Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Anatoly Yakovenko: Solana – at Breakpoint

Episode Date: November 17, 2021

Solana has pursued the vision of a single, fast and scalable blockchain from the start. Today, it has become one of the fastest growing ecosystems in crypto with hundreds of projects spanning DeFi, NFTs, Web3, and more.Last week 2,000 attendees descended on Lisbon for the first-ever Solana conference, Breakpoint. We caught up with Co-founder and CEO Anatoly Yakovenko at the event for a chat about the Solana journey and some of the most important questions they are facing today around decentralization, scalability, governance, and MEV.Topics covered in this episode:Solana's origin story and thesisThe current state of SolanaWhat censorship resistance is and why it mattersSolana's bottlenecks and remaining scaling challengesAnatoly's views on governanceSolana and Miner Extractable Value (MEV)Rollups as an Ethereum scaling solutionMarket and adoption cycleEpisode links:Episode 312 with AnatolyBreakpointSolana on TwitterAnatoly on TwitterSponsors:CowSwap: CowSwap is a Meta-Dex Aggregator built by Gnosis. It taps into all on-chain liquidity - including other dex aggregators such as Paraswap, 1inch and Matcha - offering the best prices on all trades. It provides some UX perks (no gas costs for failed transactions!) and protects traders against MEV. - https://epicenter.rocks/cowswapThis episode is hosted by Brian Fabian Crain. Show notes and listening options: epicenter.tv/418

Hello and welcome to your epicenter, the podcast where we interview crypto founders, builders, thought leaders about the future of the crypto revolution. My name is Brian Crane. Today we have a really special episode. So I was speaking with Anatoly Yakuenko, the founder and CEO of Solana Labs, about Solana. So of course, Solana has had an absolutely phenomenal, you know, phenomenal growth this year has gone up tremendously in market cap and activity. And we recorded this episode at the very first big Solana Conference breakpoint,

which took place to listen. There was over 2,000 people there. And it was really very vibrant events. So I'm excited about that conversation. And I'm sure you'll enjoy it as well. Now, before we go to the conversation with Anatolia, I want to talk briefly about the sponsors for this week. And that's Cow Swap.

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the trades are settled on a variety of underlying AMMs and chooses the best price wherever it finds it. So give cowswop a try and enjoy perks like no gas fees, paid on failed transaction, optimised transaction management for multi-six and dollars, and some other fun and entertaining surprises. So head over to cowswop.comptech and start swapping today. And now with that, let's go to our conversation with Anatoly. Welcome to Epistener, the podcast where we interview, you know, crypto founders and talk about, you know, the future of decentralized technology. So this is episode 418, and I'm here today with Anatoly Yercovenko.

He's the founder and CEO of Solana. Yeah, so welcome Anatoly. Awesome to be here. Yeah, so we've done an episode before with you, right? So this was like 2019. Pretty early on. There was a blog post where you guys outlined sort of the seven, I think it was seven. Eight.

Eight was eight. But one got dropped. Which one got dropped? Archivers. Right, yeah. But yeah, it was basically like, okay, these are like these technological breakthrough or innovations that like Solana is based on. Of course, that was like early on. And now here we're today at the Solana conference, Breakpoint, Lisbon.

It's been last day. Yeah. Last day. So, yeah, how has the comments been for you? That's great. Yeah, it was really unexpected how many people were going to show up and how much energy they were going to bring. Lisbon is a wonderful city, so it's kind of easy to put on a good show here.

It's just a really nice place, but it's just really cool to see all the people that you don't know if they're bought. They're not online, right? Yeah. But, you know, there's people, right? People that love to code, love to build stuff. Just amazing. For you, what do you feel like makes the Solana community? What's it like?

It's this idea that we're ready to eat glass, I think, kind of started permeating through this. And this goes back to, like, the validator days. When I was talking to you guys and, like, you know, Sirrus and all the other ones, the problem was that like, hey, we need you to go to a data center and put boxes up and everyone said that's too hard except for the few. Yeah, no, I think that's definitely true, right? Because I guess, I mean, of course, our listeners, right, who will be well aware of Solana at this point, right, at least on a high level.

You know, I think Solana is, I don't know, five or six or something like that, before, I'm not sure, but like somewhere, someone really high up. Yeah, I don't think. about it. But maybe let's just step back a little bit and sort of start at the beginning. Like what was the original vision for you for Solano? So I'm like an operating system geek. I worked on Brew.

I worked on Android and the Linux kernel. That was like the first interesting problem that I thought this is cool in tech. I don't know why I thought it was cool. It's kind of like a boring thing, right? You have hardware and you're just writing a little shim on top to abstract the hardware to make it easy for doves. But there's so many concentrate offs that you're dealing with. It's kind of a nerds night, right? It's a rabbit hole.

How do you build the fastest possible system call and things like that become kind of interesting challenges? So when I started Solana, you know, I called a bunch of my friends from Qualcomm. I was like, okay, this is a new operating system, a new platform, there's going to be applications. We don't know what they look like, but there's stuff running on Ethereum. We think that's, like, it was super early days. 2017, 2018, just there was an idea of smart contracts, but don't know NFTs yet, wallets barely works.

And, yeah, it was just this kind of, you know, let's build another OS, but now with a different set of challenges. And so maybe talk a little bit about this idea of like Solana as an operating system. Yeah, the thing that got me excited that I thought that I could make a difference was that I never thought sharding was a viable option. So again, the reason the design is the way it is because it's what I'm good at. But I also think that it's the best design, all things considered. and if you don't have sharding, you have one constraint environment. Like there's only one of these computers,

then you're dealing with effectively an embedded system. And that's where you have constrained hardware, and I'm good at finding those local minimums where you can squeeze the most performance out of a fixed set of, you know, memory, silicon, cores, whatever. So once you constrain it to, like you only have this much, that's all you're going to get. How do you squeeze everything out?

That's kind of the problem that I'm good at. And that was to me kind of the challenge. So the design and everything else that followed really try to optimize for, let's build the fastest possible OS, given the hardware as it is today and where it's going, which was and still is. Kuta Corps, single instruction, multiple data, these massively parallel, you know, systems where you have, you know, kind of a constraint, like, you know, programming a GPU or AVX is different than writing a bunch of code that

does whatever it wants. So you're already dealing with a little box, you know? Yeah. So how do you make that little box the fundamental core part of the platform, the developers target? Right. Because, like, I think that was, you know, that was always where Solonimo kind of unique, right, where you have all of the other projects, you know, from like Ethereum, near, you know, many others were all focused on somehow, okay, we have this one blockchain, now it's getting full, we've got to like paralyze it or like, you know, we've got to chart it and then we have the system, that's how it scales, right? And you

went the other way, I think still. So the reason for that was I looked at the data sheet of, you know, computers at the time. And just Google on the Internet, okay, what, how much, how fast can you do a signature verification? How much of those can you do in a GPU? How fast can you move memory from the network card to the GPU to do these operations? And they just kind of like laid it out. And it looked like that with hardware, you know, in 2017, 2018, not super expensive hardware,

just off the shelf stuff that you could find, you know, at, uh, at, uh, front of the hardware. or Amazon, you could get to, you could saturate one gigabit, which was roughly 700,000 TPS or 500,000 TPS if the messages are 256 bytes. So can you build software that gets out of the way of the hardware so you can actually take in that many messages, figure out where the signatures are, move all the data to the GPU, run all the signature verification, go fetch all the contract state, go figure out which programs you want to call, execute them, and dump the state transitions back into, you know, whatever disk or storage. In theory, on the data sheet, you can do that in practice. It's really,

really hard because the operating system you're running on, well, it has a scheduler and it decides when stuff goes. You have like caches that are not uniform. You take a lock on one thing and it stalls like a thousand other things, and then it becomes, that's the, that kind of like meat and potatoes problem where you're just looking at grafano metrics and benchmarks and heat maps. That was my bread and butter for a decade. So that's where I thought that I could have an edge.

And so if you look at it today, what are the bottlenecks? It is like, if you take a modern system, I think you guys run some benchmarks, but there's other validators like, and Buzzer and like a bunch of folks in the community that they just spin up whatever the latest and greatest they can get. And on modern like epics with, you know, I think 128 cores or plus without going to GPUs, you can break 200,000 TPS in a single system.

So that's just this runtime fetch a transaction from a Linux kernel of GDP buffer, do signature verification, go find some state, do a change in that state, and write it back. but all the states are parallelizable that never touch each other so in the most kind of trivial you know flip one bit on chain right flip as many bits in parallel as you can atomically

you can scale it up without going to GPUs to about 200,000 and maybe with GPUs maybe 250 because the bottleneck is no longer signature verification it's memory network cards, IO latency, you're dealing with very small packets, which is a huge pain in the butt.

Harvard doesn't like small things. It likes, give me one giant chunk of stuff. So when we outline those eight solutions, it was really like eight challenges. These are the things that we think we need to solve, and this is how we think is the best bet to solve them. And, you know, the one that we dropped was the kind of the least important one in a way. It was storing the entire history of the ledger because of you saw Filecoin and Rwee and a bunch of other folks

solved that problem and you now have robust networks that can do persistent storage forever of history And like how far do you think this one can take this? Like do you think Solana will be capable of like, you know, handling sort of all the crypto blockchain activity that people want to? link line rate, which means that as fast as packets arrive to the network card, before the next one arrives, you can already handle the full loop. I think it's doable, honestly.

I think it's scalable to whatever the bandwidth you can connect. Right. So if you have enough, if the latest and greatest bandwidth is 20 gigabit, you can go to FPGAs, go to hardware, like start doing this directly on the neck, on the nick. I think it's doable, but that requires kind of a huge investment. And both in terms of financially, because you need to hire a bunch of engineers, you need to contract out with like, you know, the Foxcons of the world, you'll need to build the reference platform.

That's like kind of going the Salana signature box. So that means also like validators running like very different setups and very different hardware. It would be, yeah, this is. kind of going to the what I think will probably be the eventual future of the stuff. If there is such a thing as a global price discovery engine,

like what is blockchain for? I think it's for running markets, right? And tracking ownership. But tracking ownership is settlement, right? And settlement's part of running a market. So if you have one giant global, you know, state machine for running all of the world's markets for, you know, from

NFTs and Sides Star Atlas, as to, you know, BTC, USD, or whatever, the most liquid pair is, every, every market in the world all in the same thing. It really feels like it should be optimized to whatever the physics allow. Do you think are there mechanisms that will, or like, you know, what do you think will drive, you know, in a way, right, for this kind of progression to happen, right? Well, what you would also want is that, like, different validators and people running validators have, like, an economic incentive to do that, right? That in a way like, okay, if someone increases their capacity, like, you know, they economically benefit from that. That is the tragedy of Commons problem,

right? I honestly think it's overstated. Just being here, right, at this conference and the people you meet, that's the vast super majority of the validators and they just want to, like, they want to see the whole thing succeed. Sure, definitely. But the number of people taking advantage of, the tragedy of commons problem in an open decentralized network in an open source community, right? It's like the people that you know complain

about the Linux bugs but never never try to fix them or never try to help the dev debug them. It's a small number. They just get filtered out. It's like, why would you be doing this, right? There's plenty other ways to make money. Like you're doing this because

you have some passion something that is like, okay, we're going to decentralize the world. Yeah, sure, I agree with that, right? For now, for now. But still you will need to, like, put a lot of investment into that, right? For sure. But it's not, like, too hard, right? It's just, you know, the opening ceremony,

it's talking about decentralization, the importance of the behavior change to maximize censorship resistance. It's not a technology problem. It's really, like, a community, like, needs to be aware that it's important. Yeah, you mentioned a lot the idea of censorship resistance. I'm curious, like, what kind of censorship are you most afraid of? It's actually not that I'm most afraid of. It's the one that I feel like will provide the most benefit.

So, like, Bitcoin, right, is censorship resistant, but it doesn't guarantee when. And that is actually true about any system, any BFT system, right? You send a message. Solana goes into forked death because there's a denial service and VGP routers get screwed up and the network can't come to finality, right? Is the network censorship resistant or is it being censored? Well, if in 24 hours the validators figure out how to reroute around that failure and continue right from the last point of finality and then your message gets accepted,

then it got accepted just within 24 hours. and not 400 milliseconds. So the network is, no matter what, censorship-resistant, as long as there's at least one validator that's out there with a valid copy of the ledger that they can tell everybody, hey, look, this is the valid copy.

You can all run your tools locally to verify it. Everybody sign this thing, right? So in that sense, if you don't put a time constraint on it, it's censorship-resistant. But what people want for the benefit of actually using this stuff in practice, is they want those guarantees within a very small amount of time

because when I click a button, an audience that says, I like the song, I don't want to wait 24 hours. I don't want to pay an arbitrary amount. I don't want to pay an unknown amount of money to get that thing accepted, right? I want to pay a very small amount of money and have that be confirmed in a very short amount of time. So when you constrain that,

then it becomes an embedded system. problem, which is fun. Yeah. I mean, of course, that definitely makes sense. Like, of course, yeah, you want to, I want to be able to send a transaction. I want to be confirmed, like, you know, pretty much as fast as it possible, cheap. You know, I think Solana actually does that today, does it well. But that doesn't, but censorship is, I mean, I guess what could censorship be, right?

I mean, of course, you could have, like, maybe governments trying to kind of, like, crack down on blockchain networks and, like, maybe, right? As long as there's one copy, right? Right? This is why when you look at like the validators app, Brian and all these other folks, they're like, okay, well, what are the data centers? What are the ASNs? Let's map this out.

And that's track where stake weights concentrated. And then let's go talk to those people and get them to decentralize it more. And you see that process run in the community and people are like, given the information, everybody's making like the right decision. They're like, okay, my nodes are all in Headsner. to move them out. All we have to do is just tell people, hey, look, there's too many nodes in Hedzner. Yeah. It's, it's a, it could like cause the network to stall, right? If Hetzner has a fire. Right. And people just did it on the road. So that, right? So, of course,

there's definitely like a risk, right, around like geographic concentration of nodes or maybe if you have like a few validators that have like, you know, a very large amount of stake and then like, maybe there's sort of, although even there, right, you have today, I think, like 19 validators, right, that are like this super minority. So, but like the censorship thing feels like a different question to me. So to me that it's the same question because you're kind of looking at the Nakamoto coefficient. So you take some parameter data centers or ASNs and then you start assigning given whatever it is, data centers, ASNs, you know, geographic like, you know, jurisdictions, where is the concentration of stake in node? And then you identify that bottleneck that's above whatever threshold you don't like,

33% or 15 or 5%. And then you go talk to those people like, hey, look, this is like a worrisome thing. Can you guys move your nodes? And people will do it. That's the cool part. But that, again, the reason why you want to do that is because that has impact on real time. censorship resistance. Like, I don't want to have this, like, guarantee that if I send a message and that's

the thing that fails, right? The Amazon, ASN goes down. Yeah. But now I have to wait maybe 24 hours before that message accepted. What I want is, when I send a message within 400 milliseconds and for a fraction of a cent, it always gets accepted. Yeah, yeah. I mean, to me, that feels like sort of around the resilience of the network, right?

at all. That's the same thing, right? It's just like you start going to objectively measurable parameters. What is, what can we, what's objectively measurable? Like any one of those things, you can then decide this is what we're looking at. We think the failure rate is X. Then we need to go and make sure that there's at least, you know, Y number of these things before the network has to go through this like recovery procedure.

What do you think are the biggest challenges ahead for Solano? I mean, realistically, going to link line rates being unbounded by the software, right, by the implementation, it's a really hard problem. It's like a really hard engineering problem. So that's kind of the biggest challenge. It seems like the Solana is fast, right? Right. Cheap and fast, but there's 300 million cryptocurrency holders out there. that's the latest number I saw.

When we actually talked to the folks doing analysis of how many of those do stuff on all the chains combined, it's like maybe three, four million at most. Yeah. Actually, people, individual humans, signing stuff,

it's a very small number. There's a lot of, like, you know, people arbing uniswap or whatever markets in Ethereum, but those are mostly bots and it's not 10 million people. It's a very small number of people generating like half a million, whatever, events per day. Yeah, yeah.

No, definitely. I think. So, yeah, the real challenges are like the engineering ones. Everything else, I feel like is the, it's like the, if we do that right, like everyone else in the community will solve all the other problems. It's just that's the, that's the challenge that you can't fix over. weekend. Sorry. Yeah.

Like dealing with the fact that our developer tooling requires you to by hand pack and unpack data structures, developer can figure out how to write a library for that over a spend a week or two, and Armani did, right? So that's not a problem that we actually need to solve. The hard one is if it takes two years to design hard. hardware that can actually handle unbounded bandwidth, like go up to 20 gigabits. And we really believe that that's what the world needs, right? For the world to be fully decentralized on.

That's the thing that, that's the biggest challenge that we need to tackle. Yeah. One thing I'm also curious about, because I feel like it's a topic that's like discussed a lot in some other kind of crypto communities. And I think it's like lesser in Solana is like the topic of governance. and I'm curious, like, what do you, how do you think Solana governance should work? I mean, maybe today, but also in the long term. Yeah, like, I think I'm like a, I think it should have like a very clear, constrained mission that makes sense.

And then the only thing that the governance is doing is, hey, are you executing in this mission or not? Like, it's more just like a back check on the work. that's being done. And like, because if you have a, like it's almost like a constitutional dictatorship or whatever, right? You got to like,

you got to pick what you're going to do, right? And that's the thing that's the most important. And then you invest in it over a long period of time. And it's not open to question, like, whether you change the mission. It's that are you like screwing up on execution or not. And making that big bet is the hard part. And the bet that everyone is making, I think, internally at labs the foundation for the vast majority, I think, for basically everyone that I've ever talked to is that that real-time censorship resistance piece, that's an important thing.

And we should basically do whatever we can to maximize it. Okay. But then, like, let's say they are, like, different interpretations, different visions, differences that arise. Like, do you feel like... So, like, inflation was a great example. Yeah. What is the optimum rate for inflation? Nobody knows, right?

And does it impact censorship persistence? Well, if you don't have it, it does. If you have too much of it, it does. But that's, again, like a very wide decision thing. Yeah. And within the community, there was a proposal process. Everybody that wanted to submitted a PR that said it should be X. They tried to defend their reasoning for it.

There were people that wanted to not have inflation at all. There was a form post on this. And then there was a validator effectively vote. And that's where it got. Right. So that kind of like, how do we pick a parameter, right? Like that feels like, again, like a thing that you can have. ask the community and have it figure it out, go through that process.

But do you feel like there will be a need at some point for like a sort of an explicit on-chain governance system or like you prefer that kind of thing to happen? Well, I mean, validators are always an explicit on-chain governance. For them to take an upgrade, for them to sign a feature upgrade, right, is a explicit thing. because they're signing those messages with their validator keys. Sure, that's true. Yeah, now, of course, valids have that role with upgrades. That's true.

But, like, for layer one, that is the layer where anything important with regards to governance happens. Is that the validator stuff? I don't think you can escape it. I don't think you can, like, push it up. I mean, it's interesting that Cosmos kind of did that, and there's, like, a pass-through mechanism to the stakeholders. Yeah, of course you can never escape that, right? That's always there.

I think that's true, right? I mean, I guess maybe Tazos was the one that weren't like pro this sort of trying to do that right with these automated upgrades, but still, like a validator can always focus software and run something different. So to me, to me it always felt like that's the heartbeat, the validator community. Those are the people actually running it. They have the most understanding of the day-to-day.

And that's almost like you've got to convince them to do anything. Yeah. If you fail to convince them, you're doing something wrong, right? Maybe you can talk a bit about, well, I'm curious about MED. So this has become like a big topic on Ethereum, I guess, most importantly, where, and maybe for listeners who are in like not too familiar with it, basically it revolves around the ability of miners to like, to, like, to, disqualify. on the order of transactions, and then there's, like, economic value in that. Like, for example, there's, like, an arbitrage opportunity, and then someone can, you know, kind of do the arbitrage, make some money, and then, of course, like, if you

can decide, like, who, who, which transaction does that, there's value in that, so. Solano's blockchain and NASDAX speed, and we never thought of MVP. I'm just kidding. Yeah, I mean, so I always thought that that, that was actually the, feature for blockchain. This is how they should work. They should have MEP. And if you come from that perspective,

it means that you need to maximize the, almost the market for it, like maximize the competition for M. So how you do that is you reduce the block times to the smallest amount possible. So we're at four and a milliseconds and you have a leader scheduled four times in a row. So imagine it's 200,

milliseconds and you have a switch in every block from one liter to the next. And Solana is actually designed where you can have more than one liter assigned to the same slot producing the same block. If you look at the white paper, I don't know if people got it. There's this thing where you kind of mix the things and you can then tell the relative time of events. It's a B minus white paper, I get it. But all the ideas are there.

So if you have multiple block producers now in that 200 milliseconds, me as a trader, I'm willing to wait, you know, two seconds and I want to maximize the number of bits that I see from the validators. The real-time guarantees in Solana is that if I'm a validator and I'm assigned slot 10, that I'm guaranteed to be able to transmit a block in slot 10. And as long as no more than a third of the network is actively trying to censor me, then because of how turbine works, because of Prophiastri is this forced delay function, I have extremely high confidence I'll be able to actually submit this block and have it confirmed. So that means that I can then bid for this order to the user that's willing to wait until my block. Therefore, I can give him the highest rebate out of all the other validators. Right. So at this lowest layer by minimizing the block time, maximizing how often we switch, maximizing how many block producers work on a single block together.

Right. We can actually create the biggest, fairest, most competitive market for MEV. And then you have real value creation, right? Because what is MEV? It's actually, I'm observing all of the world's information, every exchange out there. Twitter feeds, et cetera, I am creating a model for what the future price of anything is going to be, right? So I am doing value creation, right, in predicting the future. Then I'm betting, you know, bidding for order flow.

Hey, users, I have the best model predictor. This is what I think the fairest price is going to be, right? By the time you submit your order, give me your orders, I'll give you the biggest kickback. Yeah. So I definitely agree with you, right, that like short block times. I mean, first of all, I guess NAB is obviously harder on Solana than on Ethereum, right? I think that's already in a way, I think it has been reduced. I think Solana has kind of reduced the scope of it and maybe the issue around it.

But it is value creation if you can feed it back to the user. Yeah. Because you are effectively trying to predict the future, right? Yeah. Right. Yeah. And yeah, I think in a way you will see it feeding. back to users, right? Because, I mean, first of all, right, if validators make more money

with that, then it's also something where they can, for example, say, oh, like, you know, we don't charge hardware, right? Yeah. Let's reduce fees. Exactly. We do fees, right? Maybe you have any negative fees, you know. Which is what I mean by rebates, right? And you can do it via, like, a global negative fee rate, right? If you want to socialize it, or you can do it a competitive way. And I think the competition is actually a pretty good approach because you know, like folks like

Susquehanna like jump, they have their own models, right? This is where they differentiate and this is where they compete. And I think, you know, in a perfect world, they're the ones that are like running alongside that give validators some software. Hey, run our models.

And like send those prices to the users and get, you know, everybody get, everybody, get everybody wins basically. And so, I mean, if you look at least sort of the debate around MEP and Ethereum, right, there's also different types of MEP that people think of differently. Like, in particular, you know, like, let's say this is the example of arbitrage. So you have like exchange A, change B and the prices are different.

And someone can make money by like bringing them in equilibrium. I think that's like unequivocally good thing, right? Because I have a user then basically say, I can just trade on whatever, AMM. I don't have to worry about it because the price. should be the same, right? So I think that's clearly great thing. Then there are other things, you know, like this sandwich attacks, right, which are basically, right, I mean, how does it work, right?

So let's say a user basically says, okay, I want to trade, you know, this amount of coin for this other amount of coin and I'm willing to accept, you know, a price up to some amount, right? Where and then somebody can basically push the price to that amount, take it back and sort of I get the worst possible price I was okay with. So who takes a loss there, right? The LPs or the user? The trade, like whoever makes the trade takes a loss.

Right. So if you have a... At least on the first order, right? So if you have a competition for user flow, then everyone's going to say, well, I can maximize the sandwich attacks. Yeah. And I'll give you 50% of the profit. And I keep 50, right? And some other validator says, well, I'll give you 75%.

And keep 25%. Right. And then the user wins, right? Well, I mean, if we can improve the stake system, right? I guess, yeah, so the reaction could be, right, that, yeah, valid is basically try to, like, maximize that in some way. And then that profit flows back to the sole holders, right, the stakers in the end. Yeah. And, like, not entirely, right, because to be able to maximize that, you would need to, I think, give a return to the users.

as well. You mean the person trading? Yeah. There's some equilibrium. Why do you think so? Because the user always has a choice to trade on Solano or anywhere else. Yeah. There's never like a monopoly.

There's no modes, right? So you're always going to be dealing with a user that has the option to make that trade in Phantom, right? Or the connection will go to FTX. I mean, of course, the other, I think sort of the other maybe answer to that might also be just that, well, you can certainly design AMMs that are, resistant to that, right? To different degrees, right? So I think to some extent, if people do that,

then people will stop using that kind of AMM, right? I think they're actually going to be slower and have worse spreads compared to a competitive MVP market. Okay. So the latencies are going to be worse because you're trying to like basically

stop information from flowing as fast as possible. You're trying to control when events happen and force an ordering or like randomized stuff, right? And it's maybe perceived as more fair, but I think the result is a slower, kind of a slower system that's going to be more expensive.

Right. So your take is like, okay, it should be exploited to the maximum and then... Return to the user, right? To the stakeholders, whoever, right? I was just thinking, like, practically, I wonder how that actually... close back.

To who? To the user. Well, like, what I imagine, none of this works yet, is at the wallet itself, right? You could have a button that says, wait X seconds to get Y kickback for your trade. Yeah. And maybe you always say fastest, right? Like there's like fastest, cheapest, whatever slowest gas meter and how much you pay, right?

In this case, it's how much you want back. Right. So wallet could basically say, okay, we are going to kind of like, you know, sell the transaction, right? And then MEP is taken from that. And then some of that goes back to the wallet. And then they can distribute that to the users. Yeah. Yeah, I think it's going to be very interesting to see all of this.

Yeah. There's so many pieces there. It's such a, yeah, that is like a whole financial system just for trading pictures of. of dogs. Yeah. The entire world's financial system is going to sit on top of a collection of a monkey and if T's.

Yeah, yeah. But that in a way is kind of the amazing thing, no, about like, what's kind of happening in crypto and is that you have to, like, speculative markets or anything. And then people, like, optimize things, you know, to, yeah, make more efficient, make more money or something like that. And then I think it drives forward all of

the technology alone. Yeah. So this is where, like, you know, if we do the really hard stuff, make this as close to physics as possible, then all this stuff becomes more efficient. And more value can be returned to the world. And this has kind of been my main focus

and my biggest gripe with this idea of ultrasound money is that that meme is not maximizing the amount of value return to the users. It's not minimizing the value extraction. Like these networks, the Talek's idea was that this is a public good, right? Right. This is a public open to the world's like infrastructure.

It should be minimally extractive, right? It should minimize the amount of value it takes. So to be as close to the physics, the maximum capacity cheapest cost. Yeah. I've known nothing else matters. No other memes. It doesn't matter if it's ultrasound, you know, money or not,

or it's store a value. It's like, is it actually generating, like, positive, not some good for the world? And is it taking the least amount of value to do so? Yeah. Yeah, I mean, it is interesting, you know, how there has been, I think, a sort of shift in the theorem narrative

where it was... Ether was full of... It was gas right in the beginning. It's just, okay, it's just to pay for transactions, right? And then I think there definitely has been a sort of shift towards, even this EIP-1559, right, with like burning the fees. Because people are willing to pay for that. And I think they've been doing it for so long that maybe the mindset is shifted,

that it's acceptable. Like in my mind, as an engineer, like, no, this is wrong. The system is wrong. You got to like throw it all the way if that's what it's going to end up. I mean, I think today, right, the term is just unusable, right? I mean, this is crazy that you have like hundreds of dollars of, you have to pay for a transaction, right? So that's actually becomes kind of what Bitcoin, actually even Bitcoin's cheaper now, right? Bitcoin is pretty easily now.

but I think always one of the ways that Bitcoiners were sort of dealing with, okay, the system's really not scaling and it's clearly not going to scale unless you radically change something. It's like, okay, but then it becomes this kind of settlement layer and Bitcoin transactions can be very expensive and you have like layer two and things and everyone can kind of hold Bitcoin even if they don't directly do so.

And now I feel like... Store value is like at least something you can look at and be like, okay, I don't really care about how long takes for my transaction to settle. Yeah. As long as within some, like two weeks it does, right? So within two weeks, I could find a cheap enough time to do so. So what do you fault on, like, roll-ups and the kind of Ethereum scaling direction?

They're not as, they don't, so they don't optimize the censorship resistance piece, right? They actually just reduce, they batch stuff, so there's some batching optimizations. so they may reduce some costs to users, but the majority of those costs are simply because EVM is too inefficient to execute. So if you get rid of EVM execution, that's what effectively a roll-up does, right, is it delays executing UVM until, like, you need to run a fraud proof. But if you don't use EVM, you use, like, BPP, X-86,

any other, like, efficient virtual machine. It's not a, there's no real savings there. So you say it doesn't reduce censorship resistance because, or it doesn't maximize your censorship resistance because... It only optimizes this one thing that's extremely slow. Yeah. But you don't need to do anyways. And if you... Let's say you reduce fees to users, but you still have this settlement layer that extremely expensive to use.

So that thing, let's say that thing is generating $80 million. a day in revenue. Is that, is it providing censorship resistance decentralization at the cost of $80 million a day? No, it's not. If you add up all the costs of running of an Ethereum node and add up all the nodes and how it's sliced, right, in terms of censorship resistance, like real time, it's, I think, like, 4,000 X off. You mean that? The fees collected, right, by...

Are much higher than the cost to run so. So it is not a minimally extractive public good, right? It's just a thing that has like captive markets or the services is providing and it's actually kind of like squeezing. Yeah, right. You could, you know, reduce some of those costs to users and even if you can... That allows you to increase the number of users that will use the system.

But it's still not an efficient system. for the value it's creating for the world. Yeah. No, I think that's true, right? I think there's always say, like, is an extent where you, okay, you have this Ethereum ecosystem and there's a lot of improbability all the things there. So there's a lot of, like, value to, like, being in that ecosystem. And then at the moment, it's sort of like, okay, because there's this capacity constrained, right?

And just kind of everything, right? It attracts, extracts what it can to the, you know, to the, the value is in the cryptography. Yeah. And that's in the hands of the users. And a user that is holding a bat token that now holds it from a suck P to 56K1 key in Metamask and a FAT2519 key in Phantom of the same token,

they're still part of that bat community that likes brave. Yeah, yeah. So that just got that token went through Wormhole, right? There's some risk there to use a bridge always, but you can analyze that risk, you can minimize it, and now you've reduced significantly reduced fees, and now you can kind of minimizing the amount of value that the network itself extracts from that community. Do you think it's essential? Or do you think, yeah, I want it to what extent. Is it just a crucial thing that you sort of stay ahead, that sort of the network,

network, you know, throughput, the capacity of the network stays ahead of the actual load, but I get it's a big enough factor. Yeah, because you're kind of like costs go up when there's like a burst. Really like most things, like any kind of web scale system, you're paying usually for the worst case because you have like a rush, right, and you don't want to be able to handle it. So just like in those systems, you're typically going to have to be way over capacity. to handle an extremely high spike. And when you get that spike, persistently,

that's when fees need to go up to force whatever is effectively spamming than I want to back off. Yeah. Well, let's talk a bit about sort of, you know, we are still at, you were saying before, right? I think, okay, you were saying maybe 300 million accounts, crypto accounts, four million users, total holders, right?

So like pets.com stockholders, yeah, 300 million, actual users. Fets.com, you know, free. Yeah. So where do you think we are in terms of, like, mainstream adoption? Do you think we are going to see the kind of, like, web two applications? Yeah, on, like, what time frame do you think those are?

If next year we were looking at, like, phantom adding a million users a month, that would feel like it seems real right that seems possible even a million a week it seems possible but that would be like

oh man this is it we've hit real world adoption yeah that's kind of like I don't know when that happens could be next year it could be

two three years from now it's hard to say right yeah yeah um next year it feels just as likely as two years or three years. I mean, probably a lot depends on the market, right?

Because if things go up, then interest just goes up so much. I guess it's two things, maybe, right? Like, I think the crypto market is like a huge factor. Yeah. It just drives so much interest. And then maybe another thing is like, okay, people are actually putting out applications that are just really great. And they're unique because they leverage crypto.

And then people just want to use the application. care about the market and the prices and then they kind of switch that way. So what we see now, I guess it's different in this cycle is that you're not investing in ideas or white papers, it's in like actual products. You almost don't even, I haven't read any white papers in like the last six months. It's like, give me the MVP that works and I kind of look at it, the design, the UX. And sure, there's like some innovation around the risk engine or the thing that the, you you know, the new fancy defy market or whatever, right?

And I almost don't care. That part is like not as important as this, there's like good UX and if it feels like humans are going to use it. Yeah. So the thing that makes me sort of like pause a little bit here is because I remember, you know, in 2013 there was this full market and then we had 2017-18 in this bull market. And personally, like in each of those past bull markets, I was pretty convinced that like, it's it. There's like mainstream adoptions coming, right? Because it's obvious that this is like, we're going to be superior in so many ways and that like, oh, people understand that they're like adopted and why would that ever stop, right? Like, why would it stop until it's

actually like there? And then of course, kind of did in both times. So I'm wondering, is it, is it the now is it also like okay we have we in this bubble have this idea because because it's obviously in the end it's going to happen right in the end you know it's all going to be on crypto and like you don't think it's the one i don't know you think it's the one yeah yeah i think so yeah it's gonna scary so you think that it's it's like full it's not gonna like be easy because you still need to build applications, you need to, like, iterate on the parts where you see drop off that users lose interest. Yeah.

Right? And you need to build really good applications that people want to use that have some, some true, like, reason to be cryptographic, right? To have cryptography. Yeah. Not just, like, we stuck crypto inside, you know, Facebook. Yeah. Like, it has to, like, actually have meaningful reason, right?

And that's what I think we start seeing it. Yeah. Yeah. And I think if you think, if you look at, you know, what happened in these past bear markets, right? You had a big crash in price. And you also had the crash in, I mean, one was like confidence in the thing, right? There was many people who were like, everything is going to happen. And it was like, oh, I guess it's not going to happen after all.

So I think there was that. And then I think there was also like a decrease in activity, right? because like funding dried up and activity dried up and a bunch of people went elsewhere. A lot of funds just died. Yeah, a lot of funds, companies died, right? So I guess, I mean, obviously the volatility is here and is here to stay at least for a while, right? So I think we were going to see the big crashes. But I guess the question is, does that actually slow down anything?

Or is it still going to be that, like, in terms of, you know, people building applications and usage? Because right now there's so much capital here, right? So there was like a run, right, from 93 till 2001 on the Internet. Yeah. And this is where I think, well, this is the one. It's going to be eight years of craziness. And then write exuberance and then... So where do you think we are on this, 93 to 2001?

Well, if it's 3 million users, then it's like 93, 94. Yeah, yeah. Yeah, which is wild. Yeah. Yeah, I don't know Anything else we've been thought about? Man, I think a lot of your listeners went through the bear market

And we're building with us in the trenches I think that's what actually Will get you Will cause the super cycle Yeah Is the people building That have been through the other ones That are like, okay, well, this is fun, right?

I'm actually seeing traction I'm not going to stop. Yeah, I mean, that's the other thing If you think back to 2017-18, right, there was all of this exuberance, and there was a lot of things that were like, is it like too much exuberance and stuff like that? And now there's definitely similarities, right? You can definitely see a lot of that stuff too. But at the same time, right, if you think of like that transition to go from like three million users to like three billion users,

well, there is going to be that exuberance, right? Like that is just going to be a part of it. It doesn't mean it's like a bubble that's going to end. It's only a thousand X. Yeah. But it actually is not a lot. It's, yeah. If you look at how fast smartphones, like, grew from nothing to billions of users,

it took about a year. Yeah. Like a baby too, yeah. Cool. Well, thanks so much, Antoine. It was, you know, great catching up. And, yeah, I mean, I'm excited to, like, continue on this, like, journey with crypto and Salon in particular.

Likewise, good. Cool. All right. Thanks so much. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts. And if you have a Google Home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast.

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