Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Emin Gün Sirer: Avalanche

Episode Date: November 24, 2021

Avalanche is an open, scalable, and secure smart contracts platform. It targets three broad use cases; building application-specific blockchains, building and launching highly scalable decentralized applications (dapps), and building arbitrarily complex digital assets with custom rules, covenants, and riders (smart assets). It prides itself off on being blazingly fast, low cost, and eco-friendly.Emin Gün Sirer is the Founder & CEO of the Avalanche network. He is also a long time friend of the show, and joined us again for the 4th time after a 5 year break to share his journey since then, which led him to creating Avalanche. We also dove deep into the technical aspects of the protocol and how it fits into the blockchain ecosystem as a whole.Topics covered in this episode:Gun's journey over the past 5 years which led him to creating AvalancheThe unique features and trade-offs in the protocolA deep dive into bridging within AvalancheMEV extraction within the protocolAvalanche consensus - reliance on seed anchorsEpisode links:Episode 76 - From Selfish Miners to The Miner’s DilemmaEpisode 103 - Bitcoin-NG – Scientists Versus the ChurchEp 134 - On a Rocky DAOAvalancheAva LabsAvalanche on TwitterGun on TwitterSponsors:Chorus One: Chorus One runs validators on cutting edge Proof of Stake networks such as Cosmos, Solana, Celo, Polkadot and Oasis. - https://epicenter.rocks/chorusoneParaSwap: ParaSwap aggregates all major DEXs and makes sure you beat the market price at every single swap and with the lowest slippage - paraswap.io/epicenterThis episode is hosted by Brian Fabian Crain & Meher Roy. Show notes and listening options: epicenter.tv/419

So welcome to Epcenter, the podcast where we interview Crypto founders, where we interview Crypto founders, but I'll listen to Fault Leaders about the future of Crypto. So I'm Brian Crane and I'm here with Meher, Meher, who's doing a comeback, right, from his break, from cancer. So, so amazing to have you back. Thank you. And we're going to speak with Gunn, I mean, Gunz here about Avalanche. she's actually been on this podcast three times before.

And maybe we can start off by briefly mentioning the old episodes we did because it was like interesting sort of through the journey of crypto. Well, before we get started, just very briefly about two sponsors. So first of all, proof of stake is transforming crypto and you can be a part of it. And you can start participating in networks, contribute to network security and earn rewards by staking with course one. So we're a staking provider with billions and assets, lots of customers on many different networks. So if you're interested in running your own brander nodes, you can also do that. You can go to course of 1 to learn about it. And then also paro swap.

So if paro swap, you can beat the market price. It's fast, highly liquid, and they just launched a V5, which has a new contract, new APIs. It's a modular infrastructure, more gas-friendly and supports free approvals using Ethereum permit. And they also recently added support for other networks like Avalanche and, yeah, Polygon and PSC. You can go to Parasop.io and you can get started there. And now with that, let's go to our episodes. Gune, it's so great to have you.

Thanks so much for coming back. It's so great to be here. It's so great to see you both. And Meja are so wonderful to be talking to you again. This is fantastic. Thank you, Gond. I was looking through, like, preparing for this. I was looking through the old episodes we did.

And it's pretty interesting. So we did one in 2015, which was around selfish mining, together with Itai. So that was kind of one of the papers looking at, you know, some maybe game theoretic weaknesses around proof of work and Bitcoin. And then we did another episode the same year, which was about, again with Itai, which was also about Bitcoin NG. And Bitcoin NG was basically this idea for how to scale, you know,

transaction throughput on Bitcoin, like, buy a lot, while basically keeping the consensus algorithm like fundamentally unchanged. So I remember that and I was like, this is so elegant. and really cool and like bio like you should like implement that in Bitcoin and and so

maybe doing this episode if you dare and of course that was a lot around this this whole block size debate and you know there was people like Mike Kern and Gavin Dries and you like trying to get like

new ideas into Bitcoin so you know you were very involved back then and I think this were like super interesting discussions and then we had another episode of you which was the year after 2016 with flat sound

I'm here together. And it was right. And this thing had launched on Ethereum called the DAO. And it had accumulated something like 10% of all the ether in there. You guys wrote this blog post about like, oh, here are all the like design flaws, the weaknesses of this thing. And actually Meher had also been like writing online about like, oh, this other thing that's also flawed.

And I was like reading through this. And so then we did it this episode. And then of course, right after it's the biggest hack that has. happened in Ethereum's history, certainly in terms of the percentage of the number of ether involved. And that led then the split of, oh, it's a classic. And what was also interesting at a later point, you know, the SEC wrote this paper about the Dow being a security, which was the first, kind of the first time the SEC really made a statement about how they view tokens and token sales. So that was like the year after

And one of the evidence That they quoted in this thing That this was a security Was what The way Plattsamphir had described The curators in our episode So it was very cool that we had like A podcast cited there

So yeah such great episodes we have with you And like great discussions And then there's been a far too long gap Given all the things that happens And all the things that you've done Because it's been like Yeah you've done a huge amount following that as well.

It's been a great ride. It's been a great ride. We lived through, I don't know how many market upturns and downturns together. But I remember the very first episode we did together. It was by far the most informed, by far the most challenging conversation I had at that point. And it was fantastic. I was like, whoa, look at this. These guys are asking all of the right questions.

It was such a blast. But yeah, it's been five years, I think, since the last episode or something, right? five years since 2016. And there's been much that has happened. Layer 2s have come and some gone. Nothing ever goes away. Layer 2s have come and kind of floundered. New layer ones are here.

There's another batch of competing projects. Lots and lots of excitement. The entire space has grown tremendously. It's poised to grow even more. And, you know, back when we last talked, it was just people like us. It was just geeky. geeky people. And now it's just, I talk to fund managers. I talk to endowments. People who are in

charge of endowments and so forth. So it's a very different ecosystem out there. And the DAP system is thriving. I mean, we've come such a long way. It's so fascinating. And it's so great to come back to good old friends and, you know, chat about where we are today. in these intervening five years of course the big story has been avalanche right so i mean the initial idea and white paper was from a team called i think the rocket labs which the team remains anonymous to this day as far as i'm aware and then a month or two after that white paper came out came the announcement that you'll be building it and now you've built it and you've shipped it right following from Twitter, I also saw that

at some point while starting to build Avalanche, you decided to take a sabbatical from Cornell where you were a full professor and when I saw that tweet I was like well, that must have been a big decision. What was it like for you to take a break from being a full professor there and embarking on a journey like this?

It was very straightforward actually, It was very, very simple for me because, you know, as a professor, you're constantly coming up at a research university. You're coming up with new ideas. You're coming up with new ways of approaching problems. And you are working with some of the best and brightest people on the planet. So we do this. And you don't necessarily pay attention to product market fit, right? So as a professor, you're there for the academics, you're there for the science.

So you're trying to figure out the ways of advancing us. So I worked on a bunch of other topics in the intervening five years. So I worked on characterizing decentralization. I worked on characterizing scalability. I worked on a layer two protocol, T-chan, T-chain. That's really, really fast. I think it's the fastest layer two protocol. But at some point, you work on something that is so big that as soon as you do it, you go,

okay, this is important. And so my whole life, I had been, you know, educated, I'd studied this stuff. I never thought consensus protocols could be fast. I never thought Byzantine fault tolerance could be cheap. And as soon as, you know, we started dealing with the Avalanche Protocol, we noticed that, hey, this is going to be big. It's just so different from everything that came before us. It's so different.

Even other academics don't understand just how important it is. and they can't even fit it into their frameworks because it's just so much, so much better across so many dimensions. So as soon as I had that in my hands, it was a very straightforward decision. I decided to take a break from Cornell. I ended up taking one year of leave of absence,

formed the company, started building it up. Shortly thereafter, we got some funding from Andrewson Horowitz and from some crypto funds, including Polly Chain, Naval, and others initialized, you know, Alexis O'Hanian, et cetera. And so that was a great start. And then, of course, after that, the rest is history. We launched about a year ago.

I think it's been 14 months. So we're only 13 or 14 months old. It hasn't been that long at all. We're up there with the big boys. We're up there with systems that are far older than us. And it's been wonderful. And mayor, I can tell you something else that you maybe don't know. And this might be one of the places

that this comes out. But back in September, this September, so three years after I took, oh, I should have mentioned, I took a year of leave of absence, I extended it for another year, for two years. Then I requested permission for a third year, and Cornell doesn't allow, typically, like it never happens that they give you the third year.

They were nice enough to give me the third year, and then at the end of the third year, last September, it was time to make a decision. Go back to Cornell. or stay at Avalanche, stay at Avalabs and work on Avalanche. And I made the decision. And the decision was to be at Ava Labs, to not go back to Cornell. So I've stepped down from my position at Cornell and gave up my tenure and I'm full-time on Avalanche

because I think that's clearly where the future is. That's clearly where the most happening place is when it comes to research and development on blockchains. Let's talk a bit and be like what makes. Avalanche so unique. And are there, like, is it just, in your opinion, is it just unequivocally better than like anything else? Or like, what are the tradeoffs that Avalanche has as a consensus? Right. So the issue of tradeoffs is very important, right? And people always think, like, this is like Judeo-Christian values. Like, you can't have anything for free. You have to give

something up to get something, right? And, you know, that's typically. typically true as long as you stay within the same family of technologies. So if the goal is to move a lot of earth and you've got a small shovel with a short handle and I invent a big shovel with a longer handle, you know, there's a tradeoff there. We're using the same technology, but as you make the shovel bigger than it carries more weight, you need more strength. As you make the handle bigger, then you have to have even more strength, et cetera. So that's fine. And then, Along comes somebody with a steam shovel. That's a different technology.

And it has, it completely changes the game. It changes the game. It brings on the industrial revolution. And you go from like being a pleb with a little shovel in his hand to someone who can really excavate the earth. So in the case of avalanche, are there, are there tradeoffs? Obviously, there's always some tradeoff. But across everything that people have ever said matters to them,

Avalanche is a huge step up. It is the third biggest breakthrough in the space of distributed systems. It is only the third time that somebody invented a new family of consensus protocols. The first family, classical consensus, it brought two touring awards to the people who established that field. And all the hundreds of protocols that followed all descend from that work. And everything that you hear that's proof of stake today that isn't Avalanche is using a classical protocol, typically from 1999, sometimes from 1980s. And so protocols like Polka dot, Solana, et cetera,

these are all using classical consensus in which all of the validators collect information from all of the other validators. There is all-to-all communication. There's n-squared communication. So the second big breakthrough was proof of work mining. So Bitcoin and Satoshi came along, and they did an amazing job.

They changed the consensus protocol, and they said, guys, there is a better way to do this. It scales much better. It's far more robust. Except, of course, the problem is it consumes a lot of power, a lot of electricity. And Avalanche is the third biggest breakthrough. It's efficient, like classical protocols. It doesn't have any mining in it.

It doesn't consume energy. It doesn't leak money out of the ecosystem to the miners and to the power companies. And at the same time, it's fast. The latencies are incredibly low. We're getting confirmation latencies of 750 milliseconds these days. These are insanely fast speeds. Nobody ever comes close. So that's part of the magic that makes it really, really fast.

And what are the tradeoffs? I think there's always some tradeoff, maybe. But because you're going from some crappy technology to a much better technology, you can be better than what came before you, every metric that matters. When people ask me what the biggest downside is of Avalanche, I do need to be, as a scientist, we need to be up front with our weaknesses. The biggest weakness is that it's a new protocol. It's not as well established as, say, Bitcoin is. It's not as well established as classical protocols are. So, you know, let's say the Solana, the protocol behind Solana,

it's incredibly well understood. So you should be able to write that stuff and get it correct. You should be able to operate that network without downtime forever after. It's not very hard. You can get a master student to write that code. It's doable. But Avalanche requires a little bit of a little bit more complexity and a little bit more nuance. And no one has ever done anything like it before. So there are risks associated with new protocols. I would say that that's the first one. And is it better than other protocols across all dimensions? No. If you have a highly centralized network. If you have a network consisting of, let's say, up to 10 nodes, maybe up to 20 nodes, then all-to-all communication might be better than avalanche-style communication. So 10-square

is not a very high number. So if you've got 10 validators, then you probably should use, like you can use an old-school protocol like tendermint or Solana or whatever. So if all the decisions are being made by a small set of nodes, then you don't want to, you don't want, the avalanche complexity. And in fact, avalanche might be slower because of the way it operates. It might be just better to have a multi-round, a fixed number of rounds, three rounds of all-to-all communication, which is what PBFT would do in such a scenario.

So on the very low end, avalanche might be not suitable for you. But the magic of avalanche is, as you add more validators, as you build truly decentralized systems, then it outshines the competition by a mile and a half. So it scales differently. And if you have thousands of validators, it's so much better than the alternative than the classical protocols. So oftentimes I hear that one of the downsides of Avalanche

is that bridging to Avalanche is hard. And eventually everything, like the way to bridge to Avalanche, is to build trusted bridges. And actually the bridge between Ethereum and Avalanche is actually a multi-sac bridge, which has been secured by SGX, but it's essentially a set of signers running a bridge. Do you think there is any grounds to maybe that avalanche consensus

makes bridging hard into the ecosystem of other chains? That's an interesting question. So, okay, so there is a lot to unpack there, so let me try to unpack it. I think some of, you know, the first part of what you said derives from our first bridge. So for the longest time, we were using a conventional bridge that is residing on Ethereum and Avalanche. And the Ethereum side was executing on chain. So it was a regular chain, a regular bridge from ChainSafe.

And in fact, it's a bridge that's used by quite a few other protocols besides us. We found that it was quite fragile. And at times, there were some issues with it that. that we were aware of that could have cost a lot of coins to other people who were using the same bridge. So at some point we decided, hey, we need to ditch this thing, and we need to go to a much better foundation. So we built an entirely different kind of bridge based on a very different kind of technology for secure execution. As you mentioned, it's called SGX. it ensures that the bridge operator cannot modify the code of the bridge.

The bridge operator cannot gain access to information that's stored inside the bridge. In particular, the bridge operator cannot access the all-too-important secret which controls all the funds that are in the bridge. So the bridge can only do one function. It's got a hash of its code. And as long as that hash remains unchanged, the bridge can do only one function, which is take your funds on Ethereum and give them to you on Avalanche

and vice versa, the bridging job. So that's a first of its kind bridge. Ever since we installed it, ever since we made it public, we've gotten nothing but huge praise. I believe it is the smoothest bridging experience out there. It's fast.

It's super cheap because almost nothing happens on the Ethereum side. You just have to send your funds to the bridge address. So it's just a single transaction. It's It's a very simple transaction, very, very gas efficient, very low cost. So our bridge has been getting praise from everybody. There's also a meme going around, good bridging.

So GMGB every morning. There's a coin that somebody issued to all the bridge users called GB, and it's fantastic to have that as well. So the bridge has really been good. And one misconception I want to correct is it's true that the key secret inside the bridge is divided, split, and distributed to four different what we call wardens of the bridge. And the reason for that is not technological necessity. So if we wanted to, we could make the bridge completely trustless.

We could just have it operate as a black box secured by SGX. The key is only inside the box and it's nowhere else. But that's a little risky. This is brand new technology. We just built it. We are really proud of it. Nobody else has anything like it. A lot of other coins are coming to us right now and saying,

hey, can we use your bridge, by the way? But if you do this thing that I mentioned, which is where you keep the private key only inside the bridge, then if something goes wrong, if there's a bug in the bridge, if there's some mis-execution for whatever reason, then you can get into a situation that you cannot recover from. And that would be terrible.

So to avoid that, what we did is we simply say, look, there's some secret here. It's going to control some funds. We will split it up and divide it to independent parties so that in case something bad happens, then those same parties can reconstitute the secret and get back at the funds. It's a safety and security measure. It's not a technological necessity. The bridge is not trusted or can be made completely not trusted. And the secret can be made completely local, but that's dangerous.

So for a while to come, I plan to run the bridge in this current configuration where the secret is distributed to multiple parties. They're all independent. They've been chosen not to collude with each other. Some of the new parties we are planning. So we plan to expand that set of parties, by the way. And we plan to bring in just quite a few bigger players. But we are very happy with the bridge and how it turned out.

I think it represents the best of the bridging technologies out there, the cheapest for sure. Definitely. So, I mean, when you look at like the history of bridges in this ecosystem, I mean, in the beginning, the idea behind many of these bridges was that chains would verify each other's consensus, and then there's chain A and chain B, and then some, some, event X happens on chain B and then you can submit like a cryptographic proof

on chain A and chain A can verify that cryptographic proof that event X happened on chain B and then it can take a dependent action Y based on that proof. So we started off with that notion generally and then

what happened was like the space accelerated so fast that in reality nobody could really implement these kinds of schemes at a good enough level to be used commercially. So everything boiled down into having, you know, like five signers or 10 signers or 20 signers, and that includes the bridge between Solana, Ethereum. Like many bridges around the ecosystem are based on signers, you know. Some group of parties that are selected by usually the foundations of the chains that are bridging,

and then these signers are possessing these keys and their multi-sig accounts on both sides and they're doing the bridging. And now, of course, Avalanche has done a very big operational improvement on that setup by having the code of these signers run inside SGX enclaves where some guarantees can be made about these enclaves subject to the overall security of SGX itself,

which has been a matter of debate in the general computer's... science and cryptography community for 10 or 15 years. Should we use SGX at all, right? But Avalanche has implemented that into SGX. But do you see in the future a new generation of bridges coming between, say, Ethereum and Avalanche where it doesn't depend on signers, where there can be something else beyond signers or are signers really the edge of human knowledge and the game is about making the

signers more and more secure and that's about all we can do today? Right. Very good question. So first of all, let me handle the immediate question, which is, so what's really going on behind the bridge? Well, what's going on is you need to make sure that something happened on chain A and therefore authorize a corresponding action on chain B. So Brian brought his cash over on chain A, and now we have to give him wrapped tokens on chain B. Or vice versa. He brought his wrapped tokens over.

We have to give him the original coins. And so you need to establish whether or not consensus took place. And so there are different techniques for doing this, depending on what your underlying technology is. But it all comes down to collecting signatures. as you pointed out. Ideally, you would want to collect signatures from everybody on one side who's affected. Right? So on Ethereum, everybody who matters believes that Brian brought his coins over, and then therefore a corresponding action should be authorized.

So that's a good question. So how do you do that? It's hard to determine everybody who matters. it's also very, very costly to collect signatures from everybody on earth. If you try to do it, then this act of collecting signatures can itself become a security hole because suddenly people can doss you by asking you to sign a whole bunch of things. So it's a dangerous, I mean, it's a complicated game to play. At some point, most everybody realized, hey, there are only a few people, not few, but there are only so many people on each chain that really matter. Like, Binance matters.

If Binance believes that Brian brought his funds over, that's important. My nodes probably don't matter all that much, but Avalab's Foundation nodes, you know, that's Avalanche Foundation nodes, that matters. So there are some people or some nodes that you can identify as being important in that ecosystem, and you can piggyback your decisions on them. And that's what most people have been doing.

Can we get to a mode where we don't have these? I think it's hard, maher, because if you do, like as you start polling everybody, then that is a lot of cost for everybody. And depending on how the bridges are used, you know, those requests may be way too many in number. There are people working on less trusted bridges. Axelar is working on one, and there are many others actually currently looking at various different technologies

for making that execution faster or cheaper or more interoperable. But I don't know of anybody who will be able to beat the efficiency of an SGX implemented execution technology. Now, second point, unrelated tangent, and I think I can say this because I'm an academic, academics love, what do they love? They love intellectual challenges, let's put it that way. They love tying their hands behind their back and solving something that you could easily solve if you had both hands open. But now that you had one hand behind your back, it's a different thing. They love these Sunday puzzles.

And secure bridging or secure execution in an environment where nobody has any hardware support is really hard. It's so challenging. And there are so many academics out there that made a living out of this. They devoted their careers to these kinds of problems. What other kinds of problems that they devote their lives to? You know, there is somebody out there that we all look up to, we love, and spent a lot of time, multiple years, solving the problem of leader assignment, leader election, an ID assignment in a network that's organized like a ring where none of us have unique IDs.

So imagine, so he essentially is saying, look, there might well be networks where we're talking a ring. I can only talk to my right neighbor and left neighbor. I need to elect a leader and everybody needs to elect the same leader and none of us have IDs. And this, you know, this gets dozens, maybe hundreds of papers. It's a really interesting problem. And it's really hard to solve, it turns out. But you know how we solve this problem in real life? We just look inside the Ethernet card.

Every Ethernet card has a unique number. The industry makes sure it's unique. That's your unique ID. It was assigned to you. We're done. Here's a tiny bit of hardware support. It's just obviated years of research. You know, once you have that unique number,

leader election is incredibly trivial. All of that work disappeared. So now if you go to someone like this who spent many years trying to build complicated protocols and algorithms and so forth and you say, look, I've got this chip. It does secure execution. All your work, you know, it's kind of silly.

They will react and say, well, it's got issues with it, blah, blah, blah. Yeah, of course it's got issues with it. SGX has been broken a few times. And every time it gets broken, you know, how long does it take? It takes two days. And then within two days, Intel has a patch for it.

SGX. So I wouldn't listen to these academics all that much. They're nihilists. Nothing is good enough. Academics are by nature just like those people in the Big Lebowski. They believe in nothing, right? So remember the nihilus there? And nothing could be good enough. And they always worry about the worst case. Now, the bridge, of course, is a situation where you do have to worry about the worst case. But starting with the premise that the hardware is unhelpful is a silly starting point. So imagine trying to do, imagine trying to do. Back in the 60s, there were people who were trying to do multitasking on regular computers. And it's really hard.

And they developed a lot of cool techniques and they were all proud of them. And, you know, Maltics was doing cool stuff and so on. But then the chip manufacturers come to you and say, hey, we added a feature. We added a way to save your register set atomically. And then suddenly all these tricks that these people developed are silly. and you just use that primitive to build a system like Unix and the rest is history. Things just take off. So do we need the complexity of all these complicated things?

No, I don't think we do. And then final third rant on this topic, I think you are right on when you point out the importance of bridges. I think the next year is going to be a battle of bridges, not the war. The war is very big. There's like multiple fronts to that war. But the battle is going to be with, bridging. And you'll see at least a half a dozen new bridge technologies come to the scene.

And the chains with the best bridges, the most fluid experience, the best user experience, the cheapest experience are going to win and they will get the TVL, as we've been seeing in the case of Avalanche. So we're uniquely situated in that battle. And we have by far the best technology. And it's going to be fun to see other people try to replicate what we've done. and it'll be really interesting. So that's the next year coming up. I'm glad about, I'm very, very happy about where we are. And I just want to give you our readers or listeners a heads up about what to expect.

There will be lots and lots of cool, cool bridges come online. There will be some spectacular bridge failures every now and then. And it's going to be a fun ride. Cool. That was really great. And I think that makes a lot of sense. one thing I also wanted to speak about. So there's a topic.

Yeah, I've been thinking more about this topic of MEP, right? So MEP on Ethereum, of course, is basically minus ordering transactions using basically this sort of monopoly over this block space to do things. And then, you know, now there's then there's like, you know, DAPs that try to mitigate that or, you know, flashbots that tries to deal with it. And it's interesting what that looks like in a non-proof of work system, proof of state system or and with different consensus algorithms too that I think affect this. So I'm curious, like, what are your thoughts on MEV on Avalanche?

What a great question. I've worried so much about MEV. Really, really, really interesting feel. So for people who are listening, so MEV is this thing by which participants to your protocol can jump in and extract some value. you by jumping ahead of other natural transactions occurring in the system. You see somebody trying to buy something on, say, Uniswap, you jump ahead of them, you purchase ahead of them, and then ahead of them, and sell to them.

And, you know, that's a simple kind. You can sandwich their trades. You can do all sorts of things to extract value. On Avalanche, so there are multiple different Avalanche deployments or Avalanche protocols So protocols in the Avalanche family. And so until, I would say maybe June or so, until about four months ago or so, five months ago or so, we used a version of our protocol

where anybody could propose a block in any slot. So completely leaderless. And so actually the current protocol we're using is still completely leaderless. It's still true. What I said is still true. But we added an optimization. So back in June,

we added an optimization and it's been a game changer. If you use the initial avalanche protocol where anybody can come in at any time, then a single MEV extractor with a single stake. So Brian comes along, he buys one unit of stake and he starts doing whatever he does. He can jump in and he can jump ahead of any transaction in any block. So that's what could have happened in that protocol, and that's what was happening in that protocol. And we heard from the grapevine that there were some people extracting multiple thousands of dollars per day,

maybe $30,000 per day, et cetera, from the system. This pales in comparison to what can happen on a chain like Ethereum. On Ethereum, many millions are being extracted via MEV per day. There's a lot of money being made by the miners because the miners are in a unique position to jump in at any time. So on Avalanche that we noticed that this could have been a problem, we immediately applied an optimization where we slightly favor a given proposer in every slot. So, you know, so proposer, you know, is 37. Let's say Brian gets slot 37. He gets a slight. advantage in slot 37. But otherwise, he needs to be in line. There are maybe another thousand, you know, miners or stakers in rotation. So that suddenly reduced people's ability to jump in.

And so that has had an immense effect. The amount of MEV extracted from Avalanche, I haven't characterized it, but I believe it has dropped down significantly by multiple orders of magnitude. And And also it creates a nice dynamic. If you want to be in the MEV extraction game, now you have to buy a lot of a Vox stake and participate in consensus as a first-hand consensus member. So that's been a great change, and it made the protocol even more resilient. But at the end of the day, there is one defense against MEV extraction that is incontrovertible. It's the best defense.

and that is if you have a fast protocol, then MEV extraction becomes really hard. So when your protocol is lagging, let's say, 15 seconds behind real time, like it is with Ethereum, then there's so much MEV to extract. You know the future, right? People submitted transactions 15 seconds ago, and there you are about to craft your block as a miner in Ethereum, and you can do whatever you want because you know how the price has changed. in the intervening seconds. And in the case of avalanche, we are by far the fastest chain.

We're the only chain that goes from submission to completion in less than a second. Our time to finality is 750 milliseconds these days. So we go from initial injection to being completely done with the transaction in the blink of two, just two blinks of the eye. So like you do this and it's done. And so it's so fast that the value to be extracted is much lower. That's at least an order of magnitude faster than other chains. So it's an order of magnitude faster than Ethereum.

It's an order of magnitude faster than Solana. So that's how you, I think, eliminate most of the MEV. And then these other optimizations at the protocol level, they create a nice dynamic. Whatever remaining value there might be goes down substantially. So we've done a bunch of things as I mentioned. So we are naturally, I think, possess low value. And with just a small optimization, we managed to turn the game upside down and force the MEV extractors to have to hold a lot of stake, which is a great thing for the Alvox token holders. So, I mean, back when Avalanche was very early on, right?

So one of the things that I loved about Avalanche is that it was the first leaderless consensus algorithm by which, what do we mean when you say leaderless consensus algorithm? In Bitcoin, every 10 minutes there's a winning miner and the winning minor as a block and then it can put transactions into the block and it has full, you know, full volition about which transaction it puts in. And then then came a generation of proof of stake protocols which includes tendament, which includes Solana, which adopted these other family of consensus algorithms that you mentioned earlier, based usually on practical Byzantine fault tolerance from 1999, where there's again a leader and that leader keeps rotating and there's a leader schedule where you know who the leader is going to be and whoever is the leader can put transactions in the block and can order them. And in Avalanche, what was very, very impressive, like very early on was that anyone can propose

a block and then the network can, will come to consensus on one of the blocks and it will discard the other blocks, but this consensus will be built ground up by the polling that's done by the various nodes themselves. and then it seems like what happened there seems like what happened was that when anyone can propose a block then maybe the network could split into validators that are naive that are not able to

not trying to extract MEP at all because they're just downloading some software running it and then there are like some very sharp validators that are trying to extract the MIV they can try to position themselves in the network in ways that they can influence which block ends are becoming finalized

and they can try to extract them maybe and to sort of defend against that Avalanche has somewhat of a leader schedule now except that maybe leader scheduling is not as strict as you know tendamint in tendamint it's very

defined. A is leader then B and B whereas in Avalanche it's like well if it's A then B then C but if A proposes then B then they have an advantage. But if A doesn't send the block, then X or Y could send the block and theirs will get accepted. It is like a weak leader schedule.

Yeah. And so with this weak leader schedule, what's happening is sort of like avalanche in my mind is kind of like becoming equivalent to, you know, tendament or Solana or each two in terms of MEP because they're still. in terms of me. No, no, are we becoming equivalent? No. Let me see. Let me think about that. In some sense. In some sense. So is that what's happening? No, I thought about this before and my conclusion back then was no, it's going to forever be a different profile. And hang on, but I do need to recreate my thinking. One of the things I love about talking to you guys is we just kind of talk. So I didn't come into this knowing what questions you would ask. me. So bear with me as I try to think this up on the spot. So if we were to take a look at a system like whatever, tendermint, let's say, versus Avalanche with the weak leaders in place, then yeah, no, that's true, that the weak leaders do give an advantage to a chosen person per slot. That's definitely true. And in that sense, we are similar to what's happening on other chains,

there's still a huge difference between being a chain that takes, let's say, you know, in the case of Solana, like 15 to 20 seconds to, I think 12 seconds, whatever the number is, 12 to 20 seconds to finalize versus a system like avalanche that's taking less than a second to finalize. So that's a huge reduction in MEV. the entity that can extract MEP does change. And in a leaderless system, anyone can extract MEP at any time.

And with a weak leader, then there's a dedicated person or is a designated person who is in a favorite position per slot, and other people will find it very difficult to extract MEV. So I think that changed, that optimization for Avalanche with weak leaders, was a good one. It drastically reduced the amount of MEV. extraction. It changes the way you extract MEV as well.

So anyway, you know, we can talk about this at length. And the bottom line is, you know, what's the slippage you get when you go to Avalanche? When you go to, you know, you've bridged over. You're going to use pangolin instead of uniswap or you're going to use Trader Joe or Yiddishwap or Canary or whatever, instead of whatever people were using on Ethereum. So what's what's the slippage you get? Who jumps ahead of you

and how much worse execution do you get? And at least at the moment, I can just look empirically. And, you know, my eyes don't lie to me. The execution on Avalanche is incredibly good compared to what happens on, let's say, uniswap. Every single Ethereum miner is extracting MEP right now, all of them. And the way the Avalanche network is, there are so many people who are securing the network,

and so many of these people are firsthand participants in the network, that they just will not do any of these attacks. So that's, I think, the big difference. When you have a designated minor class, you have these people who are sharks. You know how minors are, right? They're there for the money and only the money. They are not really forward-thinking.

They have some calculations they've made. And if someone comes along and says, here is some trickery that allows you to make more money, they all jump and start using that trickery. So that's what's happening on Ethereum, and I see no reason for why that should change. We've seen this in the case of Bitcoin miners as well. They are completely profit-driven.

So they will do whatever makes sense for their profits. And in Avalanche, the way the protocol is, the vast majority of the stake is not extracting is not extracting you know my nodes are never going to extract MEV from any user so when it's their time to propose blocks they will do whatever is right

so that's I think a fantastic situation to be in and the MEV to be extracted is far lower than a system like Ethereum no that definitely makes sense I think like that's one of the big differentiators of

avalanche which is like it's not a very delegation heavy system where in other proof of stake systems because you have usually have limitations on the number of validators like in a tendament chain like you probably shouldn't go above 150 validator though so there you have to have delegation where I as a holder of tokens am delegating my voting power in consensus to a particular commercial entity and then when there are these commercial entities then of course they will have professional maybe extraction systems. If not today, then eventually, right? Like the Nash equilibrium is sort of everyone runs an MV extraction system and distributes that via lower commissions or something else, right? But in Avalanche, because essentially there is not a limitation on the number of validators. Anyone who has coins can become a validator. And so the hope can be that, well, at least a certain fraction of the network,

that is regular people running validators won't have professional MEP extraction systems. Now, that can be the hope. Now, of course, there's going to be entities like, I don't know, probably Binance has a lot of Avalanche tokens, or the exchanges will have a lot of Avalanche tokens, and they'll have an Avalanche validator, and they'll end up running MEP extraction systems in the future. But probably a bigger fraction of the Avalanche network

compared to other proof-of-stake networks might be one where people are still running like naive code with no MEP or something like that. So that could be, that could definitely be a structural advantage in, in Avalanche. One, one curiosity I, I have about,

you know, avalanches, like, it's not technical curiosity anymore. It's like, in the beginning, right, like there was Bitcoin and that there was Ethereum and these were,

there was a point where, like, these were the only two that mattered. and there was an earlier point where it was just Bitcoin that mattered. And kind of both of us have seen those points in history. And now there are so many chains. Most of them don't matter. Most of them don't matter.

But yet it's like even in the chains that matter, you see that like they are starting to develop very distinct personalities. Now, for example, I couldn't go to the conferences in. Portugal but but my friends tell me that there was a cosmos conference and there was a Solana conference and my friends tell me that you went to the Cosmos conference it was like you know a bit like the earlier crypto nerds kind of hanging out kind of atmosphere but when you went to the Solana conference it was like it was like very business like and you can see that it's like I mean there are like wall street firms that are now trading on

Solana and you can feel like oh there's this Wall Street energy that's like you know they're coming into that chain and it's a different atmosphere it's kind of a different community and you know like it's like a different go-to market as well. Did you see the

discussion they had? I saw a picture from you know they have different sessions and different lectures they had one lecture on Solana and decentralization giant room maybe like 15 people in minute. So that tells you about how much they care about decentralization in Solana in the Solana community. That was an interesting site to see. So you are absolutely right. All these chains are developing their own personalities, their own ecosystems, their own user groups. So I'm curious

where you're going with the question. Yeah. And I'm like, yeah, what's the, you know, like, I mean, one way of stating is what is like, you know, what do you think is like the target market for Avalanche, like what kind of community or distinct subculture of projects is Avalanche cultivating? Or, I mean, what is like top-down cultivation? What would you like? But what is also like, what do you think is happening bottom up? Yeah, what would I like and what's happening? That's actually, I haven't thought about that too much.

But I can tell you what's happening in the trenches. We have a very strong user community. We have a lot of crossover projects. We have a bunch of projects that got funding from PolkaDOT or from Solana even and decided that, hey, we need an EVM chain and these things don't actually work that funded us. And so Solana doesn't support the EVM. And PolkaDot makes a lot of noise, but it doesn't actually support smart contracts at the time at least. So we have a bunch of people coming over with built contracts and so forth.

So how do I characterize the average Avalanche user? That's a great question. I would say that because of my reach, there's a fair number of people who are technically savvy. So a fair number of CTOs, CIOs that got in very early, and they understand the true revolutionary nature of the technology. That's been wonderful to have. There is a large number of people who came to Avalanche, because it's cheap.

So there's a large number of people who are overseas, and they kept watching all these Westerners, all these Europeans get rich and richer and richer and richer on Ethereum, and they were cut out. You know, right now you can't do a trade on Ethereum on an AMM and pay less than 100 bucks. It's just, you know, the slippage plus the fees is going to be pretty nasty for you. And if your entire budget is too,

$200, you're not going to pay like $50 in fees or $100 in fees. So those people were cut out of defy. They had no place to go. And so Avalanche attracts a fair number of these people. And it has for them been a godsend. I get every day, I get a whole bunch of messages saying this has been a life-changing experience. And not only because of a Voxc coin appreciation, which it has done really well, but also because we gave them an ecosystem.

them. We gave them a home. We gave them an accepting place. And the people who want to run a validator, you can just run a validator. You don't have to partake in a para swap auction or not parra-chain auction. That's ridiculous

crap. That's just like stuff for the rich. So you can get into these situations and be a meaningful member of the Avalanche community. So we attract a lot of people who couldn't do that elsewhere and they came to us. We have as I mentioned, a technically savvy community, you know, go into our channels,

and you'll find a fair number of very, very, very informed, intelligent people who understand how these protocols work, what the differences are. The other thing, I guess I would say that a lot of our users are new to crypto. You know, we brought a bunch of new people in. The area also grew during the pandemic. So maybe everybody else also has this. I don't know. But I do know that there's a fair number of people for whom,

Avalanche is the first coin they owned. And that's an interesting situation. Such people tend to be a little bit more skittish. They tend to be, you know, when there is the usual China Fad or Russia Fad or India Fudd, they freak out a little bit more. If you have a bug in your system, they think that's the end of the world. They don't understand that these things happen with some regularity and they get fixed. But it is whatever it is, it's just part and parcel of having a lot of new people.

So those are, I think, my three characterizing points. There used to be, we were mostly relegated to techies, but now traders are coming in. And traders come in based on two things. The traders come in when they see another person with deep pockets. They like to ape. You know, they see a rich person doing something. They're like, hey, this guy must be doing something right. So, you know, that's fine.

That's a silly behavior. that's what, you know, they do it, that's fine. The other thing they do is they come in because the on-chain metrics are in their favor. If you look at our TVL and our market cap, we have the highest TVL per market cap. Okay, so I can't really comment on the price, but people who've got lower TVLs than us have higher market caps. So we're in a very good situation. High TVL is fantastic.

people who see our growth patterns, they come in. So more frequently, these data-driven traders have been coming into Avalanche, and that's a very different community. So they may or may not understand the revolutionary nature of the underlying technology. We also have quite a few, I would say, normal people. So just this is very important to me. And this is actually one area where I strive to differentiate us. Almost all of crypto has been appealing to the same kind of anti-establishment, anti-everything crowd.

Right? You know, they want to break down society. They want to break down the dominance of the dollar and have, say, Bitcoin instead. Or the Ethereum folks, you know, I've heard crazy things. Oh, what if we build a system that is used to store? you know, terrible, terrible content. You know, it's okay. Maybe that would be okay.

And this was coming from very high on up. And that's not where we are coming from. I think I want to, or, you know, if you wanted me to position us, I would position us slightly to the more humane side of where crypto is today. So none of this, like, you know, you lost your coins, what's it to me? Or I got mine, so screw you. type to type people, but more of the, how are you doing? I know I will do well and I want you to do well in life as well type of people. And more of the, you know, I could go buy Ethereum and I could

pretend that Ethereum is Ethereum 2, all the while knowing that Ethereum is actually Ethereum 1, Ethereum is a proof of work coin. It is as disruptive and terrible for the environment as Bitcoin is. you know, so there's a huge disconnect in some circles there, and it's a little painful to watch. So all these people who, you know, ostensibly, they seem to care about things, ESG concerns, right? So they care about the environment, they care about social impacts, supposedly. And then they go in use technologies that are, you know, 10 years old at this point. Proof of work is 11 years old. It's terrible for the environment.

You should not be touching a coin like that. if you care the least bit about the environment. You want to leave a better spot for the... But you can't be using 1% of world's electricity to mine your coin. And that's what Bitcoin and Ethereum combined do. So that's one area where I would like to make sure that everybody perceives us as being different.

You know, we are a fast chain, we're a high-capacity chain. We're a very versatile chain. And the people who understand our sub-net infrastructure, etc., The techies know this. The normies will take a while to understand. But most importantly, I would like to attract delightful, normal, reasonable people. People who don't want to break down society as we have it. People who want to essentially preserve what we have, but make it much more efficient,

make the rails more efficient, cut out the fat. Like even as I speak right above the laptop, I'm watching Wall Street. And those people, you know, they're the gatekeepers. They collect rent. They don't give you service. They, in fact, give you poorer service. They jump ahead of your order flows, right? So people who want to cut that out and leave a better world for their children,

those are the kinds of people I would like to attract. And I've done everything, everything I know to do, everything imaginable at the protocol level to build something that will appeal to them inherently. And from now on, it's just a game of mostly sitting back and letting the sort of the usual percolation of ideas take hold and have people understand what it is that we have. Because I do, you know, it's, I think, clear to me that we have something that's far superior, both technically to other proof of stake coins and also value-wise to at least some of the big incumbents in the space. Right. Yeah.

And really, best of luck going for the journey that's. that's there to come. Thank you, Mayor. And best of luck to you as well. This has been such a blast. I've so thoroughly, I was not expecting to see you today. So great to see you beat cancer. So great to have a great chat with you, as always,

as if it's just, you know, five years ago from where we picked up, from where we left off and continue the conversation. So great to see Mayor back. So great to chat with you again. Yeah, absolutely. And hopefully we can do another one. of those, you know, not so far away. Five years is definitely like way, way, way, way too far. So I think that would be fun. And I'm really excited to see what's, you know, happening in

the Avalanche ecosystem. We have at our company course, one, we have a few people who are like quite into it. And, yeah, I'm also excited because it does feel like a very, it's very elegant some of the design. So, and, yeah, I've been a big fan of your work for so many years. It's very exciting to see how this is coming to so much creation now. Thank you so much. And thank you so much for having me, guys. So, yeah, looking forward to growing the space with you all, educating people, and making, you know, just essentially, I should maybe mention this in closing. Our goal in Avalanche is to bring into the space the many hundreds of trillions of assets that are not in blockchain form.

and the space only grows with more and more value coming into it. We built our infrastructure to allow that. I talked about the scalable consensus protocol. We didn't talk about subnets. Maybe we'll talk about them. We can talk about them at the future discussion. But we have an infrastructure that allows us to create essentially blockchains for custom use cases that are open or semi-open or maybe closed, depending on the use case.

but interoperable. And so we're in a unique position to be able to absorb that growth. And we're also working to invent new assets. So we recently came up with something called ILO's initial litigation offerings. Those are fun. And so in every way, I've been trying to grow the space. I've been trying to bring into it the people who bring value with them. And I just can't wait to see the space floor.

in the next decade to come. It's going to completely transform what we do. Yeah, cool. Well, then with that, thanks so much, Kuhn. It was amazing. And I look forward to having you back on soon. Take care, guys. Talk to you soon. Bye, bye. Guest of luck. 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 latest episode of the Epicenter podcast. Go to epicenter.tv.tv slash subscribe for a full list

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