Bankless - Anatoly Reflects on Solana In 2023 & 2024

Episode Date: December 26, 2023

In today’s episode, we have the creator of Solana and the Co-founder of Solana Labs, Anatoly Yakovenko. We brought on Anatoly to reflect on Solana in 2023 and its future in the New Year and beyond.�� ----- 🏹 Airdrop Hunter is HERE, join your first HUNT today https://bankless.cc/JoinYourFirstHUNT      ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠ 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING https://bankless.com/MetaMask    ⚖️ARBITRUM | SCALING ETHEREUM https://bankless.com/Arbitrum    ⁠  🔗CELO | CEL2 COMING SOON https://bankless.com/Celo    🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku    🌐 Layer Zero V2 Launch https://bankless.cc/LayerZeroLabs    ------- TIMESTAMPS 0:00 Intro 5:49 FTX’s Effect on Solana  8:03 Solana Lindy? 9:55 Local Fee Markets  17:51 Solana’s Governance   24:58 Important Solana Questions  28:44 Firedancer vs. Jump  37:36 Latency Games 40:20 Are More Users Scary? 43:50 Hyper-Optimism    48:52 What Scares Anatoly  54:59 $BONK & Solana Phone  1:07:58 Breakout Consumer Apps  1:12:37 Solana Economics  1:18:30 ETH vs. SOL 1:34:50 Solana Alignment   1:36:49 Solana Misrepresentation 1:37:53 Closing & Disclaimers  ------ RESOURCES Anatoly https://twitter.com/aeyakovenko   ------ Not financial or tax advice. See our investment disclosures here: https://bankless.com/disclosures 

Bankless Nation, welcome to a conversation with Anatoly Yacavanko. Recently, Solana seems to have turned a page in its evolution with the Gito AirDrop, putting $200 million in the hands of over 10,000 different addresses. Seems to have really reawakened a part of Solana as new addresses and new TVL have come online and new conversations are being had in Solana. It's mainly conversations around Solana governance and Solana economics. And so this has captured the attack. of many across the crypto industry and including my own. And so I decided just to throw Anatoly

a Riverside link where we record podcasts here at Bankless and ask him to come on and just chat about things. This was a pretty unscripted conversation. Usually we have pretty thorough, robust agendas for 95% of all bankless podcasts, but this is not one of them. This is just David and Anatoly vibing on a podcast together. Talking about Solana, talking about Ethereum, talking about tribal stuff, but not with a tribal tone. So I hope you enjoy that. Before getting to the conversation with Anatoly Yakavenko, first a moment to talk about some of these fantastic sponsors that make the show possible, whether you're in the Ethereum tribe, you're in the Salana tribe, or you're in the Bitcoin tribe. Use Cracken to get to whatever preferred destination chain of your choosing. Crackin is our preferred exchange for crypto in 2020. And if you do not have an account with Crack, consider clicking the links in the show notes to getting started with Crackin today. Crackin knows crypto. Crackin's been in the crypto game for over a decade. And as one is the largest and most trusted exchanges in the industry, Crackin is on the journey with all of us to see.

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Like looking back over the year. Well, like looking back over the year, I was like, oh man, okay. this is what it's going to look like to fail. I was like psychologically preparing myself, like, at the start of this year, like, that things were not going to work out, but... Why is that? I mean, the FTX crash, kind of that the sentiment was really, really negatively turned, and there was a lot of risk to be...

Right, I kind of forgot that that was how this year started. Yeah. Yeah. Yeah, like, and, and, you know, it was, it was like kind of, like, one, no one, like left, like, in terms of like, internally all the core engineers were like, okay, whatever, I'm coding, the problems are still like my, I still have to finish this at my job. So that was good. And for the vast majority of the companies in the ecosystem, you know, they got that, like,

fight or flight response and most of them chose fight and just build better products. But that takes like a while to go from shock to like, okay, people are actually building stuff. Yeah, it was like

yeah, knock on wood, man. I don't know. I don't know how this happened. We are like 13 months past the actual FTX incident. call us like 12 months past, you know, being able to actually process what that meant for the crypto industry and especially for Solana because Solana had to especially process what that would mean for Solana. And like we could go through the gamut of the last 12 months and be like, okay, well, then there was this phase and then there was that phase and then there was this phase.

But maybe we could just like compress it all into just like what is now the net effect of all of that upon the Solana ecosystem? Because like you said, some people who just like doubled down. Some people did leave. Some people doubled down. So rather than just like going through the whole like speed running of the 2023 history of Solana, just like what's the net effect of it? The doubling down, like it causes like the people with less conviction to leave and people with more conviction to double down. And that is the best thing that could happen to an ecosystem. If you can survive it, what had happened, what like the result was that you had a really core super connected strong group of people that had really deep. convictions that just built the whole year. They just saw it as an opportunity. Now I have more

space, right? Like there's fewer noise, fewer competitors in my product category. Like, it actually is like, turned out to be like a huge win. Like, I don't think Armani would have, like, did Madlads and built the exchange. I don't think the tensor guys would have been like, oh, we can beat Magic Eden, even though they have 90% of market share. Right. Like, some people just like go hardcore when they see like, oh, this biggest competitors now like spread across five different ecosystems. There's no way they can keep focused. That's like a once in a lifetime opportunity for some folks that have that kind of energy. And seeing them rewarded for the work that they put in, I think is like the best thing that could happen in the ecosystem because

it's really, really rewarding the people to put in the work. Like that's, that's like, the, the beauty of Bitcoin and proof of work, right, is that somehow through game theory, it anonymously does that. It's magic. And that, like, doesn't always work out, you know? What would you say was the reason why? Maybe this answer isn't so, like, the same for everyone,

but why did people stay? What made people stick around Solana versus, I mean, there's, like, other high throughput chains that they could have gone to? So what about Solano? kept in there? I think the tech is pretty weird. Like, it's very different from everyone else.

And it has, like, some unique properties. It obviously is riskier, right? Like, you do a bunch of weird optimizations that people think, look at you crazy when you do them. It takes years for them to, like, mature and, like, prove themselves out. And, like, the folks that are deep in the tech, that kind of get why we made those choices and they appreciated them. Like literally, like the Mango guy said, okay, we'd have to like create our own chain like

D-Y-D-X. That's their alternative. Or we used Solana and like they felt that being part of an ecosystem is better than being kind of running your own L1. So a lot of people like made the choice. I think for that reason, for the tech reason. And I think when you have like a good group of those, like you kind of have a lot of people around them that want to build simply because.

I don't know if it's validation or like, you know, like I want to build where a bunch of other smart people build. That's, I think largely, you know, one of the best things about Ethereum is you like talk to Dancrad and you're like, wow, actually this guy is super smart. How do I like work with them? It's like the best selling point of Ethereum. But like we're starting seeing that happen on Solana and it's not the researchers that I think are like kind of the cornerstone of Ethereum. it's more like the low-level devs that kind of can grind really cool implementations and stuff.

So I think there's something to be said about that. One of my favorite questions to ask Bitcoiners is, and one of the reasons why is because the answer is always the same, mostly the same, depending on which Bitcoin you ask, they always kind of more or less say the same answer. But if you ask the Bitcoiners the question, like, what's the most important element of Bitcoin that really, like, powers the whole system?

And the answer is so incredibly uniform. They're like, well, Bitcoin is really a semblance of many different components and technologies. And it's really about how they all come together to produce Bitcoin. But really, the answer is the difficulty adjustment. Like, they love the difficulty adjustment. And it's like this keystone thing that puts Bitcoin together in a way that the other components are more ancillary. So if I ask you the question, like, what is that for Solana? Is that a fair question?

Or is it just apples to oranges because Bitcoin is so different. It's a really good question, but it's a really hard one, because I don't know. I don't know if we have like a lynch bin, like, super clever thing. I think maybe the parallelism, like, that we were able to figure out through, like, failure and experimentation that, like, we were able to, like, get it working all the way up to the economics. I think that was a really cool innovation. Okay. Okay, let's understand back then. Why is that so important and why was it so hard? Well, like, it's really not obvious.

And we basically see all these systems now that are getting inscription. Like the fees blow up because... Like the inscription locus? Yeah. And, like, what happened with Solano was effectively similar attack, not attack, but people using the chain, is that instead of seeing inscription locus, we saw, like, everything gets saturated to the point of like you cannot land a transaction. It was effectively livenous failures, right? Like for users.

Like, Defike wouldn't operate when there's an NFT in at the same time. Right? Like so, and that was really obvious in retrospect because it's kind of like, if you worked at a big web company and you have a database, you get these hotspots when like everyone wants to like order some weird thing all at the same time. but then all your other payments can't go through because there's this massive queue

for some random viral thing. Happens in every database system with any traction. But like it took it took me seeing it on chain to kind of unpack it and recognize it that this is a problem that has a similar computer science issue

in the real world and tying it to the economics to deal with the kind of the economics around making sure that you can isolate only that lock. And literally, we got lucky with SVM having this idea of access lists that are required with every transaction. We did that for performance reasons because that's the fastest way to build the runtime. But having that information is what allows us to do it now in every part of the stack

and the economics of it itself. So kind of like, it was not planned, right? I was like, what's the fastest possible virtual machine? I copied the designs that I knew worked in DSPs and GPUs, is that the developer does this very painful process of telling the system, this is exactly what memory I'm going to touch. So it wasn't like magic. It was not as, I mean, I had the benefit of having that experience

or worked in tech for like a decade to know that that's the fastest thing. But I didn't know that this is like the most critical piece for crypto. And then when we saw those failures, we had to solve them. Or I think the idea of a single global public chain that with many shared applications all using the same state was kind of dead on arrival. Like if global fees spike, parallelism doesn't matter. Right. Like you have one use case that saturates the whole thing.

No one cares how many TPS it can do. Like it's just irrelevant. Right. Like so luckily, like, we did the right steps, failed the right way, and like the solution was like kind of obvious. So I think that's maybe what makes Salami unique is we kind of, through a very long path, we found like, I think the right answer of how to build like a shared permissionless system. And that answer, what is the technical name for this? So I use the right name. We call them local fee markets.

Local fee markets. And that's where, like, if I'm coding up, I'll put this into, I actually just did this episode with Lucas from Gito. And so I was putting it into Ethereum terms just because, like, that's how I think. And that's probably what the listeners are familiar with. So, like, for example, if we had local Femarkas on the Ethereum Layer 1 and you made some ARB transaction to balance uniswap and sushi swap, you would like, what you're saying is the developers of wherever that transaction is originating from would say, okay, I need to specify to the Salana. ecosystem to the Salana SVM, I'm going to go touch the Uniswap contract or specifically the USDC Ether pool of Uniswap and then I would also be touching the Ether UssDC pool contract address of Sushi Swap and that's the only thing that I'm touching.

And anything else I don't care about. And that's how we get parallelism, right? As in like other things can specify their things over there and since they're not overlapping, we get parallelism. So it's local fee markets. it produces parallelism? Is that right? Yeah.

What I believe the technical term for this in database land is isolation. Because you have transaction isolation. So one transaction, another one isolated from each other. And when you have isolation, you can execute them in parallel and have the exact same result regardless what order they're executed in. But what's cool is once you specify that in a transaction, that information is available, in the MMPL. So then your block producer is going to be like, okay, I'm going to fill up the block

with the highest priority fees. And if the runtime, then the virtual machine says, okay, you've saturated all the USDC, uni, like transactions that could hit this specific market. You cannot add any more to the block, but you still have block space for other stuff. then the block producers can skip all the high priority fees and defer them to the next block, but then take all the lower priority ones that don't touch that saturated pool. And that's what creates this kind of like isolation and localization of fees because you have this hot spot. Everyone still is greedy, right?

So they fill up the hottest market, but then they're like, well, I still have space. So I don't take all this other stuff that is like noise or whatever. So that was the, you know, that's what we figured out had to be done for us to be able to support like payments, NFTs and defy, right? Like the big three use cases. And so, yeah, as stretching the metaphor, even though this is apples to oranges, this is what you're saying is if the Bitcoin, the difficulty adjustment is to Bitcoin, isolation is parallelism and local fee markets is to Solana.

Maybe, I hope. But I feel like smart people engineers, I think everyone is probably looking at what works for Solana and is like, okay, this is how I can apply it to my technology. So we're going to start seeing, I think, that gap narrow, but crypto man, shipping software and crypto sucks. So what you think you can do in like six weeks, takes six months no matter what. So I think Salana's been, I think, entering this, a new phase. for itself. Specifically with like the Gito AirDrop, there's like this before and after moment in the Gito AirDrop where like you kind of had like the Salana diehards, the Salana chew glasses throughout the bear market who stuck around. And now that the Gito AirDrop

happened, now it's attracted people who weren't previously attracted to Solana for like the economics reasons, for like the economic reasons, for like people understanding that this is kind of where the meta is. And that's one way I would describe the chapter or the phase shift for Solana, but another one is happening just like with some of the fundamentals here, which is like FireDancer is now a second client. Gito itself is a second client. Maybe there's another other clients coming online as well. And so this is now, once you have multiple clients, you now have the governance conversation. And so there seems to be like a lot of couple turnings of pages all kind of happening at the same time, making it seem like there's kind of a before-after moment for

Solana as it relates to like the last like six weeks or so. Yeah, that's pretty cool to see. Like, I mean, so FireDancer is a complete rewrite. Gito is another distribution of the Salana Labs client, but it does all the human bus factor kind of problems. You have now multiple points of failure, and that creates the governance problems. It's like, how do we make sure that, like, changes that Gito makes,

don't break main, changes that labs make don't break Gito, and don't delay fire dancer, like everyone's got to talk. This is why I'm writing more docs. Alignment is now a thing. How do I get all of these, like, engineers that, like, are experts in the deep part of the stack that they're in way deeper than me at this point, don't, like, all spread in different directions and make sure that there is, like, kind of one horizon roadmap that we're working towards. that's definitely a new problem, but it's a good problem to have. It means that, like, you know, people, it means you have a lot of people trying to, trying to move the ship.

So, like, coming from Ethereum land, there's all of this, like, infrastructure set up around Ethereum governance, right? Like, you have the bi-weekly all-core devs call. Now it's split into two calls, the EL call and the CL call. There's, like, the Ethereum Magicians forums. What does this kind of, like, coordination, infrastructure look like Solana or is that kind of still getting built? There's a call Jacob Creach runs.

There's a validator call to kind of more like DevOps system stuff. There's a specific core developer call between all the teams. There's a Discord with all the different channels for different teams and kind of like there's now a SIMD process. Solana improvement documents. You post on GitHub. Everyone reviews them. All that stuff is getting.

It was there before, but now people, like, it was good that we kind of, like, had set these things up, but people are now using them because there's a necessity to use them. Like, setting this stuff up is easy, right? Like, it just takes one person to run them. But none of it matters until you have, like, a critical mass of people that don't know what the hell is going on. Then they're forced to talk. They're usually smart people. They're forced to go and they're like, well, who do I talk to? Or do I find?

Who do I talk to? and you kind of start seeing that happening. I think the interesting thing that I'm seeing is like Solana, the archetypes of Solana is super strong. It's like these low-level systems engineers, these database designers like yourself. And now with this like whole phase change of Solana, the evolution of Solana into something greater,

is now needing a new archetype, which is like the governance archetype. And I, like the Solana engineering archetype, I'm not sure, has a lot of just like governance. muscle because I don't think most people to have governance muscles by default. Like I think Ethereum has attracted the governance nerd snipes because that's kind of

what it is. But I don't know if the engineers have a lot of governance muscle about them. So I think I don't know if this happened in Ethereum, but I think out of necessity you kind of start building like a constitution or a motto.

And I think for Ethereum it was like cheapest possible hardware. like how do we make this like verifiable as accessible as possible? And everyone that's building, always thinking about that. And for me, I'm trying to drill into everyone. How do you make it faster? Like just, what is like when you're like,

have 50 different options and you got to pick one or the other, which one is like more scalable faster, scales and more cores? And that's forcing all the discussions to kind of like pick out of the set of like permutations of every configuration. like, okay, we should go down this path. And this is a way, I think that, like, it's like a religious mantra, right? It's a long of north star.

It's a long alignment. Right, right, exactly. And this is not to knock on Ethereum in any way. I think, like, once you get to a certain size of the ecosystem, I think you kind of have to pick that, like, what's the core Paretoefficient spot that we're staking out and, like, have everyone align towards that? And I think like Bitcoin picked its own spot, right?

And it's worked out for them. Like, you know, despite of all the criticism that everyone throws at Bitcoin core in the community, it's still like pretty successful, right? I wouldn't believe it if Solana got there, right? It would be like crazy in my mind. Wait, what would you say is Bitcoin's North Star? Because I have my answer. I just want to hear yours. I think it's the fossilization of the supply cap that it's like the immutability of it.

Yeah. It's just like the whole idea of like you get a piece of something that no one can change. And you can like hide in your bunker and like count the bits in your ledger, right? Like in your air gap, whatever, cold storage, you can. Yeah, I think When it comes to like tribal tribal wars in the cryptospace, I think like And honestly, even some

Bitcoiners will point at this and be like, yo, that doesn't work in the fullness of time, right? Like I think Nick Carter and Hazu were famous Bitcoiners and Nick Carter, Nick Carter still a Bitcoiner, you know? But they'll point at the supply cap and be like, yeah, eventually you just, that just drives you just drive off the cliff with that. And so like there's some North Stars actually

you know, explode, if you will, before they actually get there, right? Not if you have inscriptions, and I guess they're good enough. Man, descriptions break and solve everything. Yeah, God. Okay, so what are some of the more important conversations going on in salon and land these days? Because there's the governance conversation. But what else is there?

I think, like, the trade house with, like, fixing, like, bugs and improvements versus, is fire dancer shipping faster. Those are like real hard questions. Because I think we have some obvious flaws that haven't caused a catastrophic failure yet, but stuff like the storage fees are like hard coded. And as the price of soul goes up, it becomes more expensive and then impacts developers.

And at some point, like the easy solution is like, okay, there's a governance, effectively hard fork process to lower the hard code number until, the actual solution is shipped after FireDancer. It's just like engineers don't like that because it's, we know the bug, we want to fix it, right? So there's like this like need to like fix the wrinkles and stuff, but you also have to coordinate.

So I think like tons of discussions like that are basically all swirling around. Like I know what the problem is. Like how do we solve it? But how do we also make sure that Fire Dancer ships? because having, to me, in my mind, that reducing the single points of failure of the code base is the most important thing right now to really guarantee.

How would that thing actually, like, how is that a single point of failure, the storage costs? No, like the not having, like the single, a salon of code base is a single point of failure. Having FireDencer out is the highest priority, right? So like, but fixing problems in the runtime requires both teams, teams to solve them. And like us, you know, like, even though we know what the problem is, if we're like,

okay, there's a solution, it'll only take six weeks to implement, but then fire dancer is going to be six weeks later. Right. Yeah. And then the worry is that there's in that six weeks of time is a six weeks longer amount of time in which there's a single salon client with a potential like service area for a catastrophic bug. Yeah.

Okay. So my view is that like we do the alignment conversations now. We have the design, the North Star, this is how everything should work, but ship FireDancer as fast as possible, and then start doing the work. And that's okay. I think, like, for, like, for everything that Crypto needs this year, I believe Solana is scaled to meet the demand. So, like, my view is that, like, we can delay the improvements until Fire Dancers out.

And then, like, but, like, it's really good to, like, have the design discussions now. poke all the holes in him and like that would actually be awesome if we had like did all the work that we were you know that we were supposed to do three years ago but like we can do it now and have like a really good design that everyone agrees on wouldn't it be good if you have some of these like updates that are call it like low hanging fruit that everyone has an agreement on wouldn't it be good to like ship fire dancer and then like okay we have this agreement on this direction for this smaller code change but now we have two systems that we need to update it can be like kind of a test net for governance across multiple clients.

Yep. That's basically like kind of the process that's happening. And the fire dancer folks are awesome. They're developing some of these optimizations on their own because they kind of like see where we only went halfway and they're like, why didn't you guys do that? And we're like, well, we have to ship. We wouldn't be docking to you. And like, and then they're like, okay, so we'll do the R&D and figure out how fast the

differences. So it's cool to see them do all this work. Okay, so let's, there'll be a handful of these throughout the conversation, I think. So I'll pull out, here's an Ethereum perspective on Fire Dancer that maybe you can debunk or provide the alternative opinion or perspective on.

When I see Jump Crypto making a fire, making a Salana client, and the Salana community is like, oh, fire dancer is the best things in sliced bread and jump crypto, who is like famously extractive, totally probably like the right people for the job because you want the high frequency traders to make the high frequency client. That makes total sense.

But then from like from the alternative side of things is like, I don't want these people who are masters at extraction to build the extraction client. That gives me the hebi-jeebies. What would you say to this? First of all, in the world of finance, right, the exchanges are the, the extractors. Somebody like Jump pays like an arm and a leg to operate at an exchange. And they put their capital at risk. And with their brainpower, they try to minimize latency of all the world's information,

all the noise, find all the right signals, and as quickly as possible, get them to the exchange. And the exchange has just been there because somebody's uncultrated pork a thousand years ago or whatever, right? They're not doing shit. So in my view, like, there is like value creation happening at the jump level.

And I think what these systems that we're building the permissionless open marketplaces do is they equalize the access. So now me as a hobbyist that can compete with jump without having to pay the exchange and arm and alike.

So that, that I think, is like cool. And we'll actually, both jump, I think, wants this because they're competitive. And two, I think it'll actually compress the fees all across finance because there's more competition. The other side of it, I think, is that it's all open source code. Like, literally, like, it is a bunch of Apache 2.0 code.

You can go look at it. There is no magic, if jump, do this. Like, code. Right? And then everyone has access to it across the ecosystem and across a crypto, right? So all the optimizations they do can actually, like, if they're interesting, apply them to Ethereum. Like, so from my perspective, I think it's kind of like silly. It's just like the silliest arguments.

It's just code, right? It doesn't matter who wrote the code. I think the more interesting one, is there a direction that Jump can influence Solana to where it creates an environment where there can somehow be more extractive? as a governance yeah like well like I think governance

like is not going to be stake weighted but I think core engineers have a lot of influence right like Linus has a lot of influence

on Linux even though he's just one dude like he gets to make a lot of big design decisions is there like a directional like place where jump could push Solana

to where it's somehow gives an advantage to incumbents like jump and Citadel and like displaces hobbyists or whatever. That's a more interesting question. And like, what is that technology choice? What would that even look like?

Right? Like, so I think this is where like, I think the community should be like serious, right? About like, what are we building? Does it actually improve access and stuff like that? I think, um,

I think it's pretty unlikely just talking, to the jump folks. They're like hardcore engineers. I don't, I don't think you can like even convince Kevin Bowers to like, okay, make, guide the architecture towards this place where we will extract more value. We're like, dude, you're wasting my time. They're not like puppet masters. They're just, yeah, yeah. I think that's like very far-fetched. But like, I think it could accidentally get there. And that's like a more interesting discussion. And we should like be like constantly thinking about it. Like, is the technology that we're building?

Does it, like, allow, like, you know, like me, when I graduated college, I was, like, trading on all of these dinky exchanges, but my connectivity sucked. They didn't have access to data. Everything was terrible. Like, I don't want that to happen to, like, the next Anatolia, right? Like, maybe that guy figures out and, like, does a better job than jump because, like, this is where innovation comes from is people that don't know that they're competing against the best, right? they just

yeah so like so I do get I do get the argument that like with the appropriate tech platform the middle ground the arena if the arena is appropriately like engineered and architected in a way that like junk capital only has so much more of an edge over like the average

Joe Schmo that's great however like they will have economies of scale they employ people to do good work to do good jobs to succeed at their jobs and so like it's great that we are taking down the silos of exchanges and we are making those decentralized and open. And so that centralization force, that power capture extraction venue is eliminated and now distributed through a more decentralized ecosystem, that's great. But then it kind of just

creates a new kingmaker, right, which is whoever can play those markets the best. So now that the markets, the walls around the markets are down, but the players are now the new leader if you will. And so it's kind of like, but if they're doing real work, right? If they're like looking at all of the world's information, synthesizing it as fast as possible, and like picking the highest priority things

and pricing it correctly and like, if they're doing the work, why shouldn't they earn some of the return? Like me as a hobbyist, I can do that work too, right? And I can find a, because the world is so big and is massive, and it's a very long curve of like,

of events, that happened. There's no way jump or anyone else can capture all of it. It's just too big. I always believe, like, that I could always find an edge if I work hard enough. I could, I could, like, compete with them on one particular segment of the market, beat them, and then grow my own business, right? And then, like, eventually get to their level to where I am, don't spend time on, like, the little edge cases and worry only about the big markets that I care about. Like I think that's just like normal competition. Like as long as the access is free and open to everyone globally, I think that's fine.

At least I don't see like a fundamental problem with it or like one that defeats the purpose of like open permissionless networks. Yeah. I guess the concern is a point taken for sure. I guess the concern is just like increasing the scale of capital but getting capital. like how fast does one the best trader on salana accrue more rewards faster than like the medium trader on salana and if that gap is large then then we're concerned but if that gap isn't that large and then then to what you're saying just like well at some point they are doing real work they are shifting the state of salana to map the state of the real world and that is valuable we'll see right like i think like

folks that are trying to think about how do they capture i mean this is like the problem how do we capture mev in the protocol, right? People trying to find solutions to the, I think it's unsolvable. So you're going to have, like, I think the Ethereum approach, which is through crypto economics and auctions and a slow chain that can run this. And I think you're going to see the Solana approach is like physics. How do we make the chain so fast that it's physically impossible for like information to travel around the world? And then like you have localization and like the physical force is basically kind of force a certain fairness. Like, I can submit my transaction to the block producer that's closest to me. And that means that, like, the amount of information that

thing can evaluate is only local to me and it doesn't have, like, full control of the, of the global state no matter what happens. So, like, can we, like, cut the latencies that low? And if we can, then, like, it'll be cool to see which one's better, right? Like, maybe Solana's worse. Maybe maybe Ethereum captures more value for Ethereum, but the prices to the users are worse. Who knows? I don't know, right? Like, we'll see what happens.

I think that is a pretty solid way to kind of differentiate the strategies between Ethereum and Solana, where Ethereum is trying to, like, maximize in protocol value capture, whereas Solana, like, maybe this will be my description, correct me if I'm wrong,

but Salana is, like, trying to outrace MEV. It's just like, it's just trying to go faster than it. and the first thing you learn about M-A-V is that there's actually no eliminating it. You can only just transfer it elsewhere. And Ethereum is like, well, we're going to go be slow and expensive, and we're going to capture all of that value, and it's going to be placed into Ether. And Ether is desired to be this highly decentralized, distributed asset

that everyone has access to. One of the easiest things you can do in crypto is buy Ether, and all of a sudden you have exposure to Ethereum fees and Ethereum M-EV. And Salana on the other side of things is like, well, we're just going to have block times that are so incredibly fast that someone captures it by the time that that information permeates to the other side of the other side of the world. Which does, one thing I did learn is like small blocks, fast block times do, does is actually a mechanism to lower total MEV. But doesn't it, then it just kind of displaces it into like latency games. But that's, but I think what the Salana theory or a salon of strategy is that like, well, those latency games will happen in like a local part of the glass. globe and those games won't be global games, they'll be local games.

And those people are doing work, they're racing, right? And then like, if the message bus that they're all synchronizing on is the fastest one there, then it's creating value for the whole world because then if I'm on the other side of the world, I get this reference point that's most trusted. And in theory, if the way that it's, this message bus is really valuable, the token that, you know, prevents spam and its message bus should accrue some of the value. But again, I don't know. Let's just pick up notes.

We'll see. This is like, I think the hardest part is like figuring out what happens when the system scale and like really take over real finance. Like right now, what do we have like dog coins and NFTs and inscriptions? And it's almost like, honestly, it's the perfect amount of risk. It's like risky, but we're not risking the global economy. Like, there's enough skin in the game that everyone's taking it seriously and trying to, like, do their best job. But it's, you know, it's still humans writing software.

It's not going to, like, doesn't matter if dog money, like, fails or not. It is real capital, but at least inside of it, it's in a doggy container. Yeah, exactly. Not a pension container. Yep. Yep. Okay, so The, what

Does, so the incoming bowl market, which I think everyone has assumed that we're getting, Salon activity reaching new heights, I think? It's going to be close. Pretty close. Yeah. Does the future influx of a bunch of new users scare you? So, like, we had 2 million active accounts with Steppen

during its peak. and what I learned is that these kind of like hyper economically incentivized users have a steep onboarding and then a steep drop-off if the activity they're doing is not like

creating daily value or something like that and these like economic kind of bursts like you'll have like what's cool is I think these users are like basically like already crypto users they all have seed phrases And you can see that, like, once somebody figures out how to deal with any wallet, they can switch relatively easily, right?

Their mental models are already set up for this. And this is what I believe is, like, the key part of, like, the growth in crypto industry is how many people figure out a seed of phrase is, like, the total number of addressable users. And then after that, like, it's just, I think the switching costs of somebody installing an extension, one or the other, are pretty minimal. So I think you can see that like all the pieces are there. And if the only thing that we figured out are speculative, like kind of economically incentivized games, I don't think it'll last. But if we figure out some real world use cases that create value for those users, they'll be stickier and they'll stick around. And I think the latter is still unproven. And I hope that this bull cycle is the one where like real world applications kind of get some track.

like a payments thing or something, right? Like helium, I feel like is infra that I feel like the users that are using it are not going to like be crypto users. They're helium network users. I think the idea that you can get tokens for creating a quality of the map is at least enough to onboard them to a wallet and get a seed phrase. But like I want like a Venmo. Why can't we have a crypto?

to a Venmo that's global. Everyone's sending each other, real currencies, euros, dollars, and it works. Like, something like that where it's useful. So this is my biggest story. Like, I look at the numbers. I'm glad it's happening. And, like, I'm glad that the network's not falling over while it's happening even more, that the fees are not spiking.

That's, like, pat myself on good engineering. But, like, we need to see real world use cases that I feel like are sticky to the point that users aren't going to leave. Yeah, I would say that's kind of like the identity crisis that I'm seeing unfold for the entire industry kind of in slow motion is like everyone is realizing that like it was really fun to build insular apps for like almost a decade now. And also we've gotten every single person nerd snifed about crypto who would ever be nerd snipped about that. And now if we're ever going to like, you know, get further reaches, it has to take a new kind of app. But that's not even like a Solana, Ethereum, you know, Pocodai, Cosmos,

conversation. That's just like, oh, what can we really do with crypto conversations? And there's differing perspectives as to like how far crypto can go in terms of its utility, right? Are you a reader of Pellinias blogs at all? You know, Plenia, you know, they're a more Ethereum-aligned technical writers. I've read his blogs. Yeah, yeah, yeah, yeah. So they think that like the case for crypto use cases is actually like, much smaller than what everyone in like crypto land is giving credit for. Because they're like, okay, look at the utilities. It's Bitcoin and the ether is store values.

It's stable coins for payments. And that's about it. And everything else. But isn't he arguing for a million L2s as well in the same breath? That I don't, I can't remember a specific blog of writing about that, but I wouldn't be surprised. Okay. I think he might be more in the, uh, fewer number of larger L2s,

like a power law of layer 2s. But I think he is, I think they are definitely like an app chain thesis person, but more for like, I think gaming chains. I'm starting to put words in their mouth. So like games get their own chains, for example.

But beyond that, I think it's like power law distribution for layer 2s. Anyways, the conversation I was bringing up is just like, I think like crypto is kind of, and it swings between Pendry, of optimism and pessimism, right? Like on the optimistic side of things, we have like, oh, we can tokenize everything. We can tokenize blockchains and supply chains and we can, you know, map the world and there's

going to be a token, everything's going to be a token, token economy, token economy. And then on the other side of things, it's like, you know, Bitcoin maximalism, extreme conservatism is like, no, there's only one blockchain. It does one thing, which is produced Bitcoin and Bitcoin is money. And all other utilities is just like a complete farce. And I think depending on where you fall in the spectrum, you kind of find yourself in different ecosystems of crypto. And I would definitely place Solana on the more optimistic version of the crypto utility. It's hyper optimistic.

Hyper optimistic. Yeah. I feel like if the Western world doesn't accept crypto's industry, Solana's worth, it's, it's like useless. No one's going to care. Like the only reason to have a high throughput, low-cost chain is if it's, like is adapted like at the consumer level to like normal voting citizens like use it on a daily basis right like otherwise what's the point so like I feel like yeah I'm hyper optimistic I would say I feel like legally it'll be like basically enshrined and will have some some way to operate

and launch decentralized systems and all this stuff will happen every bank is going to have a stable coin and yada yada yada but like Yeah, I think, I don't know. I think, like, if I also think in that world, something like Bitcoin or the ultrasound money, like narrative where you have like the cockroach chain is really important because it kind of forces the question. Like if it's, if the cost to shut down Bitcoin in the Western world is Orwellian,

like it requires massive surveillance and interruption of normal people's lives. It's too far politically difficult. And that forces the question for people to be like, okay, fine. Here's your box. Go do it. Right, right, right. Are you saying that like people are realizing that never be able to shut down Bitcoin? And so therefore, like, well, if we're not going to shut down Bitcoin, we might as well just keep Ethereum and then we'll keep Solana.

and we'll just keep all the less hardened ones, too. I think it's, they can shut it down, but if it requires so much political capital, right, so much, such a huge invasion of privacy and individual liberty, that it's not politically viable. That means that it's not going to be shut down because we still, I believe, live in like a fairly representative world. And that forces the conversation to be like,

okay, if it's not practical to shut down Bitcoin, then what are the green lines, right, for all this stuff? So, like, that's kind of like, I don't know, Salon is cheating, right? We're like, okay, Bitcoin survives. Here's a really fast blockchain that gives you trust minimization, but requires data centers and all that. Yeah, it's like, Solana's like the third kid

that the two older kids, like, are watching their parents just treat way nicer than they were ever treated Bitcoin and Ethereum. And they're both like, why aren't you bowling the third kid is hard? Exactly. One, like, phase change in Ethereum land or, like, development milestone of Ethereum, I always kind of, like, look at these systems as, like, literal kids, children sometime, like, Bitcoin, older brother, Bitcoin. Bitcoin's, like, probably in college, maybe.

to graduate from college, Ethereum is like entering college. Solana is like still middle school, high school somewhere. But Ethereum went through this one like development milestone when it had its whole like Tornerado Cash OFAC moment where that was like a big growing up moment for Ethereum. Like it was no longer like dog tokens and Ponzi games. It was like, yo, you are infiltrating the space of the most powerful office in the land, which is just like the Department of Defense. Department of Treasury, like threatening the dollar, threatening global security of

United States. And then all of a sudden you saw like the OFAC ruling go out about tornado cash is now you can't touch that. And then we saw like 85% censored blocks on Ethereum inside of a span of a few short months. And all the Bitcoiners are like, oh, told you Ethereum was totally like, you know, not ready to fight nation states. And then the percentage of OFAC censored blocks and Ethereum has now been down only ever since that moment, down to 33%.

And now I would call it that. That's an Ethereum's rearview mirror. I successfully passed that milestone. And, you know, watching Solana enter its economics and governance phase of its development, which is the part that really interests me, eventually I'm like, well, if all of the Solana community wants Solana to have the successes that they wanted to have, it will one day enter that very big conversation of, like, threatening nation state powers. how close do you think we are

and what do you think the Salonay system ecosystem is ready for this? Like, what do you think about this? I'm not ready for it because I'm just a year. I bet you are. I have no clue how to deal with this. I will be like, man, that's the stuff that like really churns my stomach and that I'm terrified of because I don't know what to do. I would like reach out to Coin Center and be like,

what will we do, help? I think, like, at the same time, I have very, very strong beliefs that, like, the West where we live, it's a place of freedom. Like, my parents fled the fucking Soviet Union, and, like, I want to protect it, right, against bad actors.

I will do everything I can to, like, stop bad actors from, like, preventing me to pursue happiness in the United States. It's, like, a beautiful thing to be able to, like, work on whatever I want. and do, like, learn whatever I want and say whatever I want, right, in the U.S. So, like, I, man, yeah, I don't know. Like, these are, like, the really hard questions.

I hope it's that those decisions come as far into the future as possible. Well, if the trajectory maps on, like, Solana's, like, one cycle behind Ethereum, Ethereum's one cycle behind Bitcoin. It would, if the trajectory continues, it would generally, like, if enough stable. coins find themselves on Solana and there's enough apps with like holes in them that have high TVL and it's going to attract like the dubious actors such as like the Lazarus group which is going to like that's going to happen at the tail end of this bull market

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One thing that's, I've been noticed going on, is the Bonk token. Actually, let's start with Bonk. What the hell is Bonk? This was like a project launched by NOM and a bunch of like random ecosystem devs and like participants right when like kind of the whole narrative storm was happening last year, like literally one year ago. Degods left, Solana. Magic Eaton announcer going multi-chain,

fandom announcer going multi-chain, all like in one week. Right. Everything was in the dumpster, and these kids lunch bonged, and like, it was a hit. Like, it's a dog coin. I mean, like, the only purpose is to, like,

send somebody 69-4-20 bonged and laugh about it. Like, what else? It has no other purpose beyond that, right? So, like, but, like, for whatever reason, I think, because it was launched at that like worst possible moment and like people had nothing else to do

it it like just was kind of like okay I guess we'll do bongk and that became a hit um I don't in response to like people leaving the ecosystem it was like hey I don't know the people sticking around I don't know I honestly don't know the motivation but it felt like it also felt like the bear market was already well underway right like so people were like kind of itching looking for an excuse and like like the events, like the FTX collapse and everything, it was just such a bottom that maybe, like, I don't know. Maybe that was the motivating trigger.

I don't know. Like I don't fully comprehend how these things work, how dog coins work. Okay, but why did Bonk become Bonk? So they made Bonk, but like why did it become what it is? Well, I think like everyone was experiencing very shared trauma all at the same time and everyone was plugged in. looking for the next terrible news to drop, right?

And, like, nobody else had anything else to do. Like, you just had this, like, dog coin. So I guess we're doing, like, I don't know. It's bizarre, like, how these things catch virality. Like, it's just what makes something viral, I think, is like, I don't know. I'm an engineer. If I knew I'd be doing something else. Okay, so what, how did Bonk, like, permeate throughout Solana?

Like, why do so many Salon people have Bonk? Um, they did like a big air drop across all the NFT communities. And Solana, like, users are pretty NFT heavy. Um, like, even I like have bought NFTs and stuff. So like they did a really good job filtering for civils and kind of looking at like active people with like NFTs, incredible communities and stuff. And like these did this whole like distribution process. And for whatever reason, it like, like, just didn't go to zero. I don't know why.

But like that gave people like this influx of like, oh, this thing is like or something and it's kind of happening and like it caught fire. I don't know why or how, but like it got a little virality like a year ago. And then like everything else, like everything was contracting rapidly after that. Like I think we kind of survived that moment like Vitalik saved Salon right with that tweet or something like that. It was like Vitalik. and balk at the same time happened and kind of like breathed some life into us long enough for like devs to go start shipping more products and like they just continued building integrations into like every defy marketplace every nfts project and like kept talking about it

and like the community just wouldn't die and i think as mad lads happen and backpack launch and kind of the all the announcements are on Breakpoint like you just saw that the ecosystem was alive I don't know if that's the reason why Salana got back in the news

or like in the positive like cycle but like that's the only explanation that makes sense to me is like the devs shipped a bunch of products they attracted users and that kind of starts the ball rolling so yeah

the meme was like just memey enough with the right amount of fundamental because it seems like Bonk has like a lot more of the spear of Solana in it than like Shibu Inu has anything about Ethereum.

Like the Shibu Inu community and the Ethereum community are like those Venn diagrams don't overlap. But the Bonk in Salana ecosystems, those are like pretty strongly overlapping. I think it's because the devs are plugged into the NFT developers. And like

a lot of the developers on Solana like there's like two groups, the the Jerry's Ellipsis people. that are like the super defi nerds and mev nerds like jito and then there's the nfti people that are like Metaflex and all these other monkey business and D-Gods even but like they're all like kind of building web tools and a bunch of stuff that are fun for people to use and there's some intersection between them but there's clearly like two different kind of devs and like I think

the Bunk folks were really plugged in to both and they were able to just kind of like connect both of these like I don't know the campfire between the two parties yeah exactly and then okay so but there's a bunch of bonk on all the Solana phones how did that happen um that was like one of the uh one of the theories that we had is that like we basically get nfts like everyone gets this phone it's a pain in the ass to ship apps to the big app stores but if we if like if the phones have like NFT drops and stuff like that, then the kind of people that get the phone will self-select to be the people that care

about those things. And that means then developers can ship apps to like a target-rich environment, even though it's small, but a target rich one of NFT consumers and folks like that. So we like talk to every NFT project and like

Clay knows and we talk to the devs from Bonk like, can you guys do like a small air drop? It was like 10 bucks or something. at the time. Just doesn't give the perk to have the phone. Yeah. It was not like,

there's no like master plan there to like, oh, the price of bunk is going to pass the price of the phone. Okay, so how's that happened? Because, okay, so like during the bear market. Yeah, during the bear market, nobody cared. Nobody cared about the phone. Yeah.

Bunk's worth nothing. We were selling like 20, it was weird. We were selling like 20 to 30 phones a day. kind of trickling them out. And it's like weirdly because it's like, okay, there's traction. Most DefyP protocols are not gaining 20 to 30 users every day. But you need to sell 20,000. That's going to take years to get there.

So didn't the Solanophone project like sunset formally and then the bunk token price like jumped? No, we had like the team that we didn't sunset it. The team is there. we like kind of went into cockroach mode like how do we like figure out what to do with it and like get people excited about it but like spend the least amount to like extend runway for that for that team so like what happened i think is like right after breakpoint we started sales kind of doubled or tripled we were like selling 50 to 75 which is great but like it was still pretty slow and then bonk kind of took off and then

for like people realize oh man the bunk hair drop is now worth like half the phone i think that's like okay the phone is effectively half price right like or like if you have some bonk you could literally sell it by the phone and get the phone to like equalize right like um so you still had to go like spend money to get this phone so even though like even if it's worth like 10 20 bucks it's going to take 10 days to deliver. Rationally, I don't think any person would be like, I'm going to get 10% more bonged in 10 days. It's not about the arm of bonk. Yeah, it never went off like twice as much or 10x as much as the price of the phone

to where the Rb makes sense. It was like maybe 10 to 20% more. So like enough people got it like or got excited about it to sell out. So in one day, we sold like 15,000 years. units, which is bizarre. So imagine, like, what was like the next highest day that you had prior to that? Yeah, like maybe 50 or 75 or something. No, like, I think we sold, like, at the start, we sold like a couple hundred in the first day.

Uh-huh. What was funny is that, like, literally, I was in Loracian's podcast earlier. It was like, yeah, we only sold 2,500. I don't know what we're going to do next. We're trying to figure out. So, like, and then there were, like, all these articles. cellophon is a flop. And literally three days later, we sell 15,000 of them.

But now I don't know what to do either. Like, I think this is like the big question. People are kind of treating it as an NFT, like kind of like a club. And there's now devs shipping apps. Like the interest in terms of shipping apps is like 10x. The amount of air drops, the folks are getting received. is like kind of really picked up. So that thesis is working.

But like to compete with Apple or Google in any meaningful way, you need to sell a million phones. Right. Is this enough of a signal to go try to like, the next stage would be like 100 to 200,000? Like is this enough of a signal to try to do the next stage? I mean like, honestly, prior to this percent chance of us getting to that level was like 0.1.

now it's like five which is like massive good yeah massive improvement so like it's it's probably worth it for us to continue but we still have to like figure out what that looks like

how long it's going to take costs what's the form factor shipping hardware is awesome like when you get this you like work for a year and you're like optimising you build this very complex device and you can hold it in your hands like a real product

and like you think think it's awesome and you get it out and there are some reviewers like it's mediocre yeah the mhkb the YouTuber yeah it's like salonafone it's bad I remember that so like it's great because it's so much work and it's so intricate and it's like all of human civilization has built out all these technologies for you to like ship this phone so it's really really cool but like uh people always you'll always just like in one like review it'll be like ah psh that's crap it sucks if the salonifying does take off as a result of this like bonk airdrop that's associated with

every single phone and it also like meaningfully disrupts like apple or google it will be the greatest most like facetious crypto story i could ever have you couldn't have written that Yep, yeah, it would be bizarre We live in a simulation then Like I think that's definitive proof Okay, so wait So how does the air drop per phone work Because the air drop of bonk supply eventually runs out

So like some phones won't have Bonk in the future or like what's the details? I mean like if we ship another phone It'd be another device Like you would have a different Genesis token It'd be like a different product There's the 20,000 sagas they get made that that's it.

Like that manufacturing line has been shut down. Like, we can't even ship anymore. Okay. So, like, we'd have to build another product and then figure out how that thing's going to work. Right. But, like, the goal, I think... So all the salon and genesis funds are sold out? Yep.

Okay. Because you said you sold, like, $50,000 in one day, right? No, 15. $15,000. Okay. Yeah. And so, oh, so the D-Gens just bought them up to the limit. Yeah, yeah.

It's all sold out. Oh, amazing. All right. Well, congrats for selling out of the salonophone. Yeah. Bizarre. Bizarar. Bizarro.

Yeah. Salonophone is sold out. It was not a flop. But now, like, I think, yeah. Now we have to figure out what to do next. Right. Because, like, I think if you're going to make another phone, you have to ask, like, can you get lightning to strike twice?

Because, like, you sold the phone because of the bunk ear drop, not because of the phone, right? But the question is, like, if you have a, an app store, enough devs will ship to where the probability of lightning is 100%. Right? Like, that's kind of like the theory. And having an app store that's crypto first is like we own our own destiny, right? Like, we're not beholden to the apples and Googles. You can do whatever.

It's awesome. Like, this is like the biggest unlock I think we could possibly have. So if it's possible, if you can get the, users to actually, like, get the phone, use it for crypto stuff. And like, it'd be really, really cool. I think one of the conversations that I've seen happen in a number of different places. I think the first time I've heard this was just getting dinner with John Charbonneau. And he just kind of gave me the thought experiment of like, imagine if friend.

Dot tech was built on Solana, not base. And imagine what that would have done to the Salana narrative when Friend Tech took off. And this was like two months ago. So this was a while ago. And like listening to that thought experience, I'm like, oh, yeah. Like imagine how loud the Solana community would be on Twitter. If it was Friend Tech on base, not on Solana. Like the entire narrative of Solana would have just like pivoted in an absolute heartbeat.

And that was like, you know, three months ago, two months ago when Friend Tech was a thing. And then I was also having a conversation with Chris Berniske, who is somewhere along those same lines. It's like the, and this was after Soul Price goes from 20 to. say of the $70-something dollars in like the narrative shifts, the meadow shift towards Salana where he goes like, yeah, yeah, Solana just is a pretty strong bet for like where a breakout consumer crypto app actually lands in this next like wave of adoption.

Like if it's, if it's going to be one space where that consumer app is built, the Salana is the best like risk to war to place your bets. And so it would be great. And totally if we had a breakout consumer app because we haven't really had one. We kind of had one with Friend Tech. and now it's kind of like died. What are your odds that the crypto industry,

Solana or not, the crypto industry produces a breakout consumer app in like, say, the next like two years? An optimist. I'm going to say like 90%, 95. I think these like next two years are going to be pivotal. And like I think you should see a consumer application. That's like legitimate. It does step in.

count as a legitimate consumer application? If it stuck around, I had this theory that maybe people are like, basically like, if I'm paying my trainer, you know, like 50 bucks an hour, that I would rather use the incentives that I'm getting from like the dopamine hook to the kick kickers and trading and stuff for me to run. If those are basically equivalent to what I get out of a trainer, then some segment of the population would just continuously use step in. But I don't know if it feels like that probably didn't like fully land. But there was like a there was like a theory, right? Like the value that I'm getting out of it is the exercise. And the motivation that I'm getting out of it is the

crypto games that I get to play with the NFTs and the tokens and stuff because that's pretty engaging for the brain. Right. Like if I wake up and look at the prices and the competitiveness, I spent like countless hours on this and like Ultima online trading. like random resources that nobody cares about, right? If you could get those same hooks into somebody and force them to work out, it's a value ad for the world. But I don't know if that played, it didn't seem like that played out. So I don't know if that's like the play to earn, learn to earn kind of things.

Right. Are the right matter. We'll see. But like, who knows? Yeah, token inspired consumer apps always kind of like, it seems like it seems backwards where like

you can't inspire human behavior based off of token incentives because then it becomes gameed, right? So it has to be something else.

It has to be something a little bit more sustainable, right? Random boring cross-border payments like Euro-USDC like,

I don't know. That would be like great. Venmo that's international, right? Like that works well. That would be cool. Okay, let's, I want to turn to Solana economics, because we've actually seen some like Solana fees pick up, uh, and actually like be pretty sustainable. Uh, where, where do you find Solana in, so like in Ethereum, when I got into Ethereum, the monetary policy was we issue five ether per block and then it got changed to three and then it got changed to two and then EIP 1559 was introduced and then Proofus Egg was introduced and that's like the last update that there's been. Uh, if you had to like map Solana, Lana's arc in terms of its economic sustainability.

Where are we on that arc? And what's ahead of us? I think what's different is that like, so a bunch validators compete on commission. So for users at stake, they pick the lowest commission validator. And they basically experience no dilution, right? But there is some dilution because a bunch of the tokens are on stake. So those are the folks that are effectively. paying this like kind of transfer wealth from everyone that's taking to on staking and

validators take a little cut of that in between. It's hard to tell like how much like users are impacted because the warm and the cool down and warm up period and Solana is really fast. So it's like two days, one epoch basically. So even if you're like a big fund and you're trading, you would probably keep, you know, 80% of your sole staked and the whatever you're using for trading unstaked, right? So then you're kind of experiencing minimum dilution or effectively like, it's, for whatever reason, 69% of the tokens are staked right now. If everyone's staked exactly 69% of the tokens, you'd be no dilution because you effectively like, right, like it's all moving from one bucket to the same to every person. So like, I think that pain is actually,

managed by people pretty effectively because the warm-up and cool-down period is so fast on Solana. So like, but like when I argue with you online, whether that like on Twitter, the poster, like, there's not enough room to like explain the nuance of that. But like, you're not wrong that inflation is a thing and it is diluting some people. But how much I think there's a lot of nuance to figure out how much of that is. What I know is that like a clear cost to the network is the hardware. So like every validator, every RPC note, all of those have to be paid with real money, just like you pay for electricity to mine blocks. But like the difference between Bitcoin, the cost of hash power and the cost to run the salana computer is like a million X.

But like I think for the network to be sustainable, the fees that you get from running it have to cover the total cost of the hardware. And I think like the fees, the fees right now or maybe like 50 million a year and the cost of the hardware depending on the provider and all that stuff is like maybe between 10 to 20. So I think the fees have passed the cost of the hardware so that you can say that it's sustainable.

Global cost of maintaining the Solana network is $10 to $20 million? It depends how you count it. But like if you took the cheapest possible, if you took the cheapest possible like, no, $3.50 a month and you multiplied it by 3,000 nodes, that actually comes out like to around 10. But like people are not going to take,

there's lots of different other infar costs and no one people will like pay for the more expensive ones, right? So you kind of like, maybe it's twice as much, but like it's also a bunch of nuance there, right? Like RPC nodes that like Magic Eden uses don't need to be paid for by the network because they have a business that makes money off the state and they will pay for those machines and count it as an expense.

But it is providing some security to the state, to have those replicas. So, like, how you count all the stuff is complicated. How you, like, attribute the earnings from Mav that Gito has is also complicated because effectively any value that a block producer gets from the network incentivizes them to acquire more stake. Right. Right.

So, like, that could be, like, all those incentives combine are, like, the positive stuff going into the network. All the costs are the negatives. I think right now the positives outweigh the negatives, but again, there's a bunch of nuance there. But I think, like, ultimately, these networks have to capture a lot more value to be competitive to, like, profit per market cap with a tech company. If we have to actually, like, compare those two things, unless you believe there's some other reason to value these things higher, I don't. I think ultimately, like, there's got to. to be like value created for the world,

is sometimes risk-free asset price at the Treasury is equals like our total value of the system. I think that fundamental function works for everything. And like where that value capture occurs in the future, I think is if the network can handle many different hotspots, like thousands of them concurrently. And then the economic costs of those hotspots go up and like the kind of fees that you're seeing now in the network,

if you go lose Salana Compass, you see that like priority fees on the chart are now like the biggest thing. Base fees you can't even see and vote fees are like barely like visible. They're still visible, but much, much smaller portion. So like in a world where Solana is sustainable and is like valued and capturing value at a higher rate is a world where there is lots of hotspots. You know, and the network can handle many concurrent hotspots at the same time. And those economics capture or captured by the protocol. And by captured by the protocol, do you mean payment to validators or burn? This is the big question is I don't know if that matters.

I don't like I know a lot of folks in Ethereum want to do the burn. And there's good reasons for that. I don't know if it matters over the long term. This is like the big unknown. Like I don't know if it matters. I will say that like all of the Ethereum people will like say, hey, do this, do this, do this. and it will be very much in line with, like, what Ethereum is. Like, why should you do the burn?

Well, because Ethereum does the burn, and, you know, we have ultrasound dot money, and we like to look at that website. But the thing is, like, if you keep on listening to the Ethereum people, they're just going to tell you to become Ethereum at the end of the day. And at some point, like, that's not helpful. Right, like, so, like, the argument that the burn doesn't matter is that, like, within the black box of the whole network, right? You have the negative externalities.

You have to pay for it to run the computers, all that stuff. and the view of the positive externalities where I like earned my paycheck from driving an Uber and then I used it to pay for the fees on the network. Yeah, yeah, yeah. And it, but it doesn't matter if that fees burnt or is distributed to everyone in the box or like what happens in the box, how those numbers move around. Do not change the weight of that box. It's like digital, it's like accounting in the computer, who cares if you burn it or not

or like whatever. I don't think it matters, like, at the end of the day. I think it doesn't matter at the end of the day to make the box function, like whether you give it to validators or you burn it. Like, the box can function in both strategies. But, I mean, like, what you choose to do does change the output of the system, right? And so, like, the whole Ethereum perspective is, like, you burn it because ETH is money. And the Salonid perspective is, like, you want to minimize that because,

because Solana is like an applications platform. And it's all about... I don't care about the burn of the token. What I care about is that the fees, like, the fees, like, don't spike without reason. So, like, what breaks Solana is that, like, because it's not a... We don't have a layer two. Like, layer twos are not on the roadmap. Like, you can build layer twos in Solana with the whole point of a single unified state machine

is that you don't need them. and if you have a single, if you have like Defi Arbs increase the cost to access the network to the, to have to outbid the cost of the defy ARBs, it means that payments have to have a separate app chain. Right.

It means like, and I'm like, okay, well then just make them all Celestial Rollops or whatever. I don't care. Like, then like, it doesn't matter, right? Like, I think if you can't solve the economics, the isolation at the economics level, then the premise of Solana doesn't work. But I don't,

I think you need, like, some burn to prevent, like, weird spam attacks where validators, like, spam themselves and, like, for free and can, like, price out users. A bunch of stuff with 1559 is actually really, really clever ways to prevent that. But I don't know if you need the burn for capturing value. Like, because the burn is very, very different. from Apple getting dollars and hoarding those dollars that they can spend later at any given time to like build more products right like Ethereum doesn't have that like dollar budget

when you burn the Eath cannot spend it in the future it's gone well that's not how I would describe it I would save the Eth you would you can't it's pointless to save it or burn it like if you like convert it to dollars that would be interesting and different the idea of burn is that you burn the ether and then you give yourself tolerance to issue that ether again later right and so in like at a later date you're different you're in a totally different environment and right if if shit hits the fan and everything is tanking right versus the dollar you're not actually hedge to be able to issue more you're like in a death spiral if you issue more you die like if the question

an Ethereum shouldn't be do we burn the ETH or do we give it to some validator or a public goods thing it should be do we convert it to dollars and keep this like other asset that is completely decoupled from Ethereum in case shit hits the fan

Yeah but you can't have that because these are like trustless economic systems That's like well that's what like the Terra Foundation The Luna Foundation guard was like yeah we're going to have like Bitcoin and whenever we need to defend the peg, we're going to deploy the Bitcoin. The goal isn't to defend the peg.

The goal is to pay engineers to make it better later. That's a totally different thing. You know Kevin O'Walky? Huh? Do you know Kevin O'Walky? Don't remember him. He's the founder of Gitcoin in the Ethereum ecosystem, and he made this, like, EIP proposal.

This is, like, really awesome Ethereum lore. He made this, like, Ethereum EIP proposal to, like, have 10% of block rewards go to fund, like, public goods. And like, how could you argue with that? Like, we, we can, we all love public goods in Ethereum. But it actually, like, created, like, a pretty big, not, not like civil war, because, like, one side very, very, very quickly. But it was all about, like, the credible neutrality of, like, where we send the ether that's captured. And the idea is, like, if we send it to Gitcoin, well, then, you know, Gitcoin today wants to fund public goods. But what happens when, like,

if Gitcoin just becomes, like, a vector for control? Binge it. Yeah. Yeah, but then you're changing too much, right? No, we have cryptography, which is the tool that the rest of the world, 10 billion people are going to use to coordinate decisions much more difficult than where the burn goes. This is like the magic. It's like a true pessimistic.

No, no, it's like this is like the whole like cockroach chain file of Gagriel is the metaphor that Italic uses, which is like, you know, you don't mess with. with that because as soon as like you just solve that by changing it again in the future all of a sudden you have like a political and governance system but but the whole point of like cryptography right what we're building is fundamentally is to connect 10 billion people right so they can all coordinate decisions instantly globally and like do much more like powerful things than like funding open source software yeah i think there is like maybe an opportunity for so like so like There is like, yeah, we can find systems that are totally resonant with every single human.

But like, what's that one line is like democracy is the worst form of governance except for all the other ones? It's like one of the best forms of governance is like not having any governance. Yep. And so like that's the Ethereum perspective is like you don't mess with the block rewards because that becomes a vector for political capture. I don't disagree and I would not recommend anyone try this on Salama because I think it's way too complicated too. But like, I think it's a missed opportunity, I think. Okay, so I think this is like one of the big dichotomies between like the Ethereum perspective and the Salana perspective. And I would actually like camp Ethereum.

And I don't speak for all of Solana. This is just my opinion too, right? Of course. I actually think on this part of the spectrum, like Ethereum and Bitcoin are actually closer together than Ethereum is to Solana. Where like money is an app. And it's honestly like one of the most important apps. So this is part of like the bankless thesis that we've been. like pounding around for a while where like we in crypto are here to make new monies and so like the

salana idea of um do you have non-staking disagree i think salana folks very much in the same camp uh there was this like again people started talking about like forking off the fdx estate and it was like quickly squashed by everyone there was like an instant immune response that like property rights are sacred, whatever happens, happens, like the state, the sacred sanct and we do whatever we can to preserve it. And that wasn't, it didn't come from me. I like, it literally came from the ecosystem. So I think, I don't think it would be possible for Solana to do this either. And I feel like it's a missed opportunity for somebody to think bigger and be like,

the world is like very complex. What we're building is actually to like empower people to do very, very complex governance stuff. like we can do it it's just going to be hard and we can figure it out but like most people just want to be like back off and property rights because that's like a core tenant of crypto

if you don't have property rights in your block space then what is your blockchain even for but I don't see the same area of emphasis from the Salana community as being interested in like money and the concept of money and its role in the world that I think is like maybe a very nuanced way to look at it,

but I don't think, I think that the idea of, like, collecting the fees and then spending them is against, at least to me, rubs against my idea of, like, property rights. Like, it feels like I'm being taxed. And then somebody else benefits, right?

Like, it's, like, collecting the fees and then spending them? Or? Spending them on, unlike arbitrary governance decided things. doesn't feel true to like being a fully crazy property rights libertarian, which we all get to kind of large-baths. So like Ethereum, ether collecting fees and then burning it, and rather than deciding that

like this public institution is better than that public institution feels good in terms of like no one's no one's rights are being violated because everyone's being treated equally. Correct. And I feel like most of the Salana community would agree with that sentiment. Like, we all like to LARP as libertarians, right? But I think, like, reality is that, like, there's far more complex things in the world. And, like, you want to solve them. And, like, I think cryptography offers, like, a way to, like, really transform governance

and do all these things that we all dream about in the post-crypto world. And, like, if we are too afraid to do ourselves, there's no way the world is going to do it. So, like, at the same time, like, while I, like, agree, hey, text. don't like don't do this but like I wish somebody would do it because cosmos people will do it I don't know are you like advocating this as like a thought experiment as like this is worth thinking about or do you actually think like we could make a system of money that has governance as a component of it

I think if we did it would be far more powerful than one without it that's very very Keynesian of you Yeah. I think like human intelligence, I'm like very optimistic and human intelligence, human goodness, their ability to like given enough communication come to the right decision. I'm very optimistic and that. I think it's a very hard problem to solve and like I wish somebody was solving it. It would be a first, I would say, for humanity to solve that problem. No, I think we've done it like some extent. Human governance over money and and governance is like like the meta problem of like the human species, right?

Like the world's like US is not too terrible, right? Like most of the places that we choose to live have pretty decent governance. There's definitely places that don't, but like a lot of trial and error, people have figured out like most of the best practices. Okay, so this is what I was going to bring up with the whole like, I think the Ethereum, again, you don't speak for Solana.

You are one member of the Salana, perhaps a very important one, but a member nonetheless. this is where like if that is like an perspective to to apply to like and I do see this in like broader salinas like they they don't emphasize the role in importance of money in the same way that bitcoin exclusively does and a large part of Ethereum definitely does and because like the last time we had you on bank list like we asked you like is sole money and you're like soul soul's not money and to us I'm like that's that's the thing we start there and we expand outwards but without your base train becoming money, then you don't have, you can't expand

outwards from that. Yeah. So that I agree with you. I don't think it matters to Solana devs or community. If like, if all the volume that was happening on there was going against the rapt Eith pair, everyone would be just as happy. Like, holy shit, we got it to work. Everything's like working. Really? Yeah. If Eith was the unit of account in Salana, you think to the Salani people were like, nice, cool, great. Yeah, because like the message bus works. It's coordinating

date. Everyone is like paying very low, low cheap fees and everything's working. Look, as an ETH maxi, I would love ETH to be the unit of account inside of Solana. That would be awesome. Whatever. Like, who cares? Like, it's like no different than USDC. It's not like I'm like competing with Jeremy Allaire and like money adoption. I want to help them. Is that, is this a minority or majority opinion, would you say of the Salana community? Oh, that's a good question. I don't know. This is a good question.

I think, like, people are become token maxis because a lot of their, like, faith and, like, kind of all these things and what this technology can accomplish in the future are all wrapped into this, like, one thing. And then, like, it becomes, like, I think it's harder to build an NFT marketplace for, like, whatever, quacks that trade against USC versus one was sold because you're trying to attract the, Super Solana Maxis, they're all like, you have that, like, and this is where I think the money meme starts to roll, is that like once you start building other functions on top and your initial customer base is like all the maxis of that particular like L1, they're all going to use that token. But like, I don't fundamentally believe that there's anything I can do like as an engineer or programmer to make that happen. It's a meme. And like, I think like, I honestly think that

if ETH was the biggest trading pair, like the whole idea of like Salonah's blockchain and NASDAXP, that would be the narrative of a meme. Nobody's going to talk about Solas money. And nobody does, right? I don't think you see that sentiment on crypto Twitter or Solas money. So like, I don't think much would change in the community if that was the result, which is cool. I think if like there was more of ETH was like the unit of account inside Salana and like when I went to like, uh, tensor to go like, buy another mad lad and it was denominated in Eith. That would be like the greatest Ethereum Salana handshake moment of like all time.

They could literally do that and do the trade exchange through Jupiter for zero fees. What's the fastest way to get ETH on Solana these days? Is it wormhole? It's probably Mayan Bridge is like a wrapper in type of wormhole that has nice UX or like, I think Jupiter probably has a kind of a bridge wrapper too. Cool. All right. As soon as I see a marketplace with ETH denomination,

boy is going to go shopping. Okay. Yeah, somebody should like, oh man, I'll ask the TensorFlow guys if they can detect if you have Mata Mask installed. Oh, they can re-denominate to Ease? Yeah, re-denominate an EF. Check how much Mata Mask you have. much heat you have and like pass a certain threshold you redominate.

Right, right, right, right. Yeah, we do have the tenser guys on in January in three weeks, so maybe I'll just have some then. Anatoly, when we hang up this phone and it's 2 p.m. on Tuesday, December 19th, and what are you going to go do inside of Solana? What is what are you going to go work on first? I'm writing docs, alignment docs. That sounds awful, to be honest. That's actually great. I'm writing like architecture. It actually kind of makes it seem like you're doing some of the stuff that Vitalik does when he writes on Vitalik.ca, which is just like broad vision, broad vibes, everyone else go implement it kind of strategy.

It's more specific than that. I'm like, this is the final state of these specific implementation components. And this is how they should look like. And I think this is the effect it'll have. And it's not to say that like that's the final state, but at least I'm giving people like a North Star. and a reasoning behind it. And they're super smart engineers. What's great is that they will hear me out.

They will not listen to me just simply because I said something. So that forces that discussion and like people will like comment. And like, so these are like kind of like what does Solana like the final state looks like kind of stuff? And you can go and read all this on like SoulLinked, which is like this one dev built me like a little web platform. where I can charge people USC. I use USDC as money to access my email

and my blog. Oh, gosh. Should I, should I have it? I'll ask him to add Eth. I will. Yeah, it's not very cypherpunk of you to have USC.

I'm sorry. It's just, this is the way that it is. I will use, yeah, I will have access to my blog and wormhole wrapped Eith on Solana. Anatoly, this has been great.

One last question for you. How? Let's see. If there's one thing about Solana that you would find is, like, misrepresented the most by dumb Ethereum podcasters, what would it be? Actually, things have gotten a lot better. I think, like, the criticisms. Wait, about misrepresentation or dumb Ethereum podcasters? Both.

I mean, like, first of all, I think. Most folks in the space are actually not as dumb. Like, there's really awesome people in the space, right? Like, and I think what's gotten better, and this is like the Ethereum immune response, is that, like, people will initially reject everything, just like Bitcoin people, but then they're smart and curious. And then, like, you stick around long enough and you kind of tell your story, and everyone's like, oh, you got something interesting there.

And then, like, you start getting this exchange of ideas going. And I think it's the criticisms have gotten way better in the sense that they're like, yeah, we need to fix the stuff. And like there's a plan to fix it. Cool. Well, Antoine, thanks for coming on Bankless today. I appreciate it, my man. For sure. Thank you.

Bankless Nation, you know the deal. Crypto is risky. Ethereum is risky. Salon is risky. Tech stacks of this nature. They're all risky. You can lose what you put in. We are headed west.

This is a frontier. It's not for everyone. But we are glad you are with us on the bankless journey. Thanks a lot. Thank you.