Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Jeff Garzik: Metronome – Of Bitcoin Satellites and Built-to-Last Chain-Hopping Tokens

Episode Date: February 27, 2018

We’re joined by Jeff Garzik, who was among the very first developers to work with Satoshi in the early days of Bitcoin. Later, he was a core developer at Bitpay and even tried to put a Bitcoin node on a satellite in space. Today, he is co-founder at Bloq, a company providing enterprise-grade blockchain infrastructure. Bloq recently announced a new project called Metronome that challenges some of the design and governance principles of many public blockchain networks. Metronome is cryptocurrency that sits on top of existing blockchains and aims to allow tokens to easily move from one network to the other. A series of standard blockchain contracts allow for daily descending price auctions to occur automatically, and for users to buy and sell the tokens using a Bancor-like system with built-in liquidity. Topics covered in this episode: Jeff’s background as a web developer at CNN and as a Linux developer His early days in Bitcoin working with Satoshi His thoughts on Bitcoin governance and lessons learned from the Segwit2X episode The lessons learned from founding Bloq What is Metronome and what problem does it aim to solve Metronome’s self-governance and how the system is meant to evolve The different smart contracts which make up Metronome How Metronome allows MTN tokens to move to different blockchains The economics of the protocol and the descending price auction system The upcoming Metronome token sale and development roadmap Episode links: Metronome: The Built-to-Last Cryptocurrency Metronome Owner's Manual Metronome FAQ Metronome Git Repo DSS - Dunvegan Space Systems, Inc The Long Now Foundation Bloq This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/224

This is Epicenter, Episode 224 with guest Jeff Garzik. Hi, welcome to Epicenter, the show which talks about the technologies, projects, and startups driving decentralization in the global blockchain revolution. My name is Sebastink with you. And my name is Brian Favrein Crane. We're here today with Jeff Garzik. Of course, many in the blockchain industry will have heard of Jeff. He's been around this industry for a very, very long time. He was a Bitcoin, one of the first Bitcoin core developers, one of the most influential ones. he's also had a lot of other projects that he's been working on. So I'm super excited to have you on, Jeff.

Thanks a lot. And hello, world. So we talked briefly before the show, right? So, of course, we want to hear a bit about how you originally got involved in Bitcoin, which I think was like 2009 or 10 or like a very long time ago. Oh, it was back in 99. I think I have about 20 years of blockchain experience. No, no, just kidding.

I've seen some job ads claiming, you know, they want candidates with 10, 15 years of blockchain experience. And I really wonder, you know, what kind of people they're hiring because those just don't exist. Well, Satoshi may have 10 years, right? Yeah. That would want job candidates. But yeah, the great slash dotting of July 2010 when myself, Jed McCaleb of Mount Gawks fame and many other people found Bitcoin from just one single. single article on this News for Nerd's website. Cool. But before Bitcoin, you had a long history in working on Linux as well.

Can you tell us a bit about that? Yeah, yeah. I've sort of been a nerd all my life. I've been programming since the age of eight, working on trash 80 computers that fans will know what I'm talking about and everyone else will have no clue what I'm talking about. programming basic and Pascal and that led me to working on the first CNN website here in Atlanta they put out the call and that led me to Linux and Linus Torvalds working on open source software it was this at the time amazing environment where you can if you want to make a software change and you're a software developer you make that change you create this file called a patch, which describes your change, and then you email it to the software

maintainer, the leader, the inventor of Linux, in my case, Linus Torvalds. And it's kind of like throwing spaghetti at a wall. He gets hundreds of emails a day, and you wonder if he's going to even listen to a nobody who is at some college in Atlanta. And he did. He received a, he received my patch, he applied it to the Linux kernel, which is the core of every Android operating system and Linux running in every data center. And that was sort of the start of a 20-year journey in open source was that first introduction to merit-based programming and meritocracies. If my patch was complete crap, then people tell you your patch is complete crap and here's how to improve your change. But it was accepted.

And that gave a young developer that sort of boost, you know, the little ego boost or whatever that you need to get up in the morning and keep going every day and pursue your dreams. and this internet open source stuff, working in public, airing your dirty laundry in public every day on open source mailing lists as you discuss changes. That was a really appealing environment. And Linux in the early days in the early 90s mirrors blockchain almost to the T in many ways today. It's roxious. There's a lot of flame wars and factional back and forth and all sorts of silliness. But at the end of the day, it's serious engineering. People are passionate because they care about what they're doing.

They care about making changes in the world. So that was Linux, and I think that's Bitcoin and Blockchain today. So having been in open source software for so long, you mentioned you know, sending those patches through email. Of course, there's been quite a bit of evolution since then. I mean, we've gone from that sort of very simple system to then like SVN and now like Git and these new types of community, open source platforms. In your view, what has been the most fundamental change in open source?

and similarly, like, what has remained the same? Like, how has open source finally changed since 20 years, and how is it also very similar? Well, I was fortunate enough to be there at the birth of Git. There was a, that was originally written by Linus over a couple weeks due to some copyright and licensing issues. We were having trouble with the email Linus patches, and he applies them manually system.

He and I and everyone else, we disliked SVN, we disliked CVS, those didn't really seem like solutions. There was one solution that nobody has really ever heard of, BitKeeper. It's still around, and that was one of the inspirations, the first of these repos that allows you to, clone the entire repo, the entire history. Whereas SVN, CVS, they were very server-based.

They were a very client-server. And where this was decentralized, and that was a huge, huge point. And it trickles back to Bitcoin and blockchain today, is that you can work remote. Your repo might be the leader. Maybe if you get hit by a bus, as the proverbial saying goes, your friend becomes the leader, simply because he has the latest repository. That was the way early Git worked as well. And we moved away from that Big Keeper system because it was closed. There were a lot of non-open source, non-open license components. So we went full Git.

And how has it changed in 20 years? Sadly, it's become more centralized. is that Git was originally intended to be, you post your repos on your websites, I'll post my repos on my websites, we each pull from each others if one repo dies, everyone else has a clone, very decentralized, very natural.

GitHub, which I use every day, I love it, but at the same time, I think the open source world, would melt down if GitHub and Travis go offline for 24 hours. So it's been more centralized and I hope that we find a way to make it less centralized. What do you think of these new systems that are now coming into this space? I forgot the names exactly, but these sort of blockchain-based, decentralized Git platforms. Well, that was always the natural extension for Git. Git stores objects.

It hash is an object. And it's really a hash-based object storage system, almost a file system. And that's no surprise coming from Linus and Unix and everything is a file type computing philosophy. And we see today with, say, IPFS. IPFS would be a, and I'm pretty sure there's a Git connector for it, is a natural extension for Git because it's ultimately an object addressable system. You say, give me this hash and here's this Git commit. And we're doing the same things in blockchain with blocks and transactions.

We're doing the same thing with IPFS, just that content addressable, object addressable file system. it's really just an extension. And so I had specced out 15 years ago a Git with BitTorrent. And IPFS honestly, you know, unintentionally took my design and improved it 100fold. And so it's a very natural extension, I think, for today. Yeah, I'm sure we're going to see a lot of interesting developments. And here in Berlin, there's a team called Oscoin that's kind of working on something like that too.

But so to move to Bitcoin now, so you learned about it in 2010, and then how did you get involved and what was your role in that early stage of the project? Sure. Well, it mirrored my Linux experience almost exactly. I made a change, created a patch,

emailed the leader of the software project, and they accepted the patch. It was really that simple. You know, other patches were, you know, you get feedback, you get a patch rejected. Hopefully, the leader doesn't say your patch is complete crap, and that's sort of the open source merit-based development method. It was Satoshi and G. Gavin in those days were primarily leading development. Satoshi sort of transitioned the lead merge role or the project maintainer role to Gavin while still providing the leadership and changes for say six months to a year. Then Satoshi sort of faded out of the picture. He just emailed and said, I'm going to be busy for a while and went, communicated less and less frequently,

and eventually stopped communicating it all. And that pretty much mirrored his forum posts as well, is on Bitcoin Talk. He posted a lot and then less and less and eventually just sort of faded away. And I think that that more than anything else, stopping the leaving of a trail of data fingerprints is the best thing you can do to protect your anonymity. And being anonymous, it forced all of the other engineers, myself included, to really just look at the code and say, does this make sense from a code perspective?

I don't know who this random anonymous guy is. And so I'm not putting any credit in the authority of a person X, person Y, person named Satoshi. I'm putting all of the credit in my evaluation of the code. So again, very open, very merit-based. And being pseudo-anonymous really made that, really crystallized that, I think, for the rest of the engineers. And so did you keep continuing to, you know, make little improvements, submit them? Was there a particular part of the code base that you mostly worked on or what was kind of? I was sort of a jack of all trades.

You know, the early pain point was the initial block download. It's still sort of a pain point today is that downloading and validating the blockchain before the node is up and running. So I made many improvements to improve that user experience based on all my experience with storage and Linux. I did a lot of early mining work. I wrote one of the first mining pools. I wrote the first CPU miner.

Satoshi actually asked me to do that since there are so many requests to put in this option of his optimization, that optimization into the in-client miner, he asked me to create an external CPU miner. And the ASIC miners, you know, the bit mains and that whatnot, the mining software buried deep inside still carries some of the remnants of my early CPU mining work from many, many eons ago, it seems. So mining, there was a lot of API work inside the node.

I turned it into what I call a router. I stripped out the wallet. I made a no wallet mode inside of Bitcoin Core that is sort of hyper-secure and hyper-optimized just being a full node. That work is still there today. there are a lot of other bits and bobs in there as well but it's sort of a look for a pain point and fix it that's that's really what I consider my role

and so you'll see me all over the place if it weren't for a quirk in GitHub commit statistics I would still show up as one of the top 20 Bitcoin core contributors cool yeah And then, so you worked on BitPay as well, right? I think you were one of the first kind of like, you know,

Bitcoin focused developers to get paid by a startup, you know, to exclusive work on BitPay, right? Bitcoin. Yeah, I left Red Hat in 2013. I took what at the time I thought was a big risk going into this new Bitcoin blockchain space and jumped over to BitPay. BitPay has really turned out to be just an amazing, not only business, but community. There are at least five or six businesses that were spawned by BitPay alumni after working there.

It's a really amazing tech-focused shop. The CEO, Stephen Pear, has a real sharp head on his shoulders. and so I'm not surprised to see not just myself, but a lot of the Argentinians like Zeppelin Solutions, a big smart contract auditing shop, several others, they're all alumni at BitPay. So you then went on to the co-found block.

Tell us how that came to be and how you met Matt Rozac and found a block. Sure. Well, rewinding the story a bit a couple years to 2014, after BitPay, I went to one of my passions, which is space. And I developed what was then the first open source satellite. The United States has a lot of really annoying rules about exporting satellite technology outside the borders of the U.N.I.S. United States. It's really sort of left over from the Cold War type rules. And people may remember back in 96 when President Clinton freed cryptography. Before that, if you took source code,

crypto source code from the U.S. and crossed the border with U.S. source code, crypto source code, you're exporting munitions, weapons-grade munitions. That's how dangerous they considered cryptography. And Clinton in 96 issued an executive order changing that, and then we had the internet boom. And, you know, freeing cryptography, freeze people, which freeze markets, which frees commerce. We saw that in 96. I'm just saying people crossing the border with floppies. That's right. Of crypto, like... No, there's a famous story of the Phil Zimmerman, the author of PGP.

He printed the entire source code on an OCR-friendly book. He got on a plane and flew outside the United States with this book and then scanned it in. And that's how PGP was legally successfully exported from the United States. It was using the First Amendment and printing it as a book. And Phil on the plane, he was scared. He didn't know if he was going to get arrested for exporting weapons-grade munitions or not. So all sorts of arcane rules, and they, you know, sort of getting back on track, those were the same in space. Is even if you build the world's most commodity satellite, you downloaded in the world.

instructions off the internet, you 3D printed them, you bought an off-the-shelf computer, that's still exporting a restricted material according to the U.S. Department of State, U.S. Department of Commerce. And so I worked through all the paperwork and mess to get approvals to post my satellite design on the internet. And that was Dunvegan Space Systems. 2014, the first open source satellite. It's still there today, DSS.CO, on your web browser. And you can go see the BITSAT. And down at the bottom, there's a 97-page preliminary design review.

That's essentially the BITSat technical specification. And that's what we had to get State Department approval to open source. But you asked about Block. That's sort of how I met Matt, my co-founder at Block, is Matt was a very successful entrepreneur, and he came out of the private equity space. He built and ran six enterprise software companies was very successful. He found the blockchain space in 2013, started investing in the various bridges, roads and tunnels of blockchain, wallets, payment processors, minor. you know, many of the companies that we're familiar with. And through that, he met just about everybody in the blockchain space, myself included. And I got him involved in Dunvegan, DSS.

And there are all sorts of, you know, puns and jokes to be made. You know, never got to space. The launch never launched. You know, the space venture never got what it needed, which was a very large ticket of $14 million to build a constellation of satellites in space. But I met so many people during that experience. Matt was one of those. And, you know, sort of getting back to present, Matt and I got together. in late 2015 and we whiteboarded what are the biggest opportunities in Bitcoin, blockchain,

crypto, and that is this sort of red hat of blockchain format. There are a lot of open source projects. There's a lot of developers, a lot of innovation, but at the same time, if you're a large enterprise business, like a Goldman Sachs, a JP Morgan, some of the, you know, the, the, the bigger household names, you're not going to rely on a volunteer developer at three in the morning when your software is failing. You need that professional support, professional maintenance. That's essentially what Red Hat gives big businesses enterprise today. And that's what we form block around, was that, you know, taking blockchain and specifically, you know, Bitcoin, Ethereum, the public networks, to enterprise.

But what surprised us was this, not just the Fortune 500, but what I call the Crypto 500. So many startups are these days well funded, and they need help. They need blockchain expertise. They need people to help tokenize this or that. And so we formed Blocklack. which is kind of like a Xerox Park or a Bell Labs to complement that. And that's where Metronome and some of these other token projects are coming. So there's like the enterprise side of the house,

working with the Fortune 500 and the Block Labs side of the house, building decentralized networks. And those really feed each other. And so one of the main products that you're selling at Block, like what types of solutions are you building for enterprise? I know you have this sort of technology, but you also have this consulting business. No, not really consulting. We have a product, Block Enterprise, that, again, sort of similar to Red Hat, is sold for a monthly subscription.

So you get the software as well as you get hot fixes, maintenance, updates, customer support, etc. and that's the product, Block Enterprise. That's our one software product. And then on the other side of the house, we build decentralized products like Metronome. I really believe that when you're 10 years in the future when Ishares BlackRock is building the next ETF, they're going to build it like we're building Metronome

in some of these products. And so that's the other side. the house. We don't really do consulting. Okay. I miss have misread the website then. So to say on the topic of enterprise for just for another few minutes, what types of things are you learning? I mean, coming from the open source space and working on Bitcoin and these sort of anarchic distributed systems, what sort of things are you learning from working with enterprise that have very different needs?

this is coming from someone who spends most of his time selling blockchain to enterprise as well, so I can relate to that. And what do you see as the future there? Is this something that you think will... At the moment, there's a massive need, right? Enterprise and Fortune 500s are hungry for this technology. They want to experiment with this technology and see how they can use it, and presumably to understand how it may change their business.

Do you think that this is something that will continue or will open systems sort of take the lead at some point and become the dominant place where innovation occurs? Well, I think that and Block very much built its strategy around open systems will all, and open networks will always be the driver of innovation. And so very specifically, our Block Enterprise product, for example, is only open networks, only software that came from open networks that have been field tested with real money over time. And so that's sort of Bitcoin and the Bitcoin cousins and Ethereum and the Ethereum cousins. And there are a lot of young whippersnappers software-wise that are wet cement. But strategically, we ask ourselves, what is going to generate that innovation over time? It's going to be the open source community.

It's not going to be just to pick on one particular company. It's not going to be a customer relying on R3 and only R3 for R3 blockchains. That's a higher total cost of ownership for the customer and a smaller community. And therefore, you rely on R3 much more to generate all the innovation that you as a customer are looking for. Whereas if you stick with open networks and open source, you've got the whole universe of Bitcoin, Ethereum, Manero, Zcash, all of that innovation to pull from. And where are you going to be 12 months from now, 24 months from now? If you have that open source, open network strategy, you're going to be pulling from the same piece of, same source of innovation everyone else is pulling from. It's not a side track like proprietary systems.

And so open networks always win. Open source always wins. With that said, I think that private blockchain is always going to be around. That's essentially like a VPN of sorts and privacy and private networks and private data distributions. They always make sense. the software, the robustness, that comes from openness, open networks, the innovation that comes from openness and open networks. You know, I really do believe we're reinventing the internet. You know, none of, you know, the apps on our smartphone and the, you know, the websites that

we're familiar with today, none of that would have happened if you needed a license to use the internet. Openness, permissionless innovation, that's what block. brings and that's what the internet brought 20 years ago and for enterprises they'll they'll dabble with private networks they'll set up consortiums because that that's sort of a comfort level but it's really just blockchain with training wheels the the action the innovation that happens out in the open yeah i very much agree with this perspective i would like before we go to metronome i would like to come to topic that, of course, also many, especially those following Bitcoin have been very aware of, which is a Segway 2x thing, right? So the scalability debate, of course, has been

going on for many years. I mean, I think we did podcasts on episodes on this podcast, like back in 2014 about that topic. And then I would say kind of the culmination of that was Segway 2X last year, where a group of people and you were. a very key person there pushed for a block increase to two megabytes as well as the activation of segwit of course we did get segit but not the not the 2x block size increase and now this is also kind of facilitated the split into bitcoin cash and and bitcoin so just looking back on this how what's your point of view as we have some distance on that? What happened there?

Well, starting at the fundamentals, Satoshi introduced a temporary limit, you know, many years ago, that one megabyte base block size limit. And it was always the plan when he introduced that limit to increase it at a particular either block or date. And so that was always the working plan. That was the plan that was communicated to the market and what many people build businesses on.

But starting sort of with Bitcoin XT in 2015, there was pushback to following that sort of original Satoshi block size increase plan. And there was Bitcoin XT in 2015, Bitcoin Classic, Bitcoin Unlimited, Segwit 2X, those are all sort of progressions and attempts to follow that original upgrade plan to increase the block size. And each time there was mud slung and all sorts of DDoSing of nodes. shenanigans and things of that nature that push back against that. And it was, you know, the Segway 2X was sort of the latest chapter in that. And it was a really disappointing spectacle of pushing back in some quarters against businesses that have been asking for this for years

and ultimately didn't go in that particular direction. So at the end of the day, day there wasn't consensus and you know the world moved on my predictions you know were either sort of path A or path B path A as Segwit succeeds you know obviously it didn't and Bitcoin largely continues as one coin and one community or path B is what I call the messy divorce and that's essentially that one faction won and wasn't able to come together with some of the other factions. And so you have a split. And you've got not just Bitcoin Cash, but you've got a bazillion Bitcoin Forks out there. You've got a ton of tokens.

You've got people like the Decred team from 24 months ago. you know, moving to an entirely different platform. You've got this sort of, you know, it's a spreading out or a Cambrian explosion of both projects as well as forks. And that's, all of that is, you know, fed in part by that messy divorce phase that I talked about. So we're in, you know, the second of two predictions is that messy divorce phase. And this is entirely predicted. And we'll sort of see where it goes from here. And so messy divorce, that's also messy divorce for you.

Like you also feel personally, you've moved on from Bitcoin and are focusing on. Oh, no, not at all. We have a lot of Bitcoin customers. So, you know, we're still full bore on Bitcoin itself. And so Bitcoin customers, you mean? for block or yes and what does that mean bitcoin customers would you actually what kind of they uh they pay for our block enterprise product in bitcoin our block enterprise product is uh a software suite that uh provides uh bitcoin ethereum uh it'll soon provide light coin bitcoin

Bitcoin Cash, both at the node level, the wallet level, SDKs, modules. Basically, everything you need to either connect to Bitcoin, spend some Bitcoin, check your Bitcoin. It's sort of that infrastructure software. So it's an enterprise-hardened node if you want to oversimplify. So if you connect to Bitcoin network and you want to run a full node, for example, you can either, again, depend on volunteer developers and

unpaid support, or if you're an enterprise, you can consume hardened, QAid, secured software, and a support package along with it. And so, that's what we mean by Bitcoin

customers, is customers that are using Bitcoin in their businesses, they're using our infrastructure software to do that. Okay, okay. And, but still, right, you used the term messy divorce. It did seem, you know, quite vicious at times. And, you know, certainly we were to some extent also.

Saw that, you know, in comments and stuff like that. So do you feel like there are some important lessons that you take away from that? Or what are some things you learned during that whole Segway 2X thing that you didn't know before? You know, it was basically what we expected is that in previous, you know, iterations like the Bitcoin Classic and the Bitcoin Unlimited, you saw a lot of astroturfing, you saw DDoSing of, you know, Bitcoin Core alternatives, you know, you saw companies sending executives all over the world to, you know, throw mud at me and throw mud at me and throw mud. mud at other developers and stuff like that.

It was really quite silly, but all of that was expected. We expected unprofessional behavior from, you know, other, you know, prominent blockchain companies, and we got it. You know, Bitcoin today, over 80% of all changes that go into Bitcoin Core are originated from one of two companies. And no surprise, the developers and companies, contractors and execs who work for those two companies were some of the loudest on social media. So all of this was entirely expected. None of it was a surprise.

So again, down to that messy divorce outcome. Great. So then moving on to our last topic of today's episode, but an important one, which is metronome. So Metronome is a project that has been, I guess you would say, spun off by block, right? It's a block product. So could you please tell us, what is Metronome? Why did you build this product? And what problem is it fundamentally trying to solve? Sure.

So Metronome is a new cryptocurrency, sort of a design from clean slate cryptocurrency with an eye on resilience. durability, something that'll last a long time. So there's one of the things that has been obvious for many years, not just with the various Bitcoin dramas, the various Ethereum dramas, Ethereum hard forks. We see all this stuff. Why should a currency or an asset be limited to a single blockchain? and why should that money supply not be engineered for the long term? So we really looked at what is the best of Ethereum, what is the best of Bitcoin,

and what's the latest technology in terms of building a cryptocurrency that will, ideally outlast its creator? What's the cryptocurrency that will outlasts, How can we create and incubate something like that? One of my philosophical and philanthropic interest is the Long Now Foundation. It's long now.org. It's one of the groups that is building, among other things, a 10,000 year clock, a clock that will continue operating for 10,000 years.

And the philosophy there highly generalized is that we pay way too much attention to the short term. We, you know, corporations look at quarterly numbers. The stock market looks at quarterly earnings. We plan for the next month, the next sprint, the next quarter, the next year. We need to instead plan for the next decade, the next 25 years, the next century. And so that was really the motivation behind Metronome is Bitcoin's supply, for example, declines to zero. It halves every four years. Ethereum's currency supply is a big question mark. Right now, it's five ether per block, new money supply. But the developers have openly communicated that that's going to change. We just don't know how it's going to change. So if you're looking at it from a monetary perspective, a currency supply perspective,

there's a big question mark in the future of one of the foundational currencies. So Metronome was really the genesis of that is if we start with a clean sheet of paper, what would we build in terms of a cryptocurrency that's there for the long term? And so that's what we came up with. It's a ERC 20 compatible cryptocurrency that runs on any chain that supports Ethereum VM. And it has extensions for ERC 827, which is sort of the latest token standard. It adds mass pay, which Bitcoin has, but it's new to Ethereum. And this saves a lot on transaction fees, a lot on gas. if you can have one transaction on an eth chain payout to 10, 50, 100 people.

You know, that's no sweat for Bitcoin, multiple transaction outputs, but that's new to Ethereum. So we engineered that into Metronome subscriptions, which are new to blockchain in general, because blockchains are push rather than pull-type payments. We added subscriptions and several other... payment type features. So it's really a cryptocurrency from scratch that we want to be durable for the long term. Let me just jump in the one point here, which is one of the, so interesting, but I also find strange things about metronome, right? Because metronome doesn't have its own blockchain, right? It lives on Ethereum, right? So in one way, it seems kind of strange to me to say,

okay, we're going to build this thing that's really, really durable. It's going to exist forever. It's better than the existing platforms that aren't built for long term, but it's dependent on them, or particularly Ethereum, and it's built on top.

It seems like a contradiction to me. No, I totally get it. And, you know, computer scientists, we're used to thinking abstractly, and we use the blockchain as a security layer or a transport layer for Metronome. But at the same time, we said it's so important that if you're on a single chain and you have that token, basically you have to sell out of that token to leave that universe, to leave that blockchain.

Whereas with Metronome, we draw the analogy to if your Metronome asset is a gold bar, you can take that gold bar to a new warehouse. That's importing your metronome from one chain to another. And maybe that warehouse is a little bit better. Maybe it has nicer security cameras outside or something like that to make an analogy. But essentially, unlike other sort of cross-chain products, there's no asset exchange. There's no swap. And so for tax purposes, that's very, very, very important.

If you're doing, for example, a cross-chain swap going from Bitcoin to Lightcoin, you just had a tax event. You know, maybe you bought your Bitcoin in 2011. And when you exchange your Bitcoin in 2018 for Lightcoin, you just had a tax event, potentially a very big tax event. And so even if it's a cross-chain atomic. swap, you're still moving through assets. Whereas with Metronome, it's the same asset moving to a different blockchain. And so that's the new and different part in terms of cross-chain.

So I'd like to dissect this. There's a lot here. So one of the things that sticks out on your website is this idea of a self-governed, portable, and reliable system. So we've covered the reliability aspect. I think what you mean by that is that this is a system that is meant to last for a very long time, right, where the currency continues to be created over time. The portability aspect, being able to move these coins from one blockchain to another, and we'll dig into that in a few minutes. But the self-governed aspect, could you describe how metronome is self-governed? What does that mean exactly? Sure. So this import-export mechanism, You export your metronome and your metronome only and from one blockchain and you import

your metronome and your metronome only into a new blockchain or possibly the same blockchain. And so the self-governing part is that each stakeholder is selecting where their metronome will live. And so for example, and metronome is self-adjusting. For example, if half of all metronome holders are on the ETH Classic chain, and half of all metronome holders are on the ETH chain, then the daily auctions are split in half, and half the daily supply of new metronome appears on the ETH chain

in a daily auction, and half of the new metronome daily supply appears on the ETH Classic chain. And you participate in different contract sets. and as a result, it is self-selecting. You control your stake and your stake only. Block doesn't have any say whatsoever in where you put your metronome. And so that's the self-governing aspect, is if you see that, hey, maybe troubles on the horizon, on the Ethereum chain, then I'm going to port my metronome over to the ETH Classic chain and let the storm clouds pass.

but it's in your hands to make that decision. Block has no control over where your metronome is or, you know, how you transfer it. Okay. Thanks for pointing that out. So you mentioned auctions. So let's then dig into the different components of metronome. So there are essentially four smart contracts. There's the auctions contracts, the proceeds contract. There's an autonomous converter contract.

and then the contract that issues the token, the ERC-20 contract. Could you describe sort of the flow of metronome tokens in these contracts and sort of like from the auction to say like a potential trade of ETH for metronome, for instance? Sure, sure. So the first contract, which is not really in that flow, that's the ERC-20, ERC-827-20. ERC 827 token management piece. That's what most other tokens have. I like to call Ethereum LOL, Ledger of Ledgers, and that's what ERC 20 is and that's what this is and it's no different. From that we added like I mentioned some new features, mass pay subscription and some other features. The second contract,

contract auction every day after the initial auction of 8 million on day zero. Every day there's a daily auction of 2,880 tokens, and that's to a minute. And that is sale at using a descending price auction. And a brief explanation, descending price auction, it's not like a reverse Dutch auction. it's a bit different. It's amusingly like CryptoKitties is that the auction starts at a very high price and it ticks down every 60 seconds

until you hit a market price where some of the tokens are sold. And the auction ends when all of the tokens in the auction are sold. So some people might buy at 1 eth, some people might buy at 0.5 eth. some people might buy it at 0.1e, and it's settled at the price you buy. So like the rate in auction to contrast, everyone gets the same price, the lowest price in the auction.

In a descending price auction, everyone gets exactly the price they pay at that time. And it ticks down the price is set at a specific time. So from there, the auctions receive ETH into the smart contract set, and the auction buyer, they have Metronome in their wallet. So where does that ETH go? Unlike every other ICO, where the ETH goes to the company's bank account, in Metronome, we like to call it almost an un-ICO because the raise doesn't come to us. There's no pre-sale. There's no, you know, whales are already in by the time the public gets to it. There's just the public sales, just the auctions. And the ETH from those auctions goes to contract number three, the Proceeds contract. The proceeds contract is basically a big savings basket. All it does is hold E.

Now every day, 0.25% of the total balance of all the ETH in that proceeds contract goes to contract number four, the autonomous converter contract. So 25 basis points of if there's a thousand-eath or even a million-eath in that proceeds contract, every day, 0.25% of that total balance goes to the ETH-Syth. of an ETH metronome trading pair. And that's what the fourth contract is. And we call it an autonomous converter. It acts as both a changer as well as a market maker. It is based on the Bankor algorithm. It's a direct simplification of the Bankor algorithm.

You send ETH and you get Metronome. You send metronome and you get E. And there's a particular market price that's inside the contract. And if the price is out of whack versus other secondary markets, other exchanges, then you have an arbitrage opportunity. You have an incentive to interact with that autonomous converter contract. So the flow goes from auction to proceeds to autonomous. converter. And the last detail, and this is a very key detail, is that that ETH comes from that

proceeds contract just to the ETH side of the ETHMTN trading pair. That creates a arbitrage incentive, creates an incentive for you to deposit MTN and get some of that ETH to bring the autonomous converter back to market price or back to market equilibrium. And so that's how it buys metronome on the open market. It's not essentially like a price floor type mechanism, a dynamic price floor that helps incubate the metronome system over we estimate three to four years. It's like that proceeds contract is like a slowly deflating balloon. that deflates that stored Eath over three to four years,

hopefully incubating the metronome system to the point where it's self-sustaining. Okay, so I think Bankor and this kind of auction thing is not easy to wrap your head around, but of course for people who are interested in, we've done an episode about Bankrupt previously, so they can go check that out as well. Now, just to understand this on a very high level,

comes to what's the point of this. It's basically the idea that this, all this EF is going into this contract and it's afterwards basically used to support the price of MTN. So do you expect that the result would be some kind of stable coin or somewhat stable coin? No, no. It's going to be subject to the price dynamics,

just like any other. supply-constrained token, which is pretty much most of the tokens out there. It just helps in that first incubation period. What we don't want is just sort of an up and down, and then it goes to zero. And so during that incubation period, when we're trying to build a community around this, it supports the currency during that incubation period. And so after that, it's sort of a bird that we hope flies on its own. So, of course, many projects, right, they raise money, right? And that money is then used to build software,

or many projects at this point have a lot of money, right? So they create these like ecosystem funds, build tooling, et cetera, et cetera. Now, here, basically, all of the proceeds are used just to support the price floor. So how exactly, like, what's the mechanism? by which this would create a community or incubate or create an ecosystem? Well, it's super important to us that we don't create yet another foundation. Being involved in Bitcoin since the early days, we saw the drama and mess involved in the Bitcoin Foundation. There's been, you know, some drama with the Ethereum Foundation.

You know, any time you get humans involved, there's, there's, drama, and we really wanted to design this to be as resistant to that as possible. And so creating some sort of ecosystem fund means you have to create gatekeepers who are doling out tokens and making, you know, very subjective choices at the end of the day. You know, we're building an autonomous system, one that doesn't rely on human gatekeepers. And so that was always the first and last rule when building metronome. And so that meant that a ecosystem fund that, you know, where Jeff or someone else is doling out metronome to build this, that, and the other, that that's just not in the cards.

When you spread a cryptocurrency, when you want to bootstrap a new cryptocurrency into existence, You can't bootstrap it with the notion that on day zero, everyone has to rely on block and what block builds. Otherwise, it's not going to be a success. And so we're building software. We're building wallets, mining pools, SDKs, all on our dime. But at the end of the day, we need to build a wider community. And we think that a foundation and a fund is actually a bad idea because it creates. creates a dependency like drugs create dependencies.

Yeah, I think that's, that's a, you know, there's certainly very strong arguments and issues with having, you know, decentralized organizations spawning decentralized systems. And I'm a huge fan of Dow's, by the way. And I want to see those succeed. And I think there's, there's a right way to do it. But, you know, this is not a Dow. DOWs would obviously be securities and we need to stay far, far away from that. Sure. But still, I'd like to come back to the question, because it's unclear to me how this mechanism of ether being used to support the price of MTN would incubate this community or create this ecosystem or even provide incentives for that. I mean, it provides a price for, yes, right? Yeah, it specifically is maintenance for the economy, not for the community.

So it's not money for the community. it's not a fund for the community. And we specifically designed it so that we're not creating a community fund because that would get us into Dow territory and securities territory. And that's just a bad idea for something that we want to be here 100 years from now. And so we want to not create those dependencies. We want to, in fact, engineer against having humans in the loop in a particular manner. And so we feel that we've built the not just the product, but the software around it such that that will be attractive to people and that will be where the community building comes in.

Is that here's a cryptocurrency engineered for the long term and all of the base attributes of that will be what builds that community. You know, Bitcoin and Lightcoin, they didn't have a community development fund. They just started. And people recognize their engineering attributes and built Bitcoin businesses, built Bitcoin businesses. So I think that the model of, you know, we need to give you a shot of adrenaline from our community development fund actually hurts in the long run. So I wanted to also come back to the topic of interoperability because, of course,

is an interesting topic, very important topic, also a topic I've been working on a lot. So to me, sort of superficial, to me, reading the claims in metronome, to be honest, they seem implausible, right? Like it does not seem that this would be possible. In particular, this sort of issue, right? So you have metronome tokens, right? they initially on Ethereum and now you're kind of allowing to move them elsewhere and then they can be moved back. They can move between any chains. So the sort of scenario that immediately comes

to my mind here is wouldn't this mean that, you know, if any chain gets like corrupted or we could double spend, then essentially, you know, let's say I can double spend metron. I can double spend metron. I can flood them on the other chains or doesn't that just mean the security of the metronome system becomes, you know, kind of equal to the security of the weakest link in all those chains? No, we're basically reusing the same algorithm as Bitcoin and Ethereum, et cetera, is we have a history of the money supply changes inside each set of metronome contracts. It's like a blockchain on blockchains. And so if one, say, double spins or violates the rules, it, just like in Bitcoin, when you violate the

rules, you instantly become invisible to everyone else in the metronome universe. So if we go off on, you know, Jeff Chain, which, let's say, inflates Metronome Supply by 2x, then no other metronome chain would accept my metronome ported out of this corrupted system. And so basically, it's the same algorithm that Bitcoin uses for validation, the same algorithm that Ethereum uses for validation. But how are chains aware of each other in this protocol? Basically, the simplified version would be that you, when you're porting your metronome, you're also submitting other people's transactions to that chain at the same time. And that's required to provide a proof from other chains to your local chain. And so people are essentially the vectors for spreading metronome money

supply change transactions across many chains. and there's a stake weight associated with it. And so, for example, if 80% is on metronome and 20% is on, or excuse me, 80% is on the eth chain, 20% is on Heath Classic, and you want to, say, port to chain XYZ, then the stake weight is going to be 80 plus 20 minus whatever your state. stake is moving to that new chain. And so the ETH history has an 80% weight. ETH Classic has a 20% weight. And so if you try to introduce a

corrupted history, you are measured against that stake weight on each chain. But so just hypothetically speaking, let's say I have, or 20% of MTN live on ETH Now, Ethereum Classic gets attacked. Somehow someone uses this to double spend MTN in another chain. Does that essentially burn all the MTN that was on the Ethereum Classic chain? Yeah, if the chain suddenly gets corrupted and no longer follows standard smart contract rules,

then it's gone rogue. So all of the totals that live on that chain at that time are destroyed. Yeah. That's basically the same as chain death, except since it's metronome, you had the opportunity if you had foresight to move your tokens off the chain before it gets corrupted, where if you're holding ETC, you're just screwed. But if you're holding MTFN, at least you have a chance to move off the ETC chain. Right. Although on the ETC chain, right, you may have. have some recovery. I mean, there may be some kind of brief attack then, but it seems like, you know, with NTIN, it's like there's no recovery, right? Once there is this double spend or something, it's, it's done. Well, definitionally, if the chain is intact, then Metronome is intact.

It won't permit a double spend if the chain is intact. And so if a double spin happen, then the chain is corrupted and ETC is corrupted. And so how does it not, how do those other chains know that a double spend happened? Is there, there's no, is there some sort of social consensus on like kind of governance? Like, okay, this China's going to work. We need to stop accepting metron.

No, it's just like the Bitcoin and Ethereum validation procedures is it's either a transaction. is either A, valid or B, not valid. And if it's not valid, then it just doesn't exist from the standpoint of other chains. It's the same as a Bitcoin transaction is Bitcoin transactions are either valid, and in which case you process them or they're not valid, and they just don't exist from your standpoint. So it's just reusing the Bitcoin algorithm inside of a set of smart contracts.

can you explain that I don't understand how that is reusing the Bitcoin algorithm So I mean we're kind of getting into basic blockchain here Is a blockchain is a container for a set of

transactions And the transactions are shared Across many nodes Eventually they're collected Into a block And the block is then

shared across those nodes. And each of the transactions and blocks are validated according to a shared set of consensus rules. And if any of those transactions or blocks don't validate according to those consensus rules, then they just don't exist. They're rejected. They're not validated. That's how Bitcoin prevents double spends, is that double spends aren't validates.

They aren't valid according to Bitcoin consensus rules. So similarly, a double spend of a metronome money supply, a double port, is just rejected in the same way that a Bitcoin rejects a double spend. And transactions and blocks are shared similarly to, you know, between contract sets by users who want to import and export their metronome. So you have a blockchain inside a blockchain with metronome. Okay, so it's maybe the way to think about this, which is kind of hard to wrap your head around, that almost if you, okay, in Bitcoin, right, we have different nodes that communicate, produce blocks.

So in metronome, a blockchain is like a node. A set of contracts is like a node. A set of contracts is a full node. And those will have sufficient capabilities to, like, detect hard forks or any kind of events like that in other chains. Yeah, again, they process them just like Bitcoin and Ethereum process new transactions and blocks. Okay. Well, I mean, it will be interesting to read more a bit about how exactly technically is. going to work is certainly a novel idea. Well, it's novel and it's not novel.

We went with what worked. We know blockchain's work. And so we put a blockchain in our blockchain. There are all sorts of meme picks. I'm sure we could dress up along with this. So that does bring us to the next point, which is that you guys have announced, right, that there's a metronome. This token sale is coming up very soon.

Can you give us an idea about the timeline on that? Yeah, it's currently early March, and we set a specific date 10 days before the launch. We'll publicly communicate the date very specifically. Right now, we are in the middle of auditing. We have hired not two, not three, but heading towards four Ethereum smart contract auditing. to really beat this up.

We just open sourced it on our subsidiaries GitHub, and we're looking to have a public stress test on TestNet before launch as well. We're building some interesting wallet features to go along with that and to help with the testing. So it's a one-and-done type of launch. Once it's live, We have no ownership over it.

We have no ability to turn it off or change it. And so it's something that you've got to get right the first time. And so we're only going to launch when we are happy that it is secure for consumer use and ready for the long term. So what I'm curious, though, because March, beginning of March, you know, that's almost now, right? we're almost there. I mean, actually, this podcast is, you know, I don't exactly know which date's coming out, but, you know, we'll be right then.

So one thing that I found a little bit difficult is, you know, reading through your materials you guys have on the website is that it goes into very little technical detail. So, for example, if we talk about this, the different chains being, you know, kind of verifying each other, how those tokens are moved, like all of that stuff,

there's not much information, especially since the idea is the system kind of runs itself once with the launch, right? But you guys aren't basically, it's not just you have an idea and you're going to work on this for two years and then it's kind of ready and there, right? So will you publish more information on this before? Yeah, the cross-chain spec is a separate document and that's about to be launched in probably seven days, I think. we're polishing that. Every single dang document has to go through legal wrangling as well as engineer review, which is very annoying,

but sort of the times that we live in. And so we're going to be publishing that. We're going to be publishing a sort of a how-to-buy type document that describes the descending price auctions in more detail, provide some trading strategies like limit orders, dollar cost averaging, that sort of thing, because it's a new auction format. There's no pre-sale much to Wales dismay. I get like two or three emails a day of how do I get in the pre-sale? I want in the pre-sale. And we have to say, sorry, go to the public sale. So that's sort of that format that we're

looking for. Those two documents are going to be coming out in the next few days. We're also open sourcing all of the porcelain that we've built so far. That's the SDKs, the wallets, the world's first as far as we're aware, ERC20 mining pool. We're going to be operating that as well. So all of that is getting opened prior to launch. Cool. Well, Jeff, thanks so much for coming on. And I certainly look forward to that information and learning a bit more about how exactly metronome is going to achieve those things

because it certainly would be an interesting thing if you can create one of the token that's kind of not dependent on any of the chains it lives on. So that's a very interesting direction. So yeah, thanks so much. It was a pleasure having you on. Absolutely.

Absolutely. Thanks for having me on. I appreciate it. And of course, thanks for a listener for once again tuning in. So we are going to have in the links to the episode, of course, you know, links to Metronome website, the Onus Mano, which is a little bit like a white paper and some other documents that they have published. Also, there has been actually some source code, I think, of the smart contract published. So, you know, we link to that. So if people want to dive into that, they can do so as well. And yeah, so thanks so much for joining us.

So you can subscribe to the show in iTunes, SoundCloud, your favorite podcast app, or you can watch videos on YouTube.com slash episode of Bitcoin. And yeah, so if you want to support the show, you can also leave us an iTunes review. And otherwise, thanks so much. And we look forward to seeing you again next week.