Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Abundance: The First 1 Gigagas/second Stack for Sovereign Rollups - Hilmar Orth

Episode Date: December 24, 2024

One of the most limited blockchain resources is blockspace. From Bitcoin’s Blocksize Wars to Ethereum’s scaling roadmap, a common denominator seems to have emerged in the form of rollups. Advancements in zero knowledge proofs have enabled trustless bridges, which are a cornerstone to onboarding liquidity to any blockchain. Furthermore, Celestia’s modular approach to blockchain architecture and their recent commitment to gigabyte blocks of data availability marked the beginning of commoditization for rollups. Abundance is the first rollup-as-a-service platform that is able to scale to 1 gigagas/second throughput, finally bringing off-chain applications, on-chain.Topics covered in this episode:Gelato’s pivot to rollup-as-a-service platformSovereign rollupsEnshrined bridges and settlement proofsAbundance and 1 Gigagas/second rollupsModularitySecurity assumptionsSequencer (de)centralisationSocial consensusCelestia’s DA layer bandwidthEthereum native rollupsDecentralisation and censorship-resistanceEpisode links:Hilmar Orth on XGelato Network on XAbundance on XSponsors:Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.ioChorus One: Chorus One is one of the largest node operators worldwide, supporting more than 100,000 delegators, across 45 networks. The recently launched OPUS allows staking up to 8,000 ETH in a single transaction. Enjoy the highest yields and institutional grade security at - chorus.oneThis episode is hosted by Friederike Ernst.

So we started out actually building the first for three smart contract automation protocol on Ethereum and then of course on all other EVM-based chains. This market is basically a subset of the overall block space market. And as block space remains scarce and limited, the market really to automate stuff and to the treasury day stuff is inherently limited by this. And so we were sort of like hitting the limits in order to grow the pie of all the other things we're building, we need to actually grow the pie of box space. We need to get more chains, more applications. This is then where we really saw roll-ups as the solution, how we can get

that and how we can then help projects actually scale. Welcome to Epicenter, the show which talks about the technologies, projects, and people driving decentralization and the blockchain revolution. I'm Friedricha Ernst, and today I'm speaking with Hilma Ort, who is the founder of Gillato, one of the leading roll-up as a service provider. Before I talk with Hilma, Let me tell you about our sponsors this week, though. If you're looking to stake your crypto with confidence, look no further than Corse 1. More than 150,000 delegates, including institutions like BitGo, Pintera Capital and Ledger, trust Coros 1 with their acids.

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With Hashi and NOSIS VPN, they're building a more resilient privacy-focused internet. If you're looking for an L1 to launch your project, Nosis Chain offers the same development environment as Ethereum with lower transaction fees. It's supported by over 200,000 validators making NOSIS chain a reliable and credibly neutral foundation for your applications. NOSIS Dow drives NOSIS governance where every voice matters. join the NOSIS community in the NOSISDAO forum today. Deploy on the EVM-compatible NOSIS chain or secure the network with just one GNO and affordable hardware. Start your decentralization journey today at NOSIS.I.O. Hey, Ma, it's super nice to have you back on.

The last time we had you on this pod was beginning of 2023, which was really a different time. very different yeah thanks for having me again for to be here so um you are one of the founders of gelato last time we had you and your co-founder louis on it's been a while so kind of maybe give us a brief recap of the history of gelato and what's what's happened since early 2023 yeah totally so i think last time we were on here we we talked all about our shared history as well with you and the other folks at Nosis. Of course, you were like very supporters of us at Jolato when we started back in 2019 originally. And I think that 2023 was the year for Jolato where we really started to endeavor on our journey

to scale Web 3 and go all into the role of Cendrick roadmap. And this was kind of like the starting point when we started researching. and developing what is now one of the leading role of the service platforms in the space. And I think when we were on back then, we sort of started on that journey. And I think fast forward to today and like one and a half years or so have passed, I think, and then right, it feels like an eternity, of course. But now we have 40-50 Roll-Oafs live on our platform, huge sort of chains such as LISC or Krakis.

ink chain on gelato, among many other really create projects. And we really saw, I think, a general as a space, this sort of roll-up-centric world not play out with any larger ecosystem or project application now looking into launching their own chain. And, yeah, we of course continuously trying to find what is the best ways of achieving this. How can we scale what we?

How can we help scale these applications while remaining all the cool guarantees? that Ethereum and other ecosystems sort of bring to the table. And yeah, I think that's pretty much a good summary. I think we'll dive into kind of like roll-ups and sovereign roll-ups and native roll-ups and kind of like whatever sort of roll-ups kind of like in just a second. Kind of back in 2023 and before that, kind of you guys mostly did relaying, right? It was kind of like a relayer network.

So is that still going on? And what kind of what led to the shift towards kind of this roll-up as a service platform? Totally. So we started out actually building the first for three smart contract automation protocol added really sort of got traction on Ethereum. And then, of course, on all other EVM-based chains, we are still sort of running this service among our, the transaction reading service which is used by a lot of projects for their account

extraction, sort of bundlers and so forth. What we realized, though, at some point is that this market is basically a subset of the overall block space market. And as block space remains scarce and limited, the market really to automate stuff and to the treasury relay stuff is inherently limited by this. And so we were sort of like hitting the limits of these markets. And we were like, okay, we need to, in order to grow the pie of all the other things we're building, we need to actually grow the pie of block space.

We need to get more chains, more applications, more block space. And this is then where we really saw roll-ups as the solution, how we can get that and how we can then help projects actually scale. Because an easy example, if you want to sponsor millions, of transactions, while still retaining, like, the security, and since the resistance of, like, an Ethereum or some forth, like, you can't do this on Ethereum, but you will go bankrupt. I think many people have tried, and so you need to get more blocks scales.

You need to create an abundance of block space in order to actually then achieve these sort of user experience benefits. And yeah, this is sort of how we transitioned into solving this fundamental problem first. That makes a lot of sense in terms of kind of like why you decided to embark on this endeavor. So maybe let's set the stage by kind of talking about what you actually mean by a sovereign roll-up. Because kind of like when we kind of usually talk about roll-ups, usually we think about

kind of like full roll-ups or validityms and kind of meaning kind of like you have different parts of the consensus mechanism that kind of. of have to check in with base layers. So kind of in the full roll-ups, it's kind of the state and the data, kind of with data availability. And then in the validity, it's kind of just the state periodically. What happens in a sovereign roll-up? Because kind of like even the moniker sovereign roll-up, it sounds like a bit of a conundrum,

right? Totally. And let me sort of, as a disclaimer, before it starts, say, all of these definitions are highly complex. It's like it took also myself, like working on nothing else in roll-ups for over two years, a lot of time to really understand this, and there are settlement layers and roll-ups and so forth.

And so let me try to maybe unpack and provide you with the definitions that I sort of work with. I would love that. And a roll-up for me is a blockchain that posts its blocks, to another blockchain at its very core. And a blockchain really for me consists out of, and this type, a roll-up blockchain consists for me out of a state.

So it has state. Then it has a certain state transition function, which is, let's say, like the eBM. And then it takes in transactions through the state-transition function to progress the old stage to the new state, right? And this is how the blockchain progresses. Now, the cool thing about roll-ups, is that day, you don't need to bootstrap your own validator set

and come to consensus around a certain ordering of transactions. You can outsource this to another layer, which we call mostly the data availability layer, right? You can use Ethereum for this. You can post-transactions, this blobs to Ethereum. You can also use others like Celestia for this, which are sort of purposely built to only do that. And this is at the core.

really what a roll-up is. You just post your blocks to another chain and they come to contents around its ordering. Now, if you think about it, this is really all you need to have a roll-up. You just need this roll-up, this chain, and then you need another blockchain to do content on the list of all those transactions. Where it gets more complex is now the bridging part. And there's this nice saying, it's like it's all just chains and bridges at the other day when we talk about roll-ups. And why people now get confused about like, okay, isn't like, if I talk about like a base right now,

isn't base like a roll-up? Yes, it is a roll-up, but I call it an enshrined bridge, an enshrined bridge roll-up. So what does that mean? It means it has a roll-up, so it posts its data to it other data-availability data, like Ethereum, but it also has an enshrined bridge.

to Ethereum, which we in this case call the settlement layer. And so what this means is that you can bridge in assets from Ethereum directly to base, right? And you can use the funds on base. And then you can move your funds out again. We call like trustlessly with certain proofs that you provide back to the base layer, which in this case is Ethereum. and what the sort of like the unlock here what what what what what is important for sovereign roll-ups is that sovereign roll-ups basically take this taken approach which is okay rather than having this world view where we need this enshrined bridge to Ethereum let's cut it out completely let's remove this enshrined bridge to Ethereum and let's only have the roll-up which pose its blocks to a data availability there like Celestia in the case of the ABC stack,

and therefore fully embrace like a more modular decoupled way, where we don't confuse and enshrine the bridge to the roll-up, we just detach it, and we treat the wall-up separately, and then what we do is rather having this enshrined roll-up, you can take any kind of modular intraoperability protocol that you would like, for example, a layer zero, a hyperlane, or whatever you want. And you can use that instead to bridge from assets,

not only from Ethereum, but you can bridge assets in from Solana, from Bayes, from Arvich, from Tom. And the unlock here, I think, why we have discovered this as being extremely valuable and actually potentially the future of how roadups will be designed is that the current world of stacks, and this is where we think like what roadups are,

they were designed back then with this very Ethereum-centric world views like, okay, with Ethereum, we need to scale Ethereum. How come we scale Ethereum by building these network extensions around Ethereum that looked like Ethereum and have a bridge to Ethereum, right? But the world has progressed since then and now there are chains out there, base, Arbigham, even like a Solana, a ton, who knows, right, that have a lot of liquidity and a lot of users that people actually want to access as well. So it's not just scaling Ethereum, people just want to have a chain that scale.

but taps into all sorts of users, all sorts of liquidity. And this is what sovereign roll-ups sort of have. They're like, hey, rather than having this enshrined worldview, and Ethereum at the center, and we are like the satellite that hovers Ethereum, we switch it around, we put the application in the center, and then Ethereum is basically the largest planet, like Jupiter orbiting the Earth, which in this case is your application. And this is sort of like conceptually speaking,

how I would view sovereign rollobs. As a physicist, I can tell you that Jupiter doesn't actually Uber the Earth, but... The sun in this case, of course. I take your point. I think I have a lot, I have lots of questions as to this. So maybe kind of like, let's start from a very basic understanding point of view. So kind of I understand that you post the transactions into Celestia's data availability solution. In

roll-ups on Ethereum, kind of you do two things, right? Kind of like you do you post the data, but you also periodically post a proof that kind of the data takes you using the

VM, kind of like if you kind of take all the current state and all the data, or the transaction data, kind of it takes you to the new state, right? Does this function happens somewhere in sovereign roll-ups or whom do I trust is my question. So, and that's the sort of like unlock one has to have.

So let's imagine, let's say, for example, let's take an example here. There is like a roll-up on our Robes and Service platform called Raya. They're pretty decent TVL. They're like a preptex. They use the arbitration orbit, like they're on L-Soo to Ethereum, right? they have, I think, 98 or 99% of the entire TVL, what they have, is bridged in by a third-party bridges on the roll-up. So by the way, the UCC up in August stack,

but all the funds, I think UCC, is bridged in by a socket, because they wanted to onboard their users, not via Ethereum, which is pretty expensive, but via base, Arbituram, and so forth, right? Now, in this case, what they are still doing is they, they are still sending, as you say, like these sort of like hashes, these sort of fake commitments to Ethereum periodically because their stack is still built

in a way where they have to start with Ethereum, but Ethereum provides them with zero security. Because Ethereum, if you have a roll-up and try and roll-up to Ethereum, Ethereum doesn't secure your roll-up. Ethereum gives you like consensus around the ordering of transactions

if you use it for data availability, right? but the bridge, this notion of settlement layer, like settling to Ethereum, the only thing what it provides you with is it provides you with a trustless bridge for the assets that are bridged into the roll-up

via the canonical and truined bridge. And if you have, let's say, 99% of the assets bridged in via other chains, such as base or arbitium, using, let's say, socket or zero or so forth, then you get zero benefits. and zero security from this chain.

Because what is like, why are roll-ups, like, why do you, why is this, like, say, you have a sovereign roll-up in this case? Why would it be secure without sending estate commitments to Ethereum, right? Because if you think about it, as I said at the beginning, was a roll-up, you have inputs, you've got state, you've got a state-transition function, and then you have outputs, right? And so the only thing you need is you need this audit list of transactions that everyone can follow, right? You can just spin up a node. I can spin up a node. We all look at Celestia in this case. We see what is the audit list of transactions for this particular roll-up. And then we run a node.

And then we know, okay, I know myself locally that, hey, this state transition function has been run correctly. And so I know that, okay, I received now $100 and you set me $100, right? Ethereum, the Ethereum only needs a proof, like this bridge to Ethereum, this bridge to Ethereum is like a light client, right? Because Ethereum cannot run a note for this roll-up, right? So Ethereum doesn't know whether the state transition has been executed correctly. So what we do in order to notify Ethereum to say, hey, Ethereum, you can accept back funds from this roll-up to you is we generate proofs that we post to this bridge smart contract,

like in terms of fraud proofs or ZK proofs, for example. And this then allows you to move assets back and forth. this is only adding any benefit if you actually have funds in this bridge. And what is, I think, interesting, I think Martin did a great talk at DefCon, Martin Kuppelman. And if you look at L2B, for example, what you can see is that for all the roll-ups that exist, 60% of the funds of the TVL on all roll-ups are not bridged in by the canonical bridge. what this means is like if you sort of take this to the conclusion is 60% of the assets are sovereign. So all the L2s on Ethereum right now are already, if you like, like if you sort of think about it, 60% sovereign.

They only are 40% Ethereum roll-ups or only 40% of all the assets come actually from Ethereum. They might use Ethereum as date availability, right? But the assets in there don't inherit a security. And this, I think, is a very important point to people need to understand. And what we saw at Chilado is that we have a lot of chains that have 0% in these roller bridges because they don't want to use it. They don't want to onboard people from Ethereum. They don't want to onboard assets that are issued on Ethereum.

And so for them, it doesn't make sense. They just get overhead. They just have to pay costs to Ethereum. They have a bunch of legacy code that they need to use in these lower up stacks that deal with all, like, Ethereum-related things like re-orgs and so forth. and that's why taking the current trends to the conclusion would mean that actually what applications want is a way more sovereign construction

than what they usually have right now. So maybe if I reframe this a bit, would you think, do you think it's fair to say L2s as they currently exist are largely a meme and you refuse to kind of pay for this memetic security that kind of doesn't actually secure a lot of the acids in whatever roll-up you're looking at. Settling to Ethereum, if you do not use the bridge, is utterly useless and you

only pay and you don't get any benefits from it. And yes, this is then only a meme. And you can, you can generate as many ZK proofs you want imposed to Ethereum. This doesn't add any security. So to the funds on your chain. So I fully agree with that. Okay, I have so many questions as to kind of how interoperability could or should work, but maybe kind of let's take it from the beginning. So maybe let's look at kind of how. So kind of I understand kind of what you mean by a sovereign roll-up. So kind of let's look at how your roll-up stack works and kind of how you achieve the pretty

impressive throughput that kind of you are achieving. and then kind of we can look at kind of like the wider Ethereum roll-up ecosystem later and look how we could kind of untangle this to a certain extent. You guys recently launched Abundance, so kind of the ABC roll-up stack, and what you can actually get with it is a one giga-gars per second sovereign roll-up solution. First of all, maybe kind of, can you reframe the one giga gas per second kind of number? Because kind of like if you're not very, very hardcore in the gas weeds, what does that actually mean in terms of what sort of applications that could support?

Totally. For let's say, for the end user, this might sound hypocryptic, right? but I think why we use the giga gas measure or unit to measure throughput rather than so like the traditional transaction per second measure I think that many people use is because it really like the blockchain throughput is limited by like EVM blockchain throughput is limited by basically or measured in gas right so how much gas can we get into a single into every single block. And that's why

in Ethereum and so forth, the Bitcoin is these huge debates about like block gas limits and so forth. Right. So we do bigger blocks, right? There's like all these, all these discussions going on. And so what one giga gas,

like I think the easiest one to explain how what an immense throughput gain is is is to put it into perspective of what we currently have. So if you look at, let's say, base, right, which is probably the roll-up out there with the highest usage right now in terms of users and gas consumption. It currently has 0.017 giga-gas per second worth of throughput. And this is sort of also where the current Ethereum-centric roll-up stacks clock out. we have customers on our

I wrote the service platform at Jelato which builds like games and I like games as customers because they're like hey I just I have 100,000 users and I just put everything I want on chain and then everything is already full like they really try to max out

the software and they already clocked out at 0.018, 0.019 giga gas per second with a throughput on some of the Ethereum stack. that we're using. And so what we do is we do in 100x improvement with ABC stack in terms of throughput compared to what you currently can do on like base or what this game could do. So this is a pretty big one.

If you want to use like the transaction per second sort of measure, we have some sort of like I think you can translate it to like 50,000 transactions per second. But it really depends on the transactions, what they do, how much computation they can. In my head, kind of like a small transaction, it's around 100K gas. So kind of that's kind of, yeah. There's like a small transaction, yeah. So you're kind of 50xing the throughput of. They're like, yeah, we can go higher than one gear gas, but like roughly 100x, yeah.

Okay, 100x. Okay, that is a lot. So kind of, that means kind of you can kind of onboard, you can onboard games. as an ecosystem because that kind of commit a lot more transactions on chain and kind of like can't pay the price point that many financialized transactions pay, right? Yeah, so basically we believe that we believe in a world of abundance or abundant block space is necessary in order to actually create compelling applications for like a large number of users, right?

in these games that we have, we are not talking about them having millions of users, right? They still are probably like thousands of users or something, but they're still already clogging out. But the games are, of course, one big vertical. We are also very bullish on that can actually bring in more retail people. But what we are, and we are like very, that we come from Defi as well at Jalado, so we are always very focused on like, okay, how can we actually, rather than everyone trading on Binance, how can we bring Binance really on chain?

How can we really build like fully decentralized, sensitive order books on chain, for example, right? And this is right now, the current stakes are nowhere near close enough in terms of throughput to actually facilitate this, right? And I think this would be for me the biggest unlock we see like with hyperliquid and so forth how successful you could be if you actually sort of go in this direction. And what we are mostly bullish on here is actually enabling. people without like having to horizontally chart by multiple instances for now, build like an on-chain binance on a roll-up. And I think this is for us the really exciting use case that this enables. Why do you use Celestia as a data availability layer?

Because kind of like if you look at base, kind of they're clearly using Ethereum. So what's kind of limiting them to 0.0 to gigagast? So it's really the lack of decoupling. And so if you look at the last sort of centuries or the last couple of years and software development, microservices architecture is really like a dominant sort of trend that you see. And what this means is that you decouple individual services. from each other. So they run sort of like in silos

and you can improve them in silos, you can scale them in silos, you can make them resilient. If one fails, it doesn't impact the other. And you just make them so much easier to maintain because, yeah, if you change one thing here, you don't always have to change another thing here, right? The current stacks right now are pretty, pretty coupled.

So every time you want to add something on, let's say, the execution client or so forth, they do improvements. You have to always look, okay, what about the fraud proof? What about the bridge on Ethereum? We need to upgrade it now in order to actually encompass these change that we do here. So you really couple bridging with the actual execution and the throughput, which is basically if you have an enshrined bridge and your roll-up,

this is what you do. The Ethereum roll-up stacks, they enshrine, they combine the roll-up and the bridge into one. Basically what we do is we decouple them from each other, and we make them isolated, which is what Soren Rolups do. through this decoupling plus of course like a bunch of improvements that we do to the stacks, sequences and so forth, you can really gain these massive throughput benchmarks that we achieved. And this is really the secret source here.

So decoupling things from each other and then optimizing each specific thing. And when it comes to intropability, the great thing is you just use whatever intropability layer that you like. So many of the chains that are on gelato use, for example, the layer zero messaging protocol. Others use hyperlains, permissionlessly deployable messaging protocol. And these messaging protocols are the cool thing here is that you can define your own security. And we are strong believers in that, especially for start, like you don't need to overpay for security if you just get started as an application.

If you just get started, you shouldn't pay $10,000, $50,000 per year to prove, to generate ZK proves for like $100 in TVL, right? That doesn't make sense. So this should be like a progressive thing. You should have one modular interoperability protocol. And then the more TVL you get and the sort of higher the risk is on your chain, the more secure it should be. And so another great thing that we believe in is we believe that with like what

AVC stack is built for is we don't believe like we think fraud proofs are sort of very weird sort of middle ground that we're in right now you um you sort of like everyone uses like not actually have like most Optimacy robots actually still don't use them today, but it's kind of like this meme, whereas like, hey, yeah, you get in, but okay, you can't, for getting out, you have to wait seven days, and no one really waits seven days themselves, right? Everyone uses like an operator like a cross on something and a cross rebalances via Crack and other central exchanges,

and they are the only ones actually using the canonical bridge to wait seven days and get out again. And so no one really, really, no one really wants to use them. And so what allowing modular intraoperability solution to be used means that you can instantaneously, just with attestations, bridge in from any chain

to your chain in and out in seconds right away. And whenever ZK gets fast enough from a latency point of view and cheap enough from a proof generation

point of view, you can just like flip the switch and go straight to ZK. So basically what we do is we leapfrog, frog proofs. We say, hey, just use for the beginning at the stations.

And then whenever you have high TVL and whenever ZK comes down, you just switch because ABC stack is fully ZK forward compatible. And we don't like, as other sex, we don't have, we haven't built our own trooper and our own ZKEVM from scratch in some weird programming language and so forth, what a lot of other people

do. We just are compatible with succinct SP1, with risk zero's proving system, with any other sort of jolt ZKVMs that will come out of the market. You can use them directly, prove the entire ABC stack. And they can, it's again decoupling, right? they will work on the proving system, they will make it great. Celestia works on the DA, they will make it high bandwidth. We work on the client, we will make it high throughput, and combining all these things together

in a super modular way provides the highest throughput because everyone can focus on what they are good at. Okay, I hear that. Let's talk about the security assumptions here. So kind of like, I mean, what you're rightly pointing out is that a lot of the security that's promised by L2s is not actually delivered by L2s. But I think kind of like what, I mean, I'm paraphrasing a bit meanly here, but kind of like if I were to kind of put my finger on the wound,

I would say, okay, you're not promising any security, but you're also, I mean, you're not over-promising on security, but you're also not delivering anything better than kind of what the L2s who are over-promising on security are delivering, right? So let's kind of look at your security assumptions. So say, I want to send a transaction to a sovereign roll-up. I post that transaction to Celestia. What recourse do I have if for some reason kind of my data is censored?

And what recourse do I have if my data is not censored? but somehow it's still not included. So what kind of like in the old roll-up world would be ideally kind of fraud-proof and I hear you that only works for bridged asset and so on. But what are my security guarantees? So back to the previous point of what a roll-up is, right? So the security of a sovereign-roll-up is exactly the same

as a security of an enshrined-bridged roll-up. So the security is, okay, we need to all agree, on a set of ordered transactions, right? And if we have the set of order transactions, everyone who's running a node can compute the new state based on these transactions, right? And it doesn't matter if you post,

of course, there might be an argument to say Ethereum as DA is more censorship resistant than like another DA such as Celestia, right? And so this would be a security sort of trade-off that we made here in ABC stack because Ethereum could be seen as was natural resistance.

I would agree it probably is, like homesdaker, like focusing on homesdakers and so forth, right? But why do we do this? Why do we do this trade-off? Because Celestia is basically sort of what Ethereum wants to be in terms of its roadmap. It basically started from with this clean slate when it comes to the roll-up-centric roadmap.

Celestia is built for roll-up. Celestia says, hey, we are optimizing for one-gigabyte. blocks. And as soon as you post these transactions to Celestia and, and Lesia, of course, still needs the scale. Celestia still also not at the scale today to handle like 100 ABC stack roll-off. So one giga at the second, that is not the case. But they have a clear roadmap to achieve this. And I'm moving way faster than what Ethereum is doing. But the security is really coming from there. And now, of course, the other securities is all the security is just a DA layer, right? And then everyone

running a node. But then of course you have the bridging, right? So, and then, okay, well, how do you actually secure the bridging? This is a, this is, you have to decouple these two conversations. And this is where like basically our, our whole point is that look at these bridges out there today, like Blast is the fourth largest roll-up, Ethereum roll-up, right, with $1.4 billion in TVL. And it has 84, 2% of the assets are bridged in by the Ethereum roll-up, which is secured by the fraud-proof, all like 82% are externally bridged in or actually not secured by the bridge itself. For them, there's like a caveat because they use this sort of like vault system before that escrows or the Eave, but basically the bridge itself is not even securing these funds.

So you always have to look at who is securing the funds and only and how many funds do they secure. And this is really the security you get. And so, yeah, basically most row-ups a day are already not really benefiting from the security from Ethereum. And so we just take it to the full conclusion, say, then just stop using it. Then who's securing the funds in a sovereign roll-up? So is it kind of the Celestia notes of who would you point to? Yeah. So there, like an interesting point here is that who is the asset issuer, first of all, is the question, right?

for example Ethereum issues ETH and the ETH who secures ETH in general is Ethereum right so if you would like to have ETH on your chain

then you will want to have a bridge to Ethereum right and if you don't want to have any other external dependencies in terms of security you probably want like a ZK proof based bridge to Ethereum right and then if the ZK proof is so like secure and you trust it then

it's so like you're going to have the Ethereum security, right? For UCC, for example, USC on Ethereum or UCC on base, is actually issued by Circle. So neither Ethereum nor Base provides you with any security for the USC you hold on Ethereum or base. It's solely a server somewhere at Circle, right, that provides you with that security. Now, for Sovereign Roll-up, again, it depends who issues the assets. So if you issue the assets natively on the sovereign roll-up, it's basically Celestia and everyone running the notes

who's securing these assets. So it's just a natively issued asset that you have. And there's a transaction that sent to Celestia it says, hey, I want to issue this asset. And there you see, now you've got an asset on your own roll-up and there's no external social security dependency you have.

Of course, if you want to bridge in assets from another chain, quite, let's say you have your own base. a natively issued asset on base. And I think base actually has 60% of all the TBL is natively issued on base. It's most of it, right? So if you want to access these, let's say, meme coin on base, then, of course, you, like, the biggest security assumption here is like, okay, the bridge.

First of all, how do you get the message across from base to your chain? And this is either, like, in a tester, right, there are some notes that are running full notes and they're like checking the state transition on base. and they're saying, okay, cool, it was done correctly. Here I give you the asset. You trust those. It's kind of like a multicake. Or in the future, of course, how it should be,

and this is the end game, it's ZK. So you just have a ZK proof that then proves that the stage transition on base has been happening correctly. And then base inherits the security, of course, as a from a theorem with its DA layer. I understand. So kind of if you compare, say, base and a sovereign roll-up,

So kind of the entity that kind of builds blocks on base is the centralized sequencer, right? So kind of like in effect it's some sort of coin base entity, a single one that kind of, and I mean in our roll-ups, this is the case to a certain extent. So some roll-ups kind of have a very limited list of allowed sequencing participants and so on. but kind of it's always very short list that is curated by whoever kind of set up the roll-up in the first place, which is where kind of like truly decentralized sequencing is something that kind of all else who's on Ethereum or aspire to in some sense. You're rightly pointing out that kind of this is a very centralized function, but kind of can you compare in contrast with Celestia?

So kind of like if I rely on Celestia for something that is issued on a sovereign chain, so kind of nothing that's bridged or whatsoever. So kind of like say I issue a coin on sovereign roll-up one and that leverages Celestia. What exactly are my trust assumptions here as compared to an L-2 on Ethereum that is admittedly not decentralized at this point. Yeah, so I think maybe to unpack this a bit and focusing on the first part, which is like the centralized

sequencing part. So most roll-ups, most raw frameworks today, rely on this notion of the centralized sequencer to give fast pre-confirmations. This is also the same for ABC stack. So also in the APC stack, you have right now a centralized sequencer model. Why do you?

you want this because users, especially like in high throughput applications, they want to have past blocks and they want to have pre-confirmations like preferably below 100 milliseconds, right? And we all know Ethereum takes

rough 12 minutes or so forth to finalize. So only after like 12 minutes you actually know that your transaction got included and didn't get re-orged out or something, right? This is a long time to wait. Celessia actually in this case is already so superior with their new upgrade,

I think it's six seconds. And they have single slot finality because they use the 10-economic consensus mechanism. So there you actually, after, like, you could already, like, if you think about based roll-ups, right, that sort of basically circumvent the centralized sequence there,

censorship problem and like the equivocation problem. And then you could potentially even, like, build, like you can build base ropes a day on Ethereum, but they are very unused. are friendly, even if you don't rate of finalization, wait 12 seconds. On Celestia, you could build it today. Then you would wait like six seconds, but it's still too long.

That's why you have decentralized sequences. But we actually are very bullish on decentralized sequencing in general. And Celestia actually has on its roadmap to also have sub-second block time. So I hope Ethereum will also get there at some point. And this will actually then enable this to be much more sort of pragmatic. Now, I think the second question you had was around the security of a natively issued assets, right? And the security of natively issued assets on like a sovereign roll-up, for example, are sort of two-fold. It's a bit difficult to grab you how to around it.

But first of all, as I said, a roll-up is a state, state-transition function, and then the use date, right? And then you need the transaction ordering. So you have a finalized list of transactions that have been ordered. They say the first transaction is, hey, I want to issue this asset, right? And then everyone who's running this node basically runs the same state transition and knows exactly, hey, now the output should be that Frederica received these hundred assets, for example, right? The cool thing about the sovereign roll-up is the security also sort of relies on like social

consensus. It's a bit similar to Ethereum, right? in Ethereum, what we could do is if like Ethereum is also weird in that regard like in Ethereum if everyone would now say like then with the Dow fork, right? We said, hey, this transaction had happened actually it shouldn't have

happened, but it's all agree off chain and it's all update our client and bomb after Block 100 suddenly this heck didn't happen. This was like the security at the very essence, at the very core was always like social consensus. You can just like fork and then

you have to rely on everyone. So like participating. This is, again, this is actually not the case for enshrined roll-ups, right? Because they have this enshrined bridge to Ethereum. So they can't just fork. If they would fork, then the bridge would have to be updated at the same time. Right. So they have the sort of like dependency that makes them non-sovereign. And what a sovereign roll-up is, by not having this enthrined bridge, is you could actually do similar forks when you do an Ethereum. So you can actually say, hey, if everyone agrees, we just update the client. And then this transaction that we included in our state transition function was actually not is not included anymore,

right? And that's why sovereign roll-ups are not L-2s, but you can think of them as sort of modular or virtual L-1s, but without the need to come to consensus on the data. I know this is a bit tricky and this also took me some time. But yeah, so social consensus at the very end is then still like the arbiter of what is like the security. But do you think social consensus is a good thing to kind of be relied upon kind of as a default? So I agree kind of that it worked once for Ethereum. But it was also a very tight-knit community. There weren't kind of like the stake was way smaller than it is today.

There was a very strong social coherence about kind of condemning the acts of the Dow hacker and so So do you think this is tenable kind of for a few to use? So like Ethereum is still like the same, right? So it's all deep down it's all social consensus when you drill down in the blockchain world. In practice, the social consensus is highly restricted. For example, it's another like, of course, it's an exaggeration. But Ethereum, like you can argue that circle or like Ethereum or Ethereum or Ethereum settles to Circle and Tether, right?

Because a lot of VAS is issued on Ethereum are actually issued by Circle and Tether, and they control such a vast amount of TVL on the chain that if Ethereum wanted to fork in order to do something, and Tether and Circle says, no, we won't support it, then basically suddenly a huge chunk of the TVL would be... I agree, kind of circle and tether would be kind of the kingmakers to kind of decide which focus the real one.

And so they are part of the social consensus, right? And this is the same for a sovereign roll-up. As they're similar to an L-1, if you have Circle issuing funds on the sovereign roll-up or if you have certain bridge operators that are issuing tokens based on other tokens that are locked on base, for example, on this roll-up, then they will equally be an arbitrator

and this whole sort of forked trust rule and would say, hey, guys, actually, we don't support this because this is somehow acting malicious or something. So as these chains are always sort of social consensus, at the very bottom, you always have this reliant, but you don't want to have this be one party, of course, right? You don't want to have this maybe be just circle, but you want to have this to be a wide community of everyone in general.

And then as long as you have this, you get the robustness of something like Ethereum. Another question as to kind of the robustness. So kind of on Ethereum, assets are secured by Ethereum, right? So if you look at sovereign robots, assets are in that sense kind of secured by Celestia and the Celestia stack. If you kind of run a hundred sovereign roll-ups on the Celestia stack, don't you think you're kind of overload the security that kind of Celestia with a base token kind of offers?

Yeah, so Celestia is in a sense a bit different to Ethereum, right? Because we are talking only about like DA right now. Celestia will have at some point ZK accounts, which is like a sort of ZK verification system as well. But when you talk about the scalability, so the scalability of Celestia is really about the bandwidth of how much data you can send to it. And yes, for sure, if we would have, I think,

a thousand ABCs that growlups a day that just send a ton of data to Celestia, it will probably be full. but it is already two to four times, I think, more has higher bandwidth, and Ethereum has the day. And it is sort of increasing that bandwidth as a pretty rapid pace with a roadmap to one giga glide blocks. And so Celestia for us is right now the only actual alternative for this sort of roll-up-centric roadmap that we are seeing in the space.

And I hope Ethereum sort of will accelerate and will. also provided because of course the more bandwidth is the better right but in general um you bandwidth of course is limited right now on these these networks and so will then also be the throughput of the roll-ups however that's why like um you do have um these uh sort of data availability committee committee systems right let's say if if it would be too expensive to post data to both ethereum or celestial then you have these committees that sort of post hashes, only hashes and not all the data to Celestia.

And so you can get additional scalability benefits at the cost of some trust assumptions, of course. But yeah, so these are the bottlenecks, but this is where like this decoupling, we are optimizing for this decoupling where, hey, Celestia, I let you guys cook, you'll figure this out. And like we focus on actually making sure

that the roll-up itself is as scalable and secure as possible. So you already referred to this a bit earlier in the episode. So my co-founder, Martin, gave a talk at DevCon this year, talking about Ethereum's need for native roll-ups. I'm kind of explaining that kind of the current roll-up space adds limited security, as you have already pointed out, and also kind of fragment liquidity because bridging between

different roll-ups' complete mess, as you have been. pointed out. So kind of his solution was to say, okay, why don't, why doesn't the Ethereum community kind of introduce Ethereum endorsed roll-ups that kind of all work in the same way where kind of we can say, okay, valuable assets are issued on Ethereum, they're kind of bridged into the road-ups, they can kind of rely on the security guarantees provided by Ethereum for both bridging back to Ethereum and bridging to another roll-up and so on. You saw the talk, right? And I assume you also kind of listened to the Lauracin debate with Justin.

What are your thoughts? Yeah. So first of all, I think I really enjoyed Martin's talk and I really like his intrinsic motivation to try to push the Ethereum community further and try to resolve issues and proposing alternative. So I definitely applaud Martin for doing so, and he's been a steward of a theorem for a long time. And I definitely deeply respecting for this. I think for me, what his proposal is addressing is our two things really for me. Like there's no silver bullet, of course, right now to just solve interoperability.

How do you solve interoperability is you need like fast real time, fast and cheap real time proving. right if we have this then like a droolability is cool and yeah i hope at some point the silver bullet comes around the corner it's all there but it will take some time i'm i'm sure so what is proposal for me is more so addressing is this is the value capture and the incentives if we look at like i think what he really sort of also deeply means is that right now we see we have like the optimal in ecosystem, we have the option ecosystem, we have the Polygonne ecosystem,

we have the sync ecosystem, right? And they're all building these sort of clusters and all the value really is being captured by the roll-ups, right? There's barely any value that trickles down to Ethereum. And this is kind of like where I feel Ethereum finds itself in an innovator's dilemma, where Ethereum used to be, there used to be this meme like,

ethos money. And yeah, there's so much, like this pristine scarcity of the Ethereum block space is great because everyone will forever use Ethereum. And the more people want to use Ethereum, the more they have to pay. And the gas fees just go higher and higher and higher. And we just pay more and more and bore and eat gets burned. And this is great. And it worked. For a time, we were like inflationary. But then everyone was like, hey, we don't want to pay a hundred bucks or transactions will roll up. And suddenly, all these transactions, all these priority gas fees and so forth,

they don't come to Ethereum, all this MEV. It's not leaking to Ethereum anymore. It's now on the roll-ups. And of course, this means that Ethereum, this is what I meant with the innovation's dilemma, is at a pivotal point right now. So we have to decide what do we want to do.

Do we want to have this layer? And this is sort of maybe also where I deviate a bit for some opinions of others, but Ethereum for me has to decide, do we want to be a platform that caters exclusively to roll-ups, which I think for me also means that it has to be fine, giving up a lot of value to roll-ups, and it has to optimize only for these roll-ups

and high-band-worths, EA, cheap fast-z-k verification, right? And then actually nothing else. All the old legacy L-1 state, is sort of like just like technical depth at this point. Or do we want to focus on actually creating more L1 state, like scaling L1 and execution, having apps built on the L1 itself to actually capture all the value, right? Because for me, like based roll-ups and like enshrined roll-ups is a cool concept.

And what it tries to do, what Rarsin tries to do here is he says, hey, let's just have base roll-ups. We have this Ethereum deployed roll-ups, where everyone can build on there, plenty of them. So there shouldn't be any scalability issues for foreseeable future. They will always be at some point scalable issues, but with possible future, we should be fine. And like all the sequencing, priority fees, MEV and whatnot,

all goes to ETH, right? And now we are back where we were. Like everyone just builds on ETH, but just more scalable, right? And this indeed would lead to ETH the asset actually being so way more attractive and like to show them to medium term. again, I agree. But, and so it makes sense, it's a good proposal

and that sense, if you have this lens on. But what I, my lens, my lens is on, like a gelato, what we sort of believe, and we are mostly catering to actually application developers and them. And if I look at the incentives here, is that, if I look

at the incentives, they clearly tell me that liquidity users, I mean, and so forth will go to the ecosystems and the applications that are actually sort of building and investing all the resources in, right? Base invested tremendous amount of resources in a Coinbase invested, a tremendous amount of resources in base to make it what it is today, right? Now they're actually all slowly reaping the benefits of it.

And why would they want to not capture it? Why would they want to give it away to Ethereum? Right. So what we would need is we would need to recruit. an array of altruistic developers that see base and see the value they can capture, but decide not to capture it and give it back to Ethereum, right? And I think this is like the dilemma, Ethereum's all the phases. If you think, if you look at the incentives, you will notice that I don't think this is a likely outcome.

But in this, like taking this to conclusion, you were still wanting to serve all these roles. ups and you want to position yourself with like a key play on this market and you want to have like nice bridging with where ether your asset and so direct it there you should maybe embrace this could be one way but you might want to embrace like a slightly different model which is close to like Celestia where Sylvester says we don't have any stage on Sylvester where you can't actually build applications on Sevastia it's just like a super high through high bandwidth the A layer. And then what we do is we focus on very efficient, cheap ZK verification. So the customers, so Celestia exclusively roll-ups, whereas on Ethereum, there's like sort of roll-ups,

but only roll-ups that now like should pay everything to ease, and then still applications, right? This is like this weird middle ground. And so, yeah, I think it's a good proposal. I like his idea. But I don't think the incentives are there for developers to participate in and healthy. But if Ethereum kind of where to come out and say, look, we see what all of you guys have done there with kind of kind of these different roll-ups. And we see that this and this and this actually are super nice features. And we will kind of use all of the work that you guys have collectively done with VC raised money and kind of synthesize an Ethereum-induced roll-up of that. would, I mean, kind of you don't actually have to reinvest all the money that's already been

invested because a lot of the learnings are out there. And you can kind of just cherry pick, right? So kind of like, say it would, it would cost 10 million, 20 million, 50 million to kind of deploy 128 Ethereum endorsed roll-ups on top of Ethereum, right? That would undercut the entire current L2 system. Right? So because if I'm a deaf, why would I deploy on Arbitrum or base or wherever if I can kind of deploy on the Ethereum-induced L2 that interoperate super nicely with all the other L2s where I don't actually have to have the headache

of kind of liquidity fragmentation and so on? Do you think if the Ethereum community were to come out with that admittedly somewhat aggressive move, do you think that still holds? If they say, look, thank you for innovating, we'll take it from here. So there's also a lot to unpack here. We've got like intraoperability and who gets intrappability

and difference between like atomic, like L1, L2, composability and so forth. So they like a lot of nuances to what Ethereum can offer versus others and so forth, where I don't want to go into all of them. but just from a high-level point of view and an incentive point of view, I actually made a tweet this morning about it

because I re-watched the Martin's talk before our conversation here. And I think what if you create incentives for developers to build the next base as a native roll-up on Ethereum, then I do see this happening. This could then happen. right? How would you actually do this, right? You would need to completely go away from the

scarcity mindset. You would need to completely go away from the ethos money. Like we need to now extract all the value mindset. Ethereum needs to go start from scratch and say like, okay, revenues zero, cost high. We now issue even more ETH. We say we pay for your roll-up cost. We pay for the ZK verification. We, we, we incentivize liquidity to come into these roll-ups, we build this platform and incentivize it with a massive program, like what OP is now doing with, for example, all the OP stakeholders, right,

they get massive incentives to join the OP cluster. You need to compete and, like, pay, I don't know, $40 million to these roll-up projects that want to launch these big exchanges if you want to get them on your platform, right? If Ethereum would be as aggressive to say, okay, we are doing this and all the value will leak to you for us now. And then maybe in 10 years or so, right, we will start like taking a small cut on like the MEV and whatnot.

And so it's just a long-term play. Then I would say, yes, there is a, this is a competing story because the incentives for projects to develop in a native roll-up and Ethereum are there. If not, then the incentives are not there. And then the technical benefit that this brings versus just having a. sovereign roll-up, which can also generate ZKPruz, which can also enteroperate with the other chains, it's not that strong. And so, yeah, I feel we need to go aggressive. And I would like to see that.

I'm all for it. You're all for aggression. Fantastic. So maybe let's talk about, say, kind of this vision plays out or kind of even L2 as they are. And they kind of, they slowly become decentralized and kind of make good on the promise that they kind of have been there for a long time. where do you kind of see different sorts of applications kind of run in the long term, right?

Because I think in this space, there's often this idea of kind of decentralization is great and so on. But kind of like obviously decentralization also means redundancy in some sense and kind of like making each part replaceable and so on. kind of there's a lot of overhead that comes with true decentralization. So, and a lot of people don't appreciate that decentralization in itself is not a value, right? It's kind of like what you can in principle kind of reap from it as rewards. How do you think different applications will group themselves onto different blockchains or roll-ups or sovereign roll-ups according to, what their security needs are

rather than kind of tribalism or kind of where they incentivized to deploy and so on. Because these incentives they can't go on forever, right? At some point, kind of they will have to be recouped or kind of VCs will no longer kind of fork out for kind of incentivizing behavior that's not going to be

rewarded in the long term. For sure. And yeah, maybe to the point you mentioned with like decentralization is what that means to an android, I think what the property is that blockchains provide is censorship resistance, right? So this is, I think, what decentralization provides you, which I think in today's age is extremely, extremely valuable, right? If you look at how we are getting censored in the EU, it's crazy, right?

And so sensor resistance will become, I think, more and more important. And the security, by the way, as long as we, if we are censorship-resistant DA layers, and then if we have ZK, then the only real benefit that like a decentralized will provide your sensory persistence because the verifiable you can get from ZK, right?

You can have a centralized sequencer with ZK that works, but they can, of course, censor you, right? So sensorization is definitely still important. That's why decentralization is also still important on some level like the DA layer, for example. Now, how do I see these applications develop? for me there are two camps of applications that we are gelato sort of have in our mind one is like

the probably where the majority of like long tail applications will be and these are not like the hyper sort of definated use cases and they will probably not care about censorship resistance that much and they're like what i want is great ux high throughput low costs um all of that right And what is that? It's like, censorice sequencer, one giga gas, you go out there, kiddo, and you just get these users onboarded, right? So I think there will be huge, huge array of users projects that will do that because it's totally fine for them. They are not in the business of censoring their users, right? And then, on the other hand, I think there will be this new financial, decentralized, fully censorship resistant, a platform that will be built.

the on-chain binuses, the on-chain everything financial, where you don't want to have one party controlling the sequencing and so forth, and like, the US won't interact with the central sequence of Germany and Switzerland and so forth, or Citadel of Deutsche Bank and so forth.

There you need a credibly neutral censorship resistance platform, but that can be super scalable. And this will be huge in terms of value and so forth. And I think there we see, we will see roll-ups, like we'll see roll-ups handling that, but they will have to be built in a way, more so like censorship-resistant manner,

potentially a base roll-up with super-fast block times from the L-1 or some sort of pre-confirmation layer in between. So what I believe is, in general, like ask, answer to the question about classes, I believe we will soon see a big movement. That's why we are investing our resources in it into sovereignty. Projects will want to be as sovereign as possible. they want to, applications want to reap all the benefits of what they create from the sequencing, from the users, from the TVL and so forth.

They want to be independent. They want to use modularity to the advantage by do custom block building and so forth. They don't want to be limited in their configurations of what they want to do. And so they want to be highly interconnected with ZK and sovereign in order to really reap the benefits of high scalability. This is so like where we see it. But in the short to medium term, you will have these clusters, like the super chain cluster. You will have the Arbitrum cluster. You will have the whatever cluster.

So it will be a weird time. But eventually, I think the end state is sovereign chain, all interconnected, like in the web two, right? Your server is not part of a cluster. If you build an application, you might be in a data center, but your server is not part of the cluster. You are a sovereign application. And you have one protocol to interact with another like HTTP or something to do, to communicate and APIs and so forth, but you are still your own thing. And I think we will look similar.

What does it mean in terms of kind of gelato and the ABC stack for you in the next, say, one to two years? Yeah. So as I said, ABC stack is basically still like what we believe the future will be. our learning of the past two years working with hundreds of roll-ups and customers listening to what they actually want. And so what we are really looking to build is how can we build the next on-chain Binance, how can we build the next on-chain Twitter, but fully censorship-resistant and highly scalable,

and how can we build a platform to facilitate this? And there's this platform component, which is, of course, like the role is service, like this needs to be serviced and scalable and like very easy to deploy. But then there's also the censorship resistance and decentralization part of it. How can you actually sort of facilitate this? And this is also where like abundance at some point comes in to the picture, which is kind of like the overall sort of brand of ABC stack. And yeah, these are the questions.

How can you build highly scalable, censorship, resistant, sovereign roll-ups? And, yeah, abundance is what this will be. Thank you, Hilma. So if there are people who want to try out the stack or kind of build a sovereign road up, how can they find you guys? Yeah, for sure. So you can check out at Gelato Network on Twitter

at Abundance underscore XYZ for Abundance. You can deploy a one-giga gas ABC stack test that today on gelato. just go to RASDoshalado Network, one click, you got it. Main ads will go live in January, so we'll have the first Mainz life, super excited about this, team is locked in to facilitate this and get a ship. And yeah, just follow us there and we'll do some tweets. Cool, fantastic, Helmer.

Thank you.