a complete fraud. And so because the Salana community is really going through this period of self-reflection, that makes me bullish about the Salana community. That makes me really interested in seeing how they choose to take on hardship, how they choose to go about what is going to be a very difficult long bowl market to pull Solana out of the hole that it's in. And that's why I wanted to

bring Anatolia on, because Solana is different than almost any other chain that is in crypto. It's different from all the EVM clones, Avalanche, Phantom, like, whatever, in that it's got multi-client architecture. It's the only other ecosystem that has a multi-client architecture. And there's a real builder community there. There's a real Solana community there. And so, like, Ryan, I know you and I have been branded as like, you know, we have a big ETH bias. Of course, can't really deny that. But now that we are in this bear market, it feels safe to take down my walls during the bear market because of all of the crap that we flushed out during the bull market. My walls go up during the bull market because a bunch of newcomers come in and, you know,

don't really understand the deep fundamentals about what makes crypto work. And now that, that is well behind us now that we are deep inside of this bear market, the people that are here are now here for the tech, no longer for the money. They must be here for the tech. And so that's what I see in the current state of the Solana community, people that are here for the tech. And I think now is the right time to bring on Anatoli to tell that story and to ask what's Solana going to do in 2023. Well, I can't wait to talk about that with you in the deep breathing because there's some things maybe we agree on, but I think there's some things we might disagree on about the Salana ecosystem. I think for the first time, yeah.

And, you know, we'll have that discussion, that debate and the debrief. So premium subscribers, if we want to hear all of that, the episode we record right after this episode, then click the link in the show notes, sign up for a bankless premium membership, and you can get access to that on the bankless premium feed full of special episodes that aren't available on the public feed. Guys, we're going to get right to our conversation with Anatoly. But before we get into the episode, we want to take the sponsors that made this episode possible, and especially Cracken, who's our strategic sponsor for 2023 in the exchange category.

It's our number one recommended crypto exchange for 2023. Go check it out. There's a link in the show notes. Cracken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Cracken's products. Whether you're a beginner or a pro, the Cracken U.S. is simple, intuitive.

and frictionless, making the Cracken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Cracken Pro app and web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface. Cracken has a 24-7-365 client support team that is globally recognized. Cracken support is available wherever, whenever you need them by phone, chat, or email. And for all of you NFTers out there, the brand-new Cracken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Cracken does?

And if not, sign up with Cracken at Cracken.com slash bankless. Hey, Bankless Nation, if you're listening to this, it's because you're on the free Bankless RSS feed. Did you know that there's an ad-free version of Bankless that comes with the Bankless Premium subscription? No ads, just straight to the content. But that's just one of many things that a premium subscription gets you. There's also the token report, a monthly bullish, bearish, neutral report on the hottest tokens of the month. And the regular updates from the token report go into the token Bible. Your first stop shop for every token worth investigating in crypto. Bankless premium also gets you a 30% discount to the permissionless conference,

which means it basically just pays for itself. There's also the airdrop guide to make sure you don't miss a drop in 2023. But really, the best part about Bankless Premium is hanging out with me, Ryan, and the rest of the bankless team in the Inner Circle Discord only for Premium members. Want the Alpha? Check out Ben the analyst's DGENPIT, where you can ask him questions about the token report. Got a question?

I've got my own Q&A room for any questions that you might have. At Bankless, we have huge things planned for 2023, including a new website with login with your Ethereum address capabilities, and we're super excited to ship what we are calling Bankless 2.0 soon TM. So if you want extra help exploring the frontier, subscribe to Bankless Premium. It's under 50 cents a day and provides a wealth of knowledge and support on your journey west.

I'll see you in the Discord. The Phantom wallet is coming to Ethereum. The number one wallet on Solana is bringing its millions of users and beloved UX to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet and will be offering similar staking features for Ethereum and Polygon. But that's just staking.

Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize your NFT experience. Pin your favorites. hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is, of course, a multi-chain wallet. But it makes chain management easy, displaying your transactions in a human-readable format,

with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So, get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.com slash waitlist to get access in late February. Bankless Nation, we have Anatoly Yakavenko on the podcast. He's the creator of Salana and the co-founder of Salana Labs, Anatoli. Great to have you on Bankless. How you doing? Good. Thank you for having me. Hey, how was 2023? Are you glad to have 2022 in the rear of your window?

I think. Dave and I were just talking about this, like whether we would go back in time and crush 2022, make it so it never happened or not. What's your feeling on the year of 2022? you. Yeah. I'm glad it's behind us, but that was the year that I was like spent obsessing over priority fees and dealing with spam and Solano. So if I could just like take that engineering effort and move it a year back, that would be awesome. I mean, how are you feeling coming into this year, though? Are you feeling burnt out? Are you feeling jaded? Are you feeling discouraged? Are you feeling optimistic. Are you feeling energetic? All of the above.

Like, I don't feel burned out. Like, I think it'll probably take like these cycles come and go, right? Like, I think the 18, 19 cycle was really bad. Like, people were really depressed and like, nobody, like, people were, I don't know. Companies were just like shutting down, like, left and right. Like, people that were true believers. So far,

that's not happening. So there's a lot of energy that keeps you going. Like people are still coming up with like crazy ideas. Like things that seem like they have a one and a thousand shot of working and they're, and they believe they're the ones that are going to crack it like Uber and blockchain, right? Like stuff like that, I think is like energizing because that's kind of like evoking all of the promises and all the cool shit and like of an open financial system built an open source software. And there's somebody with a lot of energy that's just driving it right now. That to me is like really energizing. All the shit that happened in 22 definitely is a drag and does burn you out.

Yeah, yeah, we definitely feel a lot of that as well. And, and, Tully, one of the things I think we want to do on this podcast today is tell the story of Solana pre-2020. I think a lot of people, a lot of the Salana community came into Solana in 2020 or 2021. But the story of Solana begins actually much earlier than that. And bankless listeners will certainly know of my. and Ryan's bias towards ETH. And so for our own purposes, I'd also like to hear this story as well. Sure.

So let's go back to the very beginning. Where does the story of Solana begin? Where was the inception moment for it? So 2017, like I've been following crypto loosely. Like, I thought it was cool to figure out if I could build like a faster miner. And like my first experience, true experience with crypto is when forget the company, but they promise to ship you an ASIC. And they mined all of Bitcoin with the ASIC.

before shipping it to you. And I got like the first taste of what crypto is all about. The original front round. Yeah, I like thought it was like kind of silly, but I got it. Like, you know, my family left the Soviet Union. They saw like the full devastation of what like a centralized, badly run economy and currency can do to like people. And like that like belief of sound money in us and like what Bitcoin promised, I think like resonated with me.

but I wasn't serious about it until 2017 when I saw that one, there was Ethereum demonstrated that there's now like an application platform and this is what I did all my entire career. I built application platforms like everywhere I worked at. Qualcomm majority of my career like if folks ever had a flip phone and ever played like any of those games, I wrote a bunch of code that made that possible.

Like I was a kernel engineer at Brue and like learned how to be an engineer in that environment. So when 2017 came around and like the fees spiked across all these networks is when I started noodling on how do you make these things, these systems fast and efficient and cheap, while maintaining like that property of trust minimization. And I literally had like two coffees in a beer. This is a true story, a cafe Soleil. At that time, I had like this cheesy side project with one of the folks that became a co-founder of Solana.

we were mining crypto while building deep learning hardware. Like we were into deep learning. We were putting up racks of GPUs. And we were mining crypto with it in the background to pay for the GPUs. And we were just like arguing about proof of work. Is it stupid? Like why are people like paying for our GPUs? Like what is the point of all this?

And I had two coffees in a beer. And I had this like eureka moment that there's a way to encode passage of time as a data structure in a similar way. that you encode entropy as a data structure in Bitcoin. You generate this difficulty, like you solve the difficulty challenge, right? Like you generate this long string of zeros. You can infer from that that a certain amount of energy was spent to generate that. And that means you've proven entropy, right? There's some amount of energy was spent.

And the timepiece was like sequential, just runcha sequentially. And I couldn't Google for it because I didn't know the term verifiable delay function. I didn't know that Dan Bonnet and a bunch of other very smart people working on this and that there's very sophisticated versions of this. But that was enough to make me think that I had something interesting because the time component is very important for optimizing wireless networks. And if you think of censorship resistance as a communication channel as a means for a user to send a message reliably to all the subscribers,

That's what censorship resists in means, right? It guarantees delivery. You can think of it as a communication channel. And once you start thinking of it as a communication channel, there's a very obvious optimization called time division, multiple access. This is what 2G cellular networks run on. The tricky part is the time part. How do you say that everybody agrees in a certain time?

And that's a very pain-in-the-ass problem to solve. Can we, because Ryan and I aren't developers, we kind of get it, but the bankless nation is also going to be largely non-technical. Could we just really drill down on this like eureka moment that you're explaining and just make sure that we, because this is the inception idea of Solana. So I want to make sure that we get this right. Could you just like do this one more time and like explain like I'm five? So Salana came a little later, but like I was just really obsessed with this like kind of

by the eureka moment that there's a way to encode passage of time as data. Because there's a lot of like kind of like there's no mathematical explanation of time. There's no proof of arrow time moving in any direction. So it was in that sense, it like jarred me and like made me like, holy shit. I think there's something really fundamentally cool about these systems. Why it was really important for Solana is because it's really hard to pick a leader. It's really hard to make a block, right, to decide who's going to make blocks. And there's a whole bunch of ways to do it.

And the way that Bitcoin does it is we solve this challenge. There's a puzzle and there's a difficulty such that we'll leave, roughly one person in the world every 10 minutes gets to solve it. And in Ethereum, they tuned proof of work to be, I think, as fast as proof of work could possibly be, it was like one in 12 seconds. And that's still much, much slower than wireless per 5G, right? Or cellular networks or anything that we use in the world. And there's other ways to do this where you run consensus and then we elect a leader.

Two-thirds of the network agrees that Ryan gets to talk. Then after Ryan is done talking, two-thirds of the network. network agrees that he's done talking and then David gets to talk. And that's a very stepwise process. It requires a lot of communication, a lot of rounds. And if you think of it, I have XM on a bandwidth to use for messages. And Ryan gets to talk for five seconds. And then we run a whole bunch of junk that nobody gets to talk to to select David. That's a very inefficient use of that bandwidth. That's a very inefficiently used channel. And this is why wireless protocols, they basically create a schedule and say from millisecond zero to millisecond 100, Ryan gets to talk, then David,

then Anatoly. And if you miss your slot, too bad, right? The network just keeps going, but as long as everyone is up and running and talking, there's no gaps, right? There's no election process. Nobody has to wait for a random event. You just get to transmit, and that's basically gives you nearly 100% utilization of the hardware resources that you have. And just to really, drill down on this point. This is the main architectural difference that separates Solana from, I think, almost every single other blockchain that really exists. And this is why, if people have been following me on Twitter, while I've given a lot more credence to Solana than I have other EVM clones, like Avalanche, Phantom, EVM clones I don't really find very interesting unless they become layer two's on

Ethereum. This is actually, I think, something that's actually interesting in the fact that it is actually a completely different design space that is unique and specifically created by Solana. Is that a fair take? Yes. No one else has gone this crazy route. And the idea is that in proof of work and also proof of stake, the next person to propose a block is pretty random. Yeah. In Ethereum's current form, it's actually selected, but it's selected randomly, which is different than Solana. Can you go into the difference of how proof of stake leader election is selected and then how that's still different in Solana? I don't want to miss speak about Ethereum because I'm not like 100% up in the latest design. But like, tenderman is like the simplest way to think about it is that

you have, let's say, 100 validators in tendermint. They all have one vote and then two thirds of them vote and vote on a block. There's a known block producer that's next. But what's not known is whether the block producer is going to succeed or not. Let's say that's David. So we wait for David to produce a block. And then everybody says, hey, I did see a block from David. Let's all agree that we all saw a block from David. Okay, we all saw the block. Let's agree that the block was good. And then Ryan gets to do it. So there's a block that's proposed. And then there's a round of verification. And then there's a round of verification of that round of verification. And that's the last step. And then the next step is another block is proposed. And this design structure is

able to let Solana optimize for bandwidth versus like proof of work or proof of whatever like Ethereum's proof of stake clear is. Basically, yes. So, because we know, so tendermint, you know all the leaders ahead of time, too, but you have this, like, stepwise agreement, did David succeed or not?

In Salana, we don't really care. David has 100 milliseconds, 400 milliseconds to transmit. If he transmitted, great. If he didn't, too bad, right? The network moves on, and then somebody else goes. Now, there's still forks that happen logically. So when you, David proposes a block,

he's got to attach it to some previous fork that he observed. And then everybody votes and agrees, was that the heaviest fork or not and stuff like that? But nobody waits for anybody to start transmitting. It just kind of goes no matter what happens. And that's in an optimistic sense, which is actually happens 99.9% of the time,

super majority of the network is live. There's actually nobody votes on a different fork. There's no forking. Everybody just transmits and votes and the blocks occur very, very quickly. and you utilize 100% of the bandwidth available to the node. So if you have a thousand validators, all of them have one gigabit of bandwidth. That's not a lot.

That's a 22-year-old standard at this point. I have one gigabit at my house. You have a lot of capacity for transactions. Like in the most optimal case, in my stupid white paper I said, I think we can stave 700,000 transactions in there. Realistically, I think with the way Internet, operates in like erasure coding and all the other stuff you can cut that in the worst case by four it doesn't

matter how many nodes you have if you have a thousand or 40,000 because of how the blocks propagate we can actually utilize that one gigabit bi-directionally between all the nodes and let's say that's 200,000 transactions per second of bandwidth available right then how do you use it that's kind of like the big question is like how do you actually process it, how do you manage all the state and all of the signature verification and all this other truck. And this is where, like, the reason why I, like, started building Salon is, like, once I realize that I think we have a design that can utilize all the bandwidth available to the hardware, the other hard problems that are left were basically the bread and butter of my career and, like,

all the folks that are worked at a Qualcomm. How do you get Silicon to process a shitload of data as fast as you can and execute as many programs, system calls, like move memory from one part of the state to another as possible. This is like, I'm sure you guys can imagine people that work at operating systems. This is what they do day and day out. And this is a known quantity. And this is why I was like, okay, we can, I see the light at the end of the tunnel. Like, we have a design that as a unique way of utilizing, like, that gets rid of like the overhead of consensus. It can utilize bandwidth that's available to all the machines

to whatever limit those machines have. And that's an exponentially growing limit. Every two years, that gets cheaper or bigger. And the rest of the problems are problems that I'm very familiar with. Like, I know how to solve the memory problems, the runtime issues, like the parallelism, all of the stuff. And that's what drove me to go like, basically take the leap, become a founder, try to raise money. And I got pretty lucky there. I had like

basically a bunch of friends at Qualcomm that I worked with for over a decade. And at that time, Broadcom was trying to acquire Qualcomm. Apple was suing them. And they had to call like President Trump to stop the acquisition. So it's like kind of low morale internally. And I called a bunch of people and I was like, hey, we're going to build an operating system. We've done this before. It's a new developer. platform. It's for these things called smart contracts. Nobody knows what they're for, but like Ethereum was worth a bajillion dollars. So like, I think we can build something cool and unique. So I never thought of like building an Ethereum killer. We never like marketed as like, this is the fastest smart contract platform. Our pitch was like, we think smart contracts

are good for finance. Like I think there's like an application for finance and I think finance depends on information propagating as fast as possible around the world. Those are valid assumptions, right? That's the idea. Yeah. That's the Salana thesis, yeah. Right. So like the niche that we were trying to build is that because of our unique

consensus design, we can guarantee that if you're participating in the network, that you're receiving state as fast as everyone else and edits like best limit, you know, 20 years of the best engineers like crank away at building Salana. When you transmit a transaction, it's going to get sent to the nearest leader. You can have multiple leaders at the same time. You don't need to schedule only one. You can actually schedule N. So that geographical gap, that latency is minimized.

And then that leader propagates that information around the world simultaneously to everybody. So that information is moving basically as fast as a newswire can travel around the world. So for markets, that's very important. Some event happens in Singapore, that newswire literally is flound. flying through fiber to a trader in New York, by the time that trader looks at a market on running on Salana or one running at Nisi, the prices are the same because that state transition to change the price for the news is already propagating as well. That means that we can be competitive with these like monopolies on how execution and finance and everything else happens in like

trade file with open source software and hardware, like run by volunteer. years. So that was like, that's the pitch. That was the cool thing. And it's only one net effect of this. So this kind of consensus change that Solana has kind of pioneered in that universe. It sounds like it's really kind of maximizing, you said, maximizing the bandwidth available, right? And that's specifically a bandwidth for validators. Does the net effect of that mean that if you're running a Solana validator, your bandwidth requirements are going to be higher than say a validator from another ecosystem, say an Ethereum validator? It's like, do you need that one gigabit?

per second kind of connection and you need that to increase over time. Is that sort of a tradeoff here? Well, the way that Ethereum right now works, you kind of have the same bandwidth requirements across all nodes. But with sharding, you actually, this is where the scalability that goes beyond what Solana can do with Ethereum is when you shard the chain, you have these quorums that are separate. They have their own bandwidth requirements. And those could be, let's say, much lower. And they finalize the block, but they don't need to transmit the entire block to every other shard. You only transmit a portion of it. And because you transmit a portion to different parts of the network, you can infer that I have honest minority guarantees that no data was withheld by the shard.

And if there was a fault, if this shard transmitted a faulty state transition that somebody could detect it, because we have guarantees that data was propagated everywhere. But those guarantees you can achieve with sub-linear bandwidth. And that's the advantage. But all of these steps are going to be much, much slower than the newswire going from Singapore to a trader. Right. Right. So, like, those are all great.

And I think that's a pretty clever design. I mean, like, I love Dunkrad. I talk to him all the time, like, whenever I have questions about, like, how did you guys solve this problem in Ethereum? It's like a beautiful design, but doesn't do the thing. It's different, right? So until it's like, is it part of the Salana mandate to ever, or vision or dream, to ever have validators being able to run from a phone, for example? You know, Ethereum would say it is.

Like, validators should be able to run from people's bandwidth-constrained phones. Can you define a validator in Ethereum? Because, like, is that, like, the consensus client or the full node? That is somebody who adds a block to the chain. A block producer? Yes. A block producer, yeah. You can run a block producer that doesn't have the full state on Solana.

basically like a block producer only really needs to like propose transactions that go into a block, pick the ones that they think are going to get in the highest ROI, so they can guess whether those are valid or not. They don't actually need to have full access to the state. But like trustlessness comes from at least one full node that has the state and can evaluate all the state transitions and say that this is the correct answer and then tell you, hey, the majority, fucked up, and then either at least to say that or if I sacked where the majority fucked up and give you a proof that they did. I would love a whole separate kind of conversation on this, almost somebody from the kind of the engineering side on Ethereum and you and Atali.

But we'll say that because David and I are not the engineers. I think we'll save that for another date. But I could say that kind of the pitch that you just talked about in 2018 is sort of what I heard from what Athana, Salana was trying to become. I remember one thing. Bona is the Salonized is a layer to on Ethereum, right? Athena. Yeah, well, so, yeah, maybe. Did I Freudian slip that? It was that a Freudian slip right there?

Well, I remember hearing about Salon in 2018, and here's the thing that kind of threw me, and this is another maybe philosophy sort of difference. And I can't say that everyone in Ethereum feels this way about ETH the asset, but certainly many people do. And this comes from a little bit of the Bitcoin school, which is Bitcoin is money, ETH is also money. That's central for the economic system. security of the network. And I remember talking to Salana people in 2018, as this network was

being propped up. And I was very at the time also interested in the Cosmos ecosystem and a few others. And I asked the question to kind of the early Solana startup team, hey, is Seoul trying to become money? And the answer is always no, not trying to become money. In fact, I heard similar from Cosmos about the atom token. So Adam token was never meant to be sort of a store of value type of thing. And I think that's kind of been consistent with what you've said about the sole token too, is you don't see it as a store of value as a money in the same way maybe Bitcoiners certainly see their asset as money. And I think increasingly much of the Ethereum community also sees ETH as money. Can you talk about that difference in philosophy in the early

days? Yeah. So like imagine a world where you had like, everyone had like a magical radio that can never be interfered with or obstructed and could transmit to everybody in the world. That's a world without censorship. I can push a button and transmit to everybody in the world. You don't need proof of work anymore to build a blockchain. If you have a censorship resistant channel, I can guarantee that messages arrive to everybody. So like the store of value part,

you can build on top of a censorship resistant channel. I think store of value is a social construct. It's a meme. It's like something that people believe in. I think that's awesome. And I honestly think it's very useful to have a store of value that is not tied to any sovereign given, the shit show that happened in the Soviet Union, right?

Like, if you experienced that one time in your life that you have like a very, you know that it can happen again, right? Like, but it doesn't need to be tied to the consensus layer. And functionally, what the layer one chain needs to do is to prevent spam. And that's what the token does. It prevents spam. Everything else is like, I can't like code it up into a store of value. There's no like code change it can make.

salon as a store value. So like, I think it's kind of dumb to, for me to, like, try to meme it into that. Doesn't it also, though, provide, like, security for the underlying salana chain. It's like, security of the underlying salana chain and some of those censorship-resistant properties are, like, based on the value and the market cap of sold the token. What is security? Can you define security? Blockchain immutability. Yeah. Okay. And liveness? The ability to not, like, not reversing blocks. is definitely a key property here. The economic cost of how much it costs to go backwards in blocks is economic security.

Well, like, the proof of stake network, once a block is finalized, going backwards is invalid. So, like, you can create two forks, and that means the majority created a fault. And then you got to resolve it, but like, let's say 100% of the validators were compromised.

Like, all of them were compromised. And there's nothing they can do to convince Circle to wire out your dollars from your bank account without your signature. right circle runs a full node they run it in there it's secure it's unstaked it's just seeing what these compromise validators are sending them there's no way they can like send it in valid state transitions so security of the network is based on this idea that if I run my full node I can process all the

valid state transitions and I know the exact state now like creating a fork right creating a duplicate fork that's an attack that you can think of as like mining Bitcoin in my hidden nuclear bunker, and then I'm going to roll back the last 50 blocks or the last 24 hours, right? That's the economic security of a proof of work chain. In a proof of state chain, it's kind of harder concept because once everyone that's finalized, Binance, circle, all the full nodes finalize something, all the honest full notes finalize something. They're going to reject any other fork that's proposed.

they don't have this like consensus hook that says oh if somebody proposes a heavier majority signature we're going to throw away our state that we accepted and like blow away all the money that like was made all the honest notes that are not partitioned are basically going to halt and now the network is stuck and humans go in and they're like well what the fuck happened that the majority double sign invalid like make an invalid double signature or something else and they resolve it. And that process is not based on the amount of tokens involved, what percentage or the value of them. It's going to be messy. It's going to involve a bunch of humans, right? Like, so then from your perspective, what you're describing, does it make

any difference for the economic security of Solana if the sole token is like, say, 10 cents versus if it's $10? With regards to safety, no, it doesn't. The likelihood of like a malicious, let's say the token was like one millionth of a penny, right? The attacker could cause a liveliness failure. They could be like, okay, I'm going to buy two-thirds of the tokens and then I'm going to halt the network. Or I'm going to create a double fork and then cause this messy process to run. The network's going to have to be down for like three days.

That sucks, right? So the value of the coin is maybe like prevents for these liveness failures that are like messy and annoying. but it doesn't in itself guarantee security. There's no way like the value of the coin has impact on circles dollars that are stuck in a bank that are governed by this full note. I think listeners can definitely see something like the philosophical differences that me and Ryan share about like eth is money versus the sole token.

But I think that's a fun exploration. But I think there's much more of the overall Solana story that I want to get back on track to. I think a store of value that is awesome could be built on top of Solana and could surpass Bitcoin. I don't see a reason why that wouldn't be possible. I want to pick up Anatoly the story back. Okay, so we have this inception of Solana, the architecture, and in the implied existence of the sole token.

And so I want to pick up the story again at the very beginning. Where does Solana go from an idea to an actual Salana Labs and all of this? Can you run us through that part of the story? Yeah, so I had this idea for a VDF, which I didn't know was called the verifiable delay function. But it was like what jarred me out of being a data. to day worker to like, I think I should go build a company in crypto. So quit my job. Being in San Francisco at the time, you're kind of connected to people in Silicon Valley that are VCs just by being here as an engineer. One of my friends through underwater hockey, it's a weird sport that I play,

was working at 500 startups. And he was like, dude, I'll give you, I forget, it was like 25K or 50K, which is more money than anyone has ever given me to do anything. just on a handshake. And I was like, holy shit, that's like enough money for me to be on ramen for six months. I can, like,

code a lot. If I had, like, I can write a lot of code in six months and, like, actually see if this thing could work. But I, with the help of my partner,

Laura, she's like, you got to do this for real. Like, there's a moment in time that happened with social networks, with search engines, with whatever,

where there's a lot of ideas. And, a lot of people go entering a space and you have to take it seriously and go raise and stuff. And that's when I got connected to Raj. And he has raised money before. He's not an engineer. So, and he was like, okay, I'll help you. And like, he drilled me on like making the deck and doing the pitches.

And like, that was like a whole part of the process. It was the first time I ever talked to anyone. And like, it felt really awkward telling him, hey, I have this idea. Nothing's built yet. No proof. but give me like hundreds of thousands of dollars so I can go hire my friends and go build this thing.

What were the initial like raise details? Like how much did Solana raise on day one? We were trying to raise 500K. That was like my target. The price at that time for the network was 20 million. Okay. Which I thought was ludicrous. Yeah.

Oh, you thought that was ludicrous? Yeah. After coming through 2020, like 20 million. Sounds extremely reasonable. I mean, think about it as like a first time founder. You guys are like, yeah, first time founder,

like all you have is an idea. Right, sure. Typical, like, raises in, like, Silicon Valley are like, for that kind of valuation is you have traction. You're like, hey, we have this amount of revenue,

we have growth. When you guys invest in us, that revenue is going to go up. That's the pitch. But that valuation, that was not, like, my pitch.

But I thought it was, like, scary high, but if it was any lower, there's no way we could have, like, funded a team to, like, go build anything. And I'm assuming that's what happened next, like started building out a team. How many employees did you guys hire in that first wave before you had to do round number two? About five people, which were all basically co-founders because they were so early.

Sure. And these were folks that are worked with at Qualcomm for a long time. I think that's still fewer co-founders than Ethereum, though. Yeah. Probably a better co-founder story. I basically called in all the favors that I had with my like colleagues that I've worked with over a decade, like getting folks that are like, you know, work 10 plus years on GPU optimization to leave their very like career effectively, like pause their career at a big company and go do the startup was like a big ask. But yeah, I got lucky with timing. We did another raise in May.

So we built a bunch of stuff and we built the first salon a node, like a single node. that could show, hey, look, we're processing signature verification in parallel. It's doing Profit History. It was doing like hundreds of thousands signature verifications per second because we like thief this box out with GPUs and whatever. And our thesis was like, look, if a single node can do this, the way that the network is designed that the network is going to run as slow as the slowest node in the super majority. So if a single node can be this fast, it means that the slowest node and the supermajority can be this fast.

So by design, it should scale to that. And that was enough, I think we caught like the last vapors of the 2017 bull market. This was like May 2018. Heath was dropping. Funds were closing and stuff like that. But we were able to raise like an A round like about 14 million. 14 million valuation? No, like 14 million bucks.

Oh, or no, excuse me, raise. Yeah, right. Okay. Yeah. And bankless listeners will know, like, like Ryan and I have talked about the depths of the 2018 to 2020 bear market and how different it is from this bear market. That bad market was dry.

Like funding absolutely dried up. And so to say, like, I really just want to drive that point home, there were fumes when it came to the private market funding in that era. And so, like, I'm sure fighting for that $14 million was not easy. So, like, what was cool was that people, like, slam us for being a VC chain. But, like, even from those early days, there were a lot. lot of like validators that were part of it. People that are cosmos, they were like, hey, we like, we run cosmos validators. We know how this stuff works. And this is cool and weird. That was basically

like, they made money on these other networks and were like, this is so weird. And like just based on that, like invested in, and like some of those folks, they were all the first ones to run notes. And like the first ones to go like help us like find data centers to actually do. And to actually deal with us and stuff like that. One of the other points I would say about the kind of the VC chain charges, like honestly, 2018 for people who were around, like, there was no other way to do it. Like how else do you, like the climate at that time was like post-Etherian ICO,

which sort of broke the glass on this, but the opportunity really closed up. Like there was no compliant way to do this, at least in the U.S. And so it's very difficult to see how, what chain could have raised post-2018 in the way the Ethereum ICO raised. Yeah, and being in the U.S., I'm like with kids, I was like, I want to just... Not get arrested? Yeah, exactly.

Okay, sensible. Yeah. We got, I think, lucky enough, but a lot of our competitors raised, like, hundreds and millions of dollars. Who are your competitors? Hashtraph. I mean, the people that you don't remember right at this point. There were, like, very big rounds. for layer ones being filled. And a lot of folks thought that we were just not going to make it

because there were just too many competitors that were too well funded. There's an article that an employee out of Salana Labs wrote not too long ago and released it the December 28th of 2022. And there's a line in here that I want to get your take on. It's written, what exists in the Salana ecosystem now was created by the need to build everything fast. Launch the network before Labs ran out of cash, ride the wave of the crypto expansion, and create an ecosystem at parity with other older siblings in record time. Would you say that as a fair characterization of like the vibe of Solana in the early days? The lack of like a hundred million dollar funding in the early days made us like prioritize things like wolves, I guess. I wanted like,

I wish we had EVM support, but it's expensive to build in a way that wouldn't cripple the network's performance. Like, what Salana be here, would you guys be talking to me now if we were like like an EVM chain that was like marginally faster consensus than Ethereum. Like nobody would care. So like stuff like that got cut and like how do you bootstrap an ecosystem without piggybacking of Ethereum devs was like a big unknown. There was a difficult challenge and we were just throwing everything against the wall that could stick.

Was there a moment where like Solana was like racing to stay alive and then that moment happened where you realized that you were going to make it? What was that moment? I hate to say it, but like, so 2020, we were like nine, ten months of cash left. So the market crashed. We like announced your coinless auction March 12th, I think, or something like that. We announced that it was going to be a week later. March 16th is when the markets crashed.

And I was like, fuck. We were so dead. But I was just too exhausted to delay. And we really didn't have an option. There was no, like, at that time, there was no bridge around coming. Like, the funds that we thought were, like, could back us were also like, holy fuck, we've never seen anything like this before. So, like, we have no advice to give you.

Right. So we decided to launch because I was, I think, my theory was that, like, the worst time to launch would have been right before the crash. So if we launch right after, there's a chance that this is like a huge overcorrection and then we just see at least the medium up swing. And that turned out to be like the bottom of the bottom and then like a start at the crazy bull run. So that was that was pretty wild.

And then we started seeing, I would say the second hackathon is when I thought that we had real traction because you saw some teams from the first hackathon that were just fucking around with a network and build like very cheesy dumb apps that didn't do anything. Right. Like you vote to have like a fighter fight chain or something like that.

Some of those folks came back and started building like DeFi, mango and like whatever. And I was like, okay, people actually like didn't hate the runtime. Like they got something out of it and they like had an idea that was unique and they built it. And that was like I thought there was something there like basically after the second hackathon. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is, of course, a decentralized exchange. but you know this because you've been listening to bank lists.

But did you know that the Uniswop web app has a shiny new Fiat on-ramp? Now you could go directly from Fiat in your bank to tokens in Defi inside of Uniswap. Not only that, but Polygon, Arbitrum, and Optimism, Layer 2s are supported right out of the game. But that's just Defi. Uniswap is also an NFT aggregator,

letting you find more listings for the best prices across the NFT world. With Uniswap, you can sweep floors on multiple NFTs and Uniswop's universal router will optimize your gas fees for you. Uniswap is making it as easy as possible to go from bank account to bankless assets across Ethereum and we couldn't be more thankful for having them as a sponsor.

So go to app.uniswop.org today to buy, sell, or swap tokens and NFTs. Arbitrum 1 is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web 3 landscape. Hundreds of projects have already deployed on Arbitrum 1, producing flourishing defy and NFT ecosystems.

With the recent addition of Arbitrum Nova, gaming and social daps like Reddit are also now calling Arbitrum home. Both Arbitrum 1 and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM compatible.

On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitram Nitro, it's also now 10-time faster than before. Visit arbitrum.io where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3

development the way it was meant to be. Secure, fast, cheap, and friction-free. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does Poaps and mintable NFTs, any kind of money that your wallet can claim, Earnify, will tell you about it. And you should probably do it now because some airdrops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new irdrop for it to make sure that you never lose anirdrop ever again.

You can also upgrade to Earnify premium to unlock access to air drops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one air drop. So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I. And make sure you never lose another air drop. And when did multi-coin capital step into the picture? What round were they in?

Seed. They were in the early days. Okay. Yeah. Was that the $12 million or the one before that, the $500,000? So we ended up, we wanted to raise $500K. We had it, like, verbally committed. The e-th dropped, like, 30% of one day.

And all these funds pulled out. But we managed to actually end up raising about $3 million during that round after, like, a lot of hustling and conversations. But there was like a moment that I was like, okay, fuck, I think maybe this is not going to happen. Okay, so we're coming out of the depths of COVID. Salon is starting to get traction. You mentioned two hackathons where like the second one started to produce real outcomes. How fast did things accelerate? Yeah, things started moving pretty quickly because we were focused on driving more hackathons. We did another one and twice as many people showed up. I don't know the exact numbers, but it was a significant bunch of,

from the previous one. From the second one to the third one, there was a significant increase in registrations and teams that completed. And the quality of the teams went up. And that was basically when we had announcer conference, Breakpoint. And like Breakpoint, the first one was pretty cool.

There were a lot of people that showed up that were just, I think, high in the euphoria of the bull market. And not as many builders. But the cool thing there was that you kind of had like a bunch of the devs on their own. they like got a space and they called at a hacker house and they just like ran away from all the bull market people and just coded on their own. This seems a lot like the Ethereum community in like 2017 where Ritalik got exasperated with like he, I remember Vitalik saying, I will leave this space if we keep talking about like Lambos and

moon coins. It kind of sounds like a little bit like that. Yeah. That was pretty cool because that was. again, we just then copied that model. It's like, okay, there's a bunch of devs that actually want to go build stuff. Why don't we like run these hacker houses

from one city to the next? And then we did a bunch of hacker houses and hackathons. And that year of doing hacker houses and hackathons leading up to breakpoint, even though the market turned around and everything started dumping was actually pretty awesome.

There's a lot of stuff got built. There was a lot of devs like the whole NFT space like happened during that cycle. like you literally, you know, Magic Indian exist, you know, like Phantom like actually became like, I think a pretty awesome wallet that everyone I think knows about at this point, if not used. So a bunch of really cool stuff happened. And the second breakpoint was awesome. It's like 40 teams that were building games.

We didn't have a game thing, even at the first breakpoint. The number of attendees nearly doubled from the first breakpoint. So despite this like market drop of Salinas Peak down to whatever, 30 bucks was a 95% drop, right? But the number of attendees to the conference nearly doubled. The number of devs that showed up was like 1600. It was a pretty awesome vibes up until the very last day. There's one on the flight back. Everyone started seeing the shit show with FTX.

Yeah, yeah, we'll get there. But I want to cover really like the throughout 2020 and 2021. Because Solana, the sole price between the start of 2021 to the end of 2021, did probably perhaps the craziest thing any crypto token has almost ever done ever, which is like go up 20,000 percent in a little bit over a year. And I mean, I would imagine that went from like Solana thinking about like, damn, we're running on fumes. Are we going to make it?

We need to get through this to like, oh my God, we've like, what have like everyone's here? Like what the hell is going on? Can you walk us through that part, that transition from A to B? Yeah. So, like, I think part of the reason of that is that because we were an underdog earlier, even compared to, like, the cohort of competitors, like Avalancheanier and all those guys, they raised at higher valuations from VCs, raise more capital at us. Or when they launched, their entry price was higher.

Salana's coinless auction to launch was 22 cents. It cleared at, like, what is that, $104 million or something like that, which is what Bitcoin was worth when it was just listed on Mount Cox. Like, there was no hype at that point. So the delta from that to, I think we passed the cohort, Avalanche and like NIR and a bunch of those other folks and PokedaD, that I think was surprising to everybody. And that's, I think, part of the reason of these like massive multiples.

Do you think it's fair in the contrast to other chains like Phantom, Avalanche, like, Near? Do you think calling Solana a VC coin is fair if we're not calling those chains VC coins too? I don't know. To what degree do you say that that's like a fair branding? I know that's a hard question. I mean, like, the very dumb thing about this whole VC narrative is that like the crypto VCs in 2018, nearly all of them were people that invested in the Ethereum ICO. And that's how they became VCs.

They, these were literally the. Ethereum backers that believe in smart country platforms and saw the future of this tech. They made big bats in the Ethereum ICO. They wrote it to like 1,300 in 2017 and they created a fund. Nearly all of these folks that were like the VCs of that era came from that. Like A16Z and a bunch of these other folks were not super active at the time. So that's kind of like I think the weird branding. Sure.

Like I don't know. Like I don't really care about the VC branding. I think it's just pretty dumb, like, to begin with. Like, are there institutionals at hold of shitload of EVE? Probably. Like, does that make it a trade fight chain? No, like, it's the people building stuff that make the chain. So what was it like?

Because Ryan and I have experienced this. Whenever you experience success, you start to get haters, right? And perhaps Ryan and I contributed to that to whatever degree we did. I'm sorry. But when did, like, the Eith Maxi crowd come in? And what was that like to be on the receiving end of that? I guess stuff that I see on Twitter, like, I just take it for granted as this is just people like being on Twitter, growing up in the 90s and forums and bulletin boards. You just like shitpost about everything.

People were getting in like flame words about Linux file systems, literally. So, but when they talk to people that are in the youth community, again, a lot of those folks, there were early Ethereum backers back Salana. A lot of the super early those folks became validators. and started businesses that are multi-chain. I never felt like there was like a hate coming out from like, especially not from like Battalic or Justin or Dunkrad or any of the core devs. Like I think they've been awesome and like super helpful. So like people shit posts on Twitter, I think is just like, I don't know.

I don't even know if they're believe what they're saying. Whatever. I don't really like let it get to me. Stuff that's, I think, valuable that comes out of that. is like arguing about decentralization, like actually getting to the nuance of trustlessness. Like how do you minimize trust? What are the tradeoffs with sharding? What are the tradeoffs with big hardware systems like Solana?

I think a lot of value is actually created there by getting the terms right, getting to the nuance of the tradeoffs. So like in some ways, like my conversations with Domtrap have influence like Solana's design. It's like just awesome. I do think that's an underutilized tool of Twitter and sometimes can be drowned it out by all the noise. So we've talked a lot about kind of the birth and the growth of Solana and, you know, 2020 and 22. But you said something really interesting about, you know, actually 2022 specifically and that you were at the breakpoint conference, I believe, when some of the FDX stuff started to bubble up. Can you just tell me about like that whole experience? because I feel like up to that point, the Salana community in general fared fairly well.

I mean, it was a rough year for crypto, right? We had Terra Luna. That was really bad for the Terra Luna ecosystem, of course. Then we had three hours capital, and we had kind of Celsius C-Fi is very shaky. You know, through all of that, Solana seemed kind of fine. Of course, prices down, but prices down everywhere. But this particular event, the FDX kind of event, and the unfolding of that had to hit the Salana community hard. In fact, I know it did. Partially because I think, whether fair or not, Sam Bagman-Fried was seen as a champion of Solana.

I think he was very much in the early days. So tell us about that event. When did you first catch wind of that? What were the thoughts going through your head? And how did that affect you and the Salana community? There's like, it was basically in the flight back is when I started seeing the tweets coming out of Sam and Binance. and like that interaction between Alameda and like the balance sheet being leaked was like,

so the first kind of like flag, but I didn't take it seriously, it was like, huh, this balance sheet, is that really what Alameda has? It seems like not great. And that like seeing Binance's reaction and CZ like making that tweet and then how Alameda responded was when like my stomachs are returning like holy shit like this might like be like a pretty bad event but again like I was really really shocked when like it unraveled to the point that it did like basically when Sam said that he's trying to sell FTX to Binance was like holy fuck something bad really really happens like and before that how would you characterize like

Sam's relationship with the Solana community was he a supporter He was obviously an investor at some level, but like, how was he involved? In the early days, like, it was a big deal, I think. Like, that, you know, again, no one really heard of Solana who just launched, trying to get people to code in this like weird rust environment where it felt like writing Linux kernel drivers. Sam saying that they're going to build serum on Solana was a big deal. That actually, I think, got a lot of developers to turn their heads and be like,

okay, there's something here. That's interesting. because I think FTCX engineers had a pretty high reputation for being like, like, you know, 10x engineers if you want to call them about, but like being a small team that can ship a lot of product and make good decisions, like engineering decisions. That drove, I think, a lot of defy interests and like got a lot of folks in the early days to start building stuff.

There was this like kind of relationship between us and them where like if we had like product ideas or something like that. We could talk to them and be like, hey, is this like an API? Can you guys add it or something like this? That was like based on this assumption that like they have a lot of soul. They're aligned with what Solano wants to do and they will like help us unblock stuff. That's really, really hard in crypto because of all the regulatory hurdles you have to jump. But they have all the licenses that do all the KYC checks for their customers.

They can build really good experiences for people to like onboard. For example, like the NFT marketplace we wanted to build, like was open source, give the tools to creators, let them fork GitHub and go launch their own auction houses. And that was the birth of Metaplex. It was like very WordPressy. They wanted like a centralized one that they controlled the experience that ran the markets on FTX. But they used the source code that we built and they built that experience. And it was the same data structures. So those NFTs could move in and out of.

Solana. And that was awesome. Like I think they tried to go get product marketed for that thing and it failed. Metaplex, I think, succeeded. So stuff like that was more like product engineering, like flowing. But that like collapse was like really painful to watch because I think a lot of people saw Sam as like one of the pillars of Solana, right? Like why would you build on Solana? Well, because Sam was building on it. Right. And therefore like I'm in a good group of people that are. building awesome stuff. It was kind of like a Joe Lubin type figure, not kind of a co-founder, but almost like a consensus, it felt like a little bit. They could like build stuff like consensus kit. Consensus is like 2,000 people, right?

Like I think that we are an org with like labs as like 75 people. We just don't have that scale to go build a bunch of stuff. Having that like disappear overnight was like pretty shocking and jarring. And like I was like, holy fuck, is this like is everything going to die now? Okay, so like shocking and jarring, I will tell you, 2022 shook my faith in people once again. At a level, I don't think I felt, even in 2018. Kind of like faith in humanity, faith in people that I thought were, I mean, many folks were on high pedestals in the crypto community. And they just completely failed from a trust perspective. 22 shook me like 2008 sounded like it shook people yeah did you feel that I mean like are you immune to that are you impure are like people are people did I get like burned down on that and I like I don't even know I'm a very kind of trusting person like I didn't have any

reservations with like working closely with Sam and maybe in retrospect you got to like you probably should like be cautious about anyone in crypto. And I don't like being that. I don't like having to think, like, are there alternative motives or are they doing something shady? Because it's just like, it's exhausting. It sucks. And knowing how, like, developers think and work, I think that you and atolli are a dev who wants to do dev things. And so probably to, like, have to consider, is SBF a good actor or not? It's not, you just want to build, right? Is that a fair take? We wanted to, like, make the network faster and, like, get more shit on. more people using it.

I think that if I want to put on my super critic hat of Solana, and this is echoed in a lot of the Heath Maxi circles, is that like Solana just ended up being a place for mercenaries in this last bull market, SBF being one of them. There's that guy that like spun up like a bunch of like that ecosystem of defy apps that pumped up the TVL, now being investigated by the DOJ. Would you say like the Heath criticism,

the Heath Maxi criticism of Solana as just like a place for mercenaries to operate? How would you feel about that? critique of Solana inside of it's like 2021 to 2022 era? I think those folks definitely suck. Like, I'm not disagree with you there. I don't know if Solana had like more than Ethereum or like proportionally more even. Because there was a lot of like shit that happened on Ethereum as well. And those, I mean, would it be wrong for me to say that like those were the two growing

ecosystems in that era that actually experienced pretty rapid growth? Finance March into it. Right? I think BSC came out and like grew up a pretty substantial side and also experienced a big pile of like shitty actors. I think I don't know what like we can do better as like a community to kind of like have an immune response to push those people out faster. Like there's just some stuff that's like I kind of thought what happened on its own. Like people would pick open source software over close source, but they don't. They just like pick whatever is like the shiny new thing. they don't really like look beyond that.

So that was like to me kind of surprising that you saw the market not resolve that on its own. And like simple things like that, like is that building immutable smart contracts that are open source that I've been audited and like it was a development done in the open? That would probably filter out like 99% of these folks. Like just because the folks that want to take the shortcuts are the ones that are trying to like, you know, take people's money, right, and lie or whatever. That same article that I was referencing earlier, titled on Medium, the year that

Solana blew up, blew up in a good way, it might have a double meaning when FTX blew up, but there was a part on cultural debt that I thought was a really, really interesting. And it's something that, like, I really enjoyed reading, especially when it coming from somebody who worked at Salana, they wrote, as a result, we have a massive cultural debt in our community, one that must be repaid. What do you think when you hear this? What I think about is that, like, there were a lot of projects that kind of launch, best as they could to get either funding or product market fit or users. And they didn't like audit. They didn't do open source development from the start. They didn't build immutable smart contracts.

They didn't use a like governance or like a multi-sign for their upgrades authority. Like that kind of stuff I think is like very sloppy. And you think that got like instilled a little bit too deep in the salonac culture for that bull market? I mean, what's weird is that like Armani and like the core salonna devs that you like look at that are like, you know, Armani, the Cheeto guys, manga, like, all those folks are like doing the right thing. They like build like labs didn't build the tooling for people to verify their programs on chain. Like they did. Right. Like they did all of the stuff because they wanted to see it. And those are like the people that when I look to like who are this core salon developers. There's those folks. And there's like a whole bunch of people

in the periphery that were trying to make money as fast as they could that like took those shortcuts. I don't know how we correct that or is that a self-correcting thing because over time it's just those dabs are the ones that are going to be here in the next cycle and all the other assholes or not. I'll tell you my take on that. I do think it's kind of self-correcting if you can survive. And one of the signs has somebody who's been interested in this Alana community, but kind of wait and see what happens is I almost feel like bear marketers, so good for purifying. Yeah, it's a perch.

I think the charge that David just said of, you know, Salonin being full of mercenaries, this is exactly what Bickoiner said about Ethereum in 2018, basically. There's all these ICO scams. Who in Ethereum, who was here for the right reasons, could deny, there weren't a lot of people that took advantage of the base layer of Ethereum to raise scammy ICO pump and dumps and exit. A ton of that happened.

But they weren't the people that stuck around. And so for my vantage point in Italy, I've very much been paying attention to how the Salana community fares during this bear market season. It's being tested in kind of the fiery crucible of a bear market. And if it survives, if it shows sign of life, if the builders continue to build, that to me is a bullish sign that Salana's going to persist and continue doing meaningful things for the community. So it's almost in some way when we were talking about at the beginning, like how about 2020? was it, was a good year? Would you erase it if you could? I wouldn't.

In fact, I think that, and this might sound, okay, it's like, if I were to say something at the Salana community, I think that this is a blessing, actually, for Salonata to actually have to go through this. It was too easy, wasn't it? It can't be this easy. You can't just go from like 11 freaking cents or whatever

to like $250.000. You can't just do that, all right? there has to be some troth of disillusionment. There has to be some washout. There has to be some purification, some testing along the way for Salana to really figure out what its culture is, what its values are, and whether the builders are going to continue to build. So that's what I'm kind of looking for. And I don't know if we're in the section of we have to talk about future for Solana yet. There might still be some other things to cover.

But I don't know if you share that sense with me in Italy. This is the testing phase for the community. man it's the testing face sucks it does suck it does suck yeah

it sucks because it's like deflating for a lot of the people that are doing the right things that are taking slower I think that happened on Ethereum as well but like I think

like Compone and Ave and all those folks are awesome right they've built really good products and like they're an example that I think everyone should look up to I hope we have like the same kind of cohort of people survive that can become leaders like in the next cycle. But getting through this phase sucks for sure. So Anatoly, here we are in 2023.

And I kind of want to just do like a snapshot, an audit of the current state of Solana. Because there are some parallels that I see to the state of the Ethereum community, not necessarily the Ethereum project because there's philosophical differences that will always make it different. but the state of the Ethereum community and the state of the Salana community, right? Solana is just coming out of the overhang of SBF, right, and FTX. Massive, forced seller of soul into the market. I kind of see a similar parallel of, honestly, like, Joe Lubin and Consensus in Ethereum 2018. Big forced seller of ETH because of the operating cost of consensus.

To say absolutely nothing about any sort of similarity between Joe Lubin and SBF couldn't be more different. Just the nature of the forced selling of a large, holder of the bag. And then also, like in Ethereum 2018, you had the ICO treasuries, big just sellers into the market. And between like Joe Lubin selling for consensus, ICOs selling because of their treasuries, like just drove the ETH price down. And I kind of see that with FTX being a four-seller. And also funds, you know, unsure, uncertain rumors about like multi-coin being needing to sell their soul and selling their soul into the market as well and other funds as well, you know, all of the VCs that did own Seoul. And in Ethereum, when all the ICOs sold

their ETH, it was a massive distribution. Same thing with, like, Joe Lubin, one of the biggest, most concentrators holders of ETH, all the ICO treasuries, big concentrated holdings of ETH, had to sell into the bottom of the market to the few remaining community members still bullish on the future of Ethereum. And that has to be what's going on with Solana right now, where you had the concentrated VCs, you had the four-seller of FTCs selling Sol into the market. And distributing the sole token to the last remaining people who are bullish Solana. That's my like snapshot of like where Solana is. And so is that a fair take?

And can you kind of provide your own like audit of the Solana ecosystem? Like how are people feeling where are they at right now? I mean a lot of like the stuff that's happening, I think in in like that's pretty exciting is like development of new defyp protocols, Zeta drift, like folks building like new perpetual markets and like figuring out how to use the chain for. to get to that vision of like let's replace trade five running it on salana and have like a competitive system to nisi that's happening i think that's pretty exciting and those are really dedicated teams that are working really really hard and that sucks because defy has been like hurt

the most on the network but i'm like pretty stoked about that the nfts community is like very thriving it's like i think arguably the second it's the second largest right crypto. Would you guys agree with me? It seems like by activity and by like numbers, it's half about half the size of Ethereum. That's very like I'm like proud of that.

Like I didn't do it. I didn't do anything. But like it's awesome. It's awesome to see that. And like those folks are having fun and like building cool shit and like creating memes and like trying to build brands or whatever. And there's always constant controversy because it's big enough to wear it.

It's just a continuous thing. but that is awesome. A lot of the mobile kits for the Salana Mobile, all the dev kits sold out. So we have like a very strong, I don't know how that's going to translate to consumers, but there's a very strong like developer like sigh of relief that there is like a chance

for an app store that isn't controlled by Apple or Google. That's coming from the folks in the community. I think that to me is pretty awesome. I don't know if people are still like kind of down in the gut or thinking about like FTX and all this stuff. That maybe, I don't know. Like I think the bear market was so bad up until that point that maybe this was like bad news and the best possible time.

Like it just happened. The band-aid is ripped off. Now everyone's thinking about the future. Like my personal like vibes are like, I'm a bit exhausted from like the negative news. And I want to see like some wins. I want to see people launch products and build cool shit. that you can't really do on your oral. So that to me is like what I'm excited about. Well, Anatoly, one of the things that make me really optimistic about the current state of Solana

is Solana is the only blockchain in crypto after Ethereum that has a second client. And this is like one of these like things about crypto that makes me feel like I'm taking crazy pills, that no one cares about having a multi-client architecture about their blockchain. It's insane that Bitcoin is like only one client and if there's a bug in it, that bug is Bitcoin. That's Bitcoin. We're going to run with that bug. That's crazy. And so, like, I see a lot of, like, the fact that Solana is developing Fire Dancer, I think,

in partnership with Jump, I think, maybe you can go into the details. But that's, to me, a huge vote of confidence that we finally have a second blockchain ecosystem that has a multi-client architecture. So I kind of want to lead up and open up this next conversation, the last bit of this conversation is like the future of Solana. Make us bullish about the future of Solana. Entice us to like stick around in the community during the bear market. And maybe you can also dive into the second client.

So I mean, people are always worried about like scalability. How's it going to scale? Where are you going to get more throughput if it's a monolithic chain with no sharding? And like Fire Dancer is like the example of how you can use software to utilize commodity hardware, stuff you can buy off the shelf to move a lot of memory and a lot of signature. through these systems and scale the network. They've done demos that are like, this is like the block producer stage

that can handle like 600,000 to a million transactions per second. And this is on commodity hardware, like dual CPU, like Intel systems. They're expensive, but you can buy them. And by the time you need that much capacity, it's going to run on like whatever desktop you can buy on fries. The cool thing about it is that it's just performance. optimizations. There's not like protocol changes. There's no like magic unknown science fiction that we need to build. It's fairly straightforward stuff that like every database engineer like has gone through like when they need to go from like when they need to step level the performance of the system.

So it's going to get done. It's just going to work. I'm like very confident that there's no like there's no magic that needs to happen. And it's a second client. And why a second client is important in a high performance system. Like I think, You can argue that Bitcoin is so slow that with 10 minute blocks, if something goes wrong, that the community has enough time to like maybe revert eight hours worth of blocks or something like that. And that's reasonable. What that means about Bitcoin finality is like a whole other topic. But for a high performance system, we need guarantees that the state is final. And with two clients, if they ever diverged, network cults.

So at a gut level, you're actually trading liveness for. safety. Like if humans wrote this code and humans are failable and they wrote bugs and those bugs are catastrophic to where there's a state invalid state transition exploit, then two systems written by two different groups of people in different languages, different tools. It's very unlikely that they'll have the same bug. And if they ever diverge and the network has at least 33% on both clients, then the network will halt and humans will be like, are needed to go figure out why. Now, if you had four clients, it's even better. And I think the goal for Ethereum must have four clients, right? So if you have, then it's very unlikely that two of them

will have the same bug. So one of them goes down, 75% of the network is still live, and you maintain liveliness. Now, to get to four clients, they'll take a lot of work. But eventually, the cool thing about what Fire Dancers doing is, they are also building a spec of what Salana is. So it's much, much easier to where, like, there's an agreed upon spec of all the definitions, of all the protocols and formats that's all in one place for somebody to get and then go look at, like, okay, this is how labs did it. This is how fire dancer did it. We can rewrite this and go or whatever and make it plenty fast. And now you can have three or four clients. That's five years from now, maybe, like, will be a priority. But like, V0, I think we need to

get to a second client simply because safety is paramount. And then what keeps me up at night is like the scariest thing in the world is a code execution bug in the runtime that causes like tokens to be minted or state to be corrupted. And like that's catastrophic. That's like the scariest thing. And like it's code written by humans, you know, like the best engineers working on the Linux kernel sometimes introduce zero days. And that's just really, really frightening.

I think the other unique thing that differentiates Solana from any old EVM clone is it's VM. Can you talk about the Solana VM and how it's unique and differentiated from other VMs in the space? Yeah, everyone that, like, used the Ethereum VM just got a free ride, which is smart. Because you're using a VM that's securing a very large amount of dollars, right? And that's a very large bounty to find every possible bug. But you are giving up a lot of performance. Like, as I earlier described, like, the whole point of Salon is, like, we, like, remove the cap on bandwidth. If the network has X amount of bandwidth, it can stuff all of it with transactions.

It means you can have very large amount of throughput, like hundreds of thousands of TPS on old school one gigabit standards. Now, the hard part is then, like, how do you actually process all of them and how do users actually take advantage of this throughput in a single state machine? it's very, very tricky to actually write systems that allow for parallelism at the user level. So the runtime, as is designed, is built kind of from the ground up with that idea. Like, we built the system so when transactions flow through this thing, they can be processed in peril as fast as possible. And that's very different from how EVM is constructed. And that means that, like, we had to build not only just the consensus layer and, like,

the tooling and all this other shit, we also have to build like a EVM equivalent, like a touring machine equivalent virtual machine. If we didn't do that, you would basically see like kind of a slightly faster Ethereum. That could do maybe like 30 to 50 TPS. Like it would be very limited by how EVM works and how memples work and a whole bunch of other stuff.

So it's only very much like Ethereum, I think in the depths of 2018. Some people out there, maybe even a lot of people out there, are saying Salon is not going to make it. All right. They're not saying that about Bitcoin. I still don't think they're saying that about Ethereum. I mean, some people are saying all of crypto's not going to make it, but let's put those haters aside. We don't listen to them.

Different podcast. You're not a typical bankless listener. But some people have doubts about Salana. Is Solana going to make it through the bear? What is your case for why Solana will make it through this bear market out on the other side stronger? Salana, the token or the network? The network. Well, yeah, the network. You can do both, yeah. The network will make it. I mean, like, the tech is there. It's just like, go fork it and run Solana New Salonor or whatever, right?

The code is there. It's awesome. People like using it. So like I think in that sense, we have enough traction and enough like devs that want to keep this thing going to where it'll keep going. The rest is like, I think very much macrodependent. I think that's like a big question for like

probably all of the smart contract platforms except for Ethereum is like, are we going to be in like a high interest rate environment for the next five years where like all the riskier bets get squeezed down and there's no traction that means that there's nothing for salana to do that's useful to the world that ethereum doesn't cover even if salon is a hundred times faster right even if we do more transactions and all the ethereum all two's combined they're not providing enough value to the world in that environment if they're not that means it's not going to survive now that's like the big if and that, I don't know. Like, that's a big if for crypto. What is crypto doing right now that is so crucial to the world that it can't live without it? Well, how do you feel about Salinas chances then? How do you feel about that bet? I think, honestly, I feel pretty good. Like, I think the fact that we have, like, this thriving NFT community, which was built totally accidentally, like neither myself or Raj or, like, NFT gurus, this just happened because the UX was better and it was cheap and fast.

And no one has been able to replicate that and like get that going. I think to me speaks that there's something there in the attack that'll continue like derive value to the real world from the chain. And if there's like companies like Magic Eden or whatever and the long tail of like NFT startups that have real world revenues, they're actually like making money on the web that excludes the like ad tech like it's not google revenues anymore it's like web three crypto weird revenues that are people like they have with like hundreds of thousands of users it means the underlying base layer will survive in some shape or another and that that's awesome

like this is like my bear i put on my like worst bear hat everything's going to shit interest rates are 10% or is like the web three nfts business model survive i think so and if that's true I think Salana survives. You got to feel better about your chances than versus 2018 when you started this whole thing, right? Chances are, I feel like way more bullish now than 2018, 2019. I mean, there's so much funding that's still happening in crypto. There's so many, like, smart young people that are, like, not joining the big companies and, like, building awesome products.

My guess is if you, like, looked at all the product launches from inception of crypto to now to what's going to happen in the next, like, 12 to 18 months. The next 12 to 18 months is probably going to be way more than everything else combined up to this point. And if people are launching products,

they're grinding for product market fit, they're going to get users. Me and Scripta's going to survive. It's just like that's going to happen. And totally, thanks for this conversation. It's way more fun to have this conversation in the bear market, actually. It gives us a chance to kind of take a breath

and hear what's really going on. And we're excited about what the Salon community's doing. So thanks for joining us. For sure. Oh, last question for you. Okay, you said monolithic chain with no sharding. Is that still the strategy? Yeah.

I'm just checking. You're sure about that? There's no way that sharding is going to get information faster around the world. There you go. Still the strategy. Still the difference. And, Titole, you said that if Solana can do more transactions than all the Ethereuml2s combined. Do you think that that's going to happen, that Solana can do more TPS than all theorem L2s combined?

Yeah, I'm pretty sure. He got to admire the confidence here. And, yeah. Game on, brother. I think this is what levels up the entire crypto community is a bunch of builders in competitive games, friendly competitive games with one another. Antaulay, thanks so much for joining us. We appreciate you. For sure. Bankless Nation will include some links in the show notes with some action items for you.

Some further research you could do on Solana. Also on the multi-client architecture that Antoley was talking about. That was called Fire Dancer. Am I correct, guys? Yeah, fire dancer. We'll have links to that too. As always, got to end with our risks and disclaimers. You must realize by now that crypto is pretty damn risky.

You could 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.