Unchained - 2024 Was Solana's Best Year Yet. Can It Sustain the Momentum in 2025? - Ep. 755

Episode Date: December 24, 2024

2024 has been a transformative year for Solana. With a surge in developer activity, bold innovations in DePIN, and its ambitions to become a “decentralized Nasdaq,” the ecosystem is making waves. But are these changes enough to differentiate it from competitors like Ethereum and L2 solutions such as Base? In this episode, Lily Liu, president of the Solana Foundation, and Mert Mumtaz, CEO of Helius, join Unchained to discuss how Solana is carving out its niche. They debate whether Base is a serious contender, why they’re not concerned about the 2025 token unlocks, and how Solana’s unique approach to MEV could shape its future. Plus, they tackle the ecosystem’s broader challenges and why they believe Solana’s vision will endure. Show highlights: Why Mert feels paranoid but also vindicated  Why Lily started working on Solana after being known as a hardcore bitcoiner How Mert’s background in Coinbase led him to found Helius and become the voice of Solana online Whether Solana can become a place where unique innovations are built, rather than copying Ethereum Whether Solana can achieve its vision of a “decentralized Nasdaq” Why the ecosystem has attracted so many developers in 2024  Why Lily believes that Base is no competitor to Solana What network extensions actually mean, according to Mert How Mert responds to the criticisms around Solana’s MEV Why Mert and Lily are not worried about the token unlocks of 2025 How the Solana mobile phone will compete with the giants Why DePIN showcases the real value of blockchain technology Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Kelp DAO Robinhood & Arbitrum Polkadot Guests: Lily Liu, President of the Solana Foundation Mert Mumtaz, CEO of Helius Links Unchained:  Pudgy Penguins See NFT Floor Price Drop Almost 50% After PENGU Launch -  Pump.fun Becomes First Solana DApp to Top $100M in Monthly Revenue How Solana Beat Out Ethereum to Nab New Crypto Developers in 2024 Are Solana's 'Network Extensions' Just Like Ethereum's Layer 2s But by a Different Name? What Are DePINs in Crypto? A Beginner’s Guide Timestamps:  00:00 Intro 02:34 Mert’s mix of paranoia and vindication about Solana 07:08 Why Lily shifted from Bitcoin to working on Solana 09:43 Mert’s journey from Coinbase to becoming Solana’s online advocate 14:47 Can Solana foster unique innovations rather than mimic Ethereum? 19:47 Solana’s vision of a “decentralized Nasdaq” vs. center of memecoin mania  27:54 What’s driving Solana’s surge in developer activity 30:26 Why Lily sees Base as no real competitor 33:04 The meaning and implications of network extensions 37:07 Mert’s take on criticisms of Solana’s MEV approach 42:11 Why they aren’t worried about the 2025 token unlocks 44:26 Competing with tech giants through the Solana mobile phone 50:48 How DePIN highlights blockchain’s true potential Learn more about your ad choices. Visit megaphone.fm/adchoices

I don't think that base long term can compete with Salana. I'm going to be honest. Why do people consider base to be competitive with Salana right now? Well, because it's fast and cheap. Okay. Is it how scalable is that infrastructure? How decentralizes it? Well, most, when you bring that up with folks today,

oftentimes the answer you'll get is, well, users don't care about decentralization. Everyone, look and unshade. You're no-hype resource for all these crypto. I'm your host, Laura Shitt. We are now featuring quotes from listeners on the show. Today we have one from Jelly Goddess in response to last Friday's interview with Robin Hood's CEO, Vlad Tenive. Jelly Goddess tweets about Robin Hood's plans around staking and stable coins. Quote, stable coins and staking are cool, but are they just another way to keep retail hooked while regulations catch up?

Taff your comment featured on Unchained, write a review of the podcast overall, or leave a comment on our video on YouTube or X. This is the December 24th, 2024 episode of Unchained. Robin Hood Wallet, Robin Hood's Defi mobile app, takes no fees on same chain and cross-chain swaps. Use Arbitrum's Layer 2 to swap

with low network fees in just a few taps. Other fees may apply. Download on iOS or Android today. Pocodot is the original and leading layer zero blockchain with over 2000 plus developers, and the Pocodot 2.0 upgrade will be a massive accelerator for ecosystem, making it faster, more secure, and adaptable. Perfect for GameFi and Defy to build,

grow, and scale. Join the community at poca dot.network slash ecosystem slash community. Did you know High Growth Vault, aka High Gain by Kel, offers over 20 plus percent reward rates on ETH by leveraging blue chip defy strategies? Maximize your rewards with professional risk management. Get some of the highest rewards on ETH. Visit www. Keltdown.xyZ. Today's topic is Salinas Banner Year. Here to discuss are Lily Lou, president of the Salada Foundation,

and Mertzontas, CEO of Helios. Welcome, Lily and Mert. Thanks for having us. Hi, Laura. Good to be here. If you're watching the video, you might notice that I'm not on screen.

I fell last week and hit my head, and I'm in the process of healing, which is the point where, you know, I have like a little mini black guy, and there's other horrifying things on my face. So I'm going to spare you. and myself, and not put myself on camera. All right, so Lily and Mert, Solana has had a monster year in so many ways.

Not only was it home to one of the biggest phenomena of the year, which is pump.com. That fundee really showed what the blockchain can do in terms of transactions per second. I saw, I believe it was the goat phenomenon, took the network to 10.6 million transactions in a single day. The Pango AirDrop last week pushed it to 10.4 million transactions in a day. and a month ago, invested the last all-time high set in November 2021, reaching $260. And meanwhile, Electric Capital's developer report found that this was the first year since 2016. That an ecosystem, other than the Ethereum, attracted the greatest number of new developers.

So, drumroll, that was, of course, Solana. How does it feel to both of you to have been part of Solana's success? Do you want to go first, Lily? Uh, go for it, right? Okay. How does it feel to basically go through this year? Well, I would say personally, I feel very paranoid because it feels as if the higher you go up and the more success you have, the more pressure, the more people, the more things you need to do. And so it's exciting.

It's fun, but also very paranoid that we don't get complacent. and keep shipping while still steering a much bigger ship. And I try to tell us a totally all the time. I'll be like, you know, stop working on the phone and come ship some code. We need some work to do here and whatnot. And so I personally mostly feel paranoid, somewhat vindicated because at first everybody thought we were relatively crazy for actually saying the things that we did in December 22, such as how we'd come back.

And so that wasn't consented at the time. And so it feels a little better to feel or at least be proven less crazy, but there's still a ton of work to be done. And just to clarify when you said that you kill Antella Yakubiko to not work on the phone, for most of us that means like we're literally just working on our little spices, but you mean on the Salana Seeker, which is the next version of the Salinasogica. Correct. Yes. And Lily, do you want to add, when I asked this question, you had like a gigantic smile on your face? Well, to many external observers and the number of the external observers has increased rheumatically over time, it went from rubber-necking seemingly December 22, January 23.

It was like people rubber-necking, you know, a big rig car crash on the side of the highway and being like, okay, well, you know, that's probably dead. But, you know, from my vantage point, it doesn't feel that dramatically different. And we have a little bit of an ethos, I guess, of related concepts. One is that we kind of wake up every day and do the same thing that we did, whether it's December 22 or December of 2024, you wake up and every day is a new day and you think, you know, we are nothing today, and what are we going to do today, which is going to potentially have a bit of an impact. And if you do that every single day in succession, then, you know, frankly, most people don't think that way.

Most people do not behave that way. Then you will compound the fruits of your labors as an individual, as a team, as an ecosystem, as an ecosystem of people with very diverse skill sets. And so from that kind of micro perspective, actually nothing really has changed that much. And I think because we are able to do that at scale as an ecosystem, then what you kind of see as having been this arc over the last two years, I think that we can continue to as an ecosystem ship really cool things. So I don't see this as, you know, being a cycle thing as just being, you know, this one sort of right now the beanie baby at the moment as meme coins. I don't think that this is something that

just comes and goes with whatever the hype cycle is because the fundamental of it is just an ecosystem that has kind of a culture of building useful things and shipping. So to an external observer, it might seem very unusual, right? Oh, that was a bit of a surprise. But, you know, in the way the more things change, the more they say the same. And Lily, I just have to ask you, because you used to work at 21, which became Earn, and I always remembered you as a hardcore bitconer. So I remember that when I saw you became the president of the Salon Foundation, I was very surprised. How did that shift take place? I see them as being very complimentary, actually. I absolutely love Bitcoin. I think that we all

should. Bitcoin is the one that kicked off this entire space and created this kind of collective dream that we had around not just sound money and store value. That's part of it. Bitcoin is one that articulated all of the other things around open finance, right? Why self-custody is important. And so if you'll remember what happened in 2016, 2017 with the block size debate, before that there was a lot of discourse as to whether Bitcoin is a technology platform, whether it was sound money, store value, which now we call digital gold, whether it was supposed to be a meeting of exchange, right?

So it's these kind of like three different things that a blockchain could do or a token could do. And now it's like 99% everyone's like, yeah, you know, Bitcoin is digital gold. And if it does these other things that will be at some point in the future, maybe lightning, maybe something else, maybe L2s, whatever might be. But Bitcoin doesn't need to be any of those things. Okay. So then back in the early days, the, of course, Silicon Valley, which is, you know, Silicon Valley sees everything as being a potential. as a potential technology platform, then Silicon Valley went in, okay, well, if Bitcoin's not going to be that technology platform, who is? And basically everything else after Bitcoin is going

to be that technology platform or seeking to be that technology platform. So the way I see it now is the vision is still always the same that Bitcoin gave us, right? Open finance, programmable money, self-custody, leading to self-sovereignty. And Bitcoin is not going to be that open finance technology platform. So then the question is, who is? And what drew me does, to Solana was in 2021. I just started using Salana as a user. And I was really blown away by it because I thought, okay, this actually kind of feels like the web to internet. You click something, you click a button, that thing happens. And it's a good user experience. So of all of the things that I saw in 2021, I thought this is the only one that can sort of be that complement to Bitcoin and do the

things that Bitcoin has chosen not to do. So to me, I don't really see it as a choice. I think it's been wrongly framed in our industry for the longest time as this being sort of you're either a Bitcoiner or you're not, right? That's in my mind the wrong way to think about it. And Mert, you in a way are almost like this voice for Solana online. And I was curious. Well, why don't we just start with what it is that Helius Labs does, how you came to found it, but then also how you came to be this voice for Salana and like why you chose Salana. So Chilius is a developer platform. Basically, if you want to build apps, fast, cheap, scalable apps, you use Helios to make that a reality. The origin story of Helios, and actually how I started being super loud about

Solana, is actually kind of the same. So I used to work at Coinbase before this, and I used to work on a system that handles pretty much all blockchain, so Ethereum, and at that time it was Polygon, optimism was just coming online, and Avalanche, even, and there I used to work on different chains and something always bug me the most and it's still us today which is how come everybody's using these chains for Ponzionomics and weird yield farming things as opposed to actually taking the potential and building some useful things that I can use today and at the time my thesis for that was well there's a bunch of reasons, right? There's obviously scalability issues. There are regulation issues. There's a bunch of

different issues. But the one that I could probably help the most on with my skill set with cloud infrastructure was actually giving developers more expressiveness and abstracting away sort of the pain of just doing things on chain. And I used to build things on Solana on my own time anyways during the weekends or at night while I used to work at Coinbase. And this was at the time when there were really no block explorers or zero analytics sites, so I would just write the code myself. And when I used to, and I used to build also on Ethereum. And my thesis at the time was something like this,

which is, okay, so if I want to solve this problem, then I need to make it easier for app developers to build things. Now, I can either do this on Ethereum or on Solana. On Ethereum, though, there's a lot of things that are not in my control, right? So scalability and future roadmap things, these things I have no control over. And for Ethereum successfully scale, it's going to need to require at the time the merge to go through, right, transition to proof a stake, 4844, L2s, L2s to get to stage 2 and all these different things. And while I think it will get there, Salana was kind of the opposite, where it was like it's a scalable base layer. And if you just come in as an ecosystem team, you can fix.

a bunch of these problems and have a lot of influence over, and your faith is more in your own hands. And you can just build things, right? And at the time, Solana had basically three-digit number of developers, I would say, and people used to kind of troll me for this because we're a developer platform. And everybody was like, well, why aren't you going where the developers are? And my thought was, well, it's going to be the fastest growing if you can actually solve some of these problems, which is, you know, basically what ended up happening so far at least. And while I was doing that, at the time on Twitter, I used to actually first be a reply guy against a lot of people, where the NFT influencers back in the day before analytics sites existed would say something like, you know, mint my weird ape because it's going super fast. But nobody could check what was happening.

And I would write a script and I'd be like, but you have 99% of the supply. Like you just, and so I would reply guy them doing that. And then somewhere along the way, there was a lot of threads as Salana started picking up momentum about like fundamental technical misunderstandings of how Salana worked. And having already studied how the tech works on multiple chains, at first I would just say like, this is wrong. And here's why you're wrong. And then that basically, I did that so often that people would just tag me on Twitter and be like, Mert, can you come confirm this? Or like, somebody would shoot me a message on telegram like, hey, dude, this is true. And then it just never stopped.

And I mean, I don't think I'm the voice that's long by any means. I think certainly there's quite a few different voices, which is what's ideal. I think there should actually be more anyways, like at least 10x more. But it's basically just being super annoyed by guys. even if they're from Salana seeing just patently false things. Okay. Well, you know, as we mentioned,

clearly the enthusiasm that you guys have has now infiltrated many other people. And so we saw that in November, DAPS on Salana generated $365 million in revenue. So PumpDot Fund obviously accounted for $100 million, or more than $100 million of that. But, you know, one thing that I have noticed is a lot of the gaps that are coming to slaughter are super similar to what we've seen on Ethereum.

So do you expect that they'll kind of continue to compete in these similar ways? Like, I feel like pumped up on as kind of the one new area, you know, meme coins generally. But like other than that, I don't know if I have seen too much that's super differentiated. I think you will. When it comes to the financial economy, there's a lot of cool stuff that's cooking and payments that I think you were going to see probably in a few months time. if you haven't already started to see it. And so I think that broadening what we can actually do on chain

is what Salon is going to contribute to this space. We've been through, I guess, some form of Beanie Baby cycle, one after the other for the last 10 years, right? Maybe more than that, if you count since the beginning of Bitcoin. And so the critique oftentimes will all be intimately aware is that this is really just ponsonomic speculation gone wild, and there's nothing useful. And I would argue one of the reasons why there hasn't been a lot which has strong utility is because, well, if you look at most human economic activity, it's not in trading, right?

Token in, token out. Most human economic activity is actually about the payment for goods and services, a transactional economy. And the reason why that doesn't exist on chain right now, now is because it has not been able to because the market for payment transaction that cost two minutes and take that take two minutes and cost $2 to click a button is there's no market for that. And that's what we've been able to offer at scale as an industry until you have something like Salana come along. Right. So you had to have liquidity and stable coins and then you also have to have a performance network that can actually support payments to be able to support a transactional economy. And then I think you can actually broaden what you can actually do on chain outside of

sort of speculative wave after speculative wave. And I think what that's actually going to do is I think that's going to benefit the crypto economy, the on-chain economy as a whole. Because what you have right now is there's going to be these, there's like the ICO stuff and there's the NFT stuff. And right now you've got meme coins. And so people pile in because of the speculative fervor. And then once that speculation is over, then people kind of go back to their brokerage account. right? But if you can actually do cool stuff on chain, which is not just trading, then people are going to be more likely to leave their money on chain because it's better than being in their brokerage account. And I think we're starting to, we're starting to really build

and support that economy. And guess what? It's going to be on a layer, which is both liquid, fast and cheap. I would also somewhat challenge the notion of doing what Ethereum is doing. I think that used to be the case. In fact, I was quite annoyed by that, and that's why we came up with Only Possible on Solana, right? Do things that are only possible here, such that you have a moat, such that you can't just vampire attack with a copy paste of the same code base. And I would say that used to be the case, but I don't think it's quite the case today.

In fact, I think it's the opposite where you saw that Solana obviously has a meme coin ecosystem, and now there are teams that have meme coin funds. or ecosystem funds dedicated to memes or they're really trying and hard to get a meme coin ecosystem going through basically any means necessary. People even trying to

I mean all L-1s really try to and this isn't a positive way, not a negative way like basically just play or follow the super team playbook of spinning up a bunch of different entities around the world and getting the developer communities they're going. And

there's also some things that are relatively more unique to Solana, which is, you know, things like Deepen, right? You start to get someone to flywheel there once you have helium, high map, or render, Ionet, etc. And I would say as, and then like just, there's boring things that are quite different as well, like the evolution of EVV. Salon MAVEV looks quite different than Ethereum MEV, the developer ecosystem, network extensions, which I don't like that name, but they are quite different. And so, but like fundamentally it's just open source software, right?

So there will always be copying from all ends in a free market. But I think it's like quite a bit different than maybe two years ago, where now the newer incumbents tend to try to compete with Salana, right? Like before they go live, they will say, oh, well, we'll be faster than Salana, right? Okay. Well, yeah, some of the activities that you call that are ones that I do plan to ask you about. So I think you're right that you're onto something about where it could potentially go. I did want to ask though because, you know, as everybody famously, as everybody talks about, Anatoly has famously said that his vision for Solana is that it would be a decentralized NASDAQ. But because right now it does seem like the activity on Solana, that's found product market fit is the meme coins. And, you know, there, I don't want to make a judgment call, but obviously there are people that, you know, they kind of question the sort of validity of that activity. I think also critics will point to incidents like the whole racist meme coin trend or the one, you know, that happened with the live stream where people were

threatening to kill themselves or abuse a child or whatever if their coin didn't reach a market cap. And I just wondered, how do you square Natoli's vision for Solana as the decentralized NASDAQA against the meme coins craze that happened on Solana? So I've been asked this a few times. And the way I like framing it is, okay, so meme coins are a thing that exists or fundamentally speculation is something that exists in crypto and it's fundamental to it, right? First you have Bitcoin, then you have the ICOs, then you have NFTs, then you have meme coins. And it's just so happens that Solana is the, or at least at the time, I still think it is, but in the historical context, at the time was the best place to launch tokens, right? When you say you want to build a

decentralized NASDAQ, what are you actually saying? You're saying we want to build a product or a system where trading is easy, price discovery is optimal, and the UX for both the people who supplying the liquidity and also people who are trading is optimized. Now, that trading, this chain does not control, right? The chain does not say if token type equals meme coin, then enable, or, you know, if real product don't enable, right? It's, it's, the token is a container, it's a vessel, and it can take many different shapes. Now it's just so happens that meme coins are the big thing in all of crypto this year, right? And you can see this with, you know, flanker, I believe, on base, but also different chains, also trying to have different meme coins.

I mean, there's entire chains that are meme coins, right, like Doge. And meme coins have been around this whole time. And so I think the meme coin indictment is actually much more an indictment on the entire industry. And so how do you reconcile Tolly's vision with what's actually happening? And I've actually asked them this at breakpoint, this exact question. And like, he'll say something like, well, you know, you look at it. earlier there's the internet, and people will just use it for whatever they want, but then when the actual time comes, the system is battle tested for the real use cases if they happen.

And so that's like the similar way I think about it, where the meme coins today, and a good example is actually historical context, NFTs, right? So NFTs back in the day used to actually take out the chain in 2021, 2022. And they were just weird. key pictures, right? But the engineers then learned a ton of lessons that were shortcomings in that system, and they improved it such that it doesn't go down from that type of activity anymore. And it turns out that's just type of token. And so when meme coins came online, then the chain didn't go down again. And in fact, the chain was optimized for the movement of tokens, right? And so Salon has a thesis called Fat, right? Founders' Apps tokens. And the idea is you obviously

you want the decentralized NASDAQ to be the best place for launching, creating, transferring, burning, whatever operation you want to take on those tokens. And those tokens, the chain is not a pinionated on, right? Today, they're meme coins. Tomorrow, they're IWAs. They're deepened coins. They're stable coins. They can take many forms.

Yeah. And actually, to build on, like what you just said, they reminded me of what Lily said a little while ago about how payments are. are a big activity. I, watching the mean coin thing, it reminds me of how, like, some little kids I know spend so much time trading their, their Pokemon cards. And it feels like so much the same activity, except this is on chain. So I do think that there, you know, is something there that's just inherent to human nature. All right. So in a moment, we're going to talk about how Solana has been growing, but also where it faces competition. But first, a quick word

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It is what is driving the whole foreign buyer property market. This is an actual thing. And once they get settled here, the family continues in the same vein. Funnel through casino, buy property, gain residency, move, family member repeat. And Aung Thu 2006 filled in more details saying that these casino shenanigans are, as an example, quote, such as using the junket operators to facilitate gambling with funds, they're actually designed as hotel charges, thus bypassing restrictions on currency transfers to China. Super interesting. Remember, if you want to have your quote

featured on Unchained, please write a review of the podcast or leave a comment on our video on YouTube or X. Back to my conversation with Lillian Mert. So as you mentioned earlier, Solana attracted the most new devs in 2024. Why do you think that is? And if you were a dev, you know, coming into date, like, how would you think about that choice of going into either the EVM ecosystem or the SVM ecosystem? First, the first question on why people, why this year was a particularly big year for Solano developers? I think a few things. I think a few things. things. One is, and we actually wrote a post about this about two years ago now, and it's basically played out roughly what we thought would happen, which is, let's say you're a developer,

you want to build something in crypto. Well, what do you want? You want something that scales such that and is cheap and actually works as your business grows and scales so that if all you have to do is work on your product, right? You don't want to be bothered by, we're infrastructure stuff that you're not an expert on or that you can't fix anyways, even if you wanted to, right? Because you're not going to fix the entire chain. It's a decentralized chain, right? If you wanted that, you would maybe go with an app chain, but then with an app chain,

you need to bootstrap liquidity and get all the ecosystem integrations going, and it's a lot of upfront capital. And so with that framing in mind, then the question becomes, okay, so what do you build on? Well, fundamentally, you want to build on where, one, there's the most ecosystem integrations. So things like, what do the wallets look like? What do the dexes look like? Can I get support from the community like the founders? Do they have ecosystem grants?

Do they have a risk-based capital system with VCs? And then once you go through those, okay, well, then you have a few options. And it's probably going to be something like, at least for this past year, it's probably going to look something like, well, there's Solana, there's something like Sway, some of the move chains, and then there are some L2s. But then within the alt-2s, you kind of have to pick which one of those alt-2s you want to pick. And that becomes confusing. And then with move, it is like to give credit to move specifically sweep.

They are a good ecosystem. But then you have to be like, well, it's early. And so I'm taking a big risk here because it hasn't been battle tested. There isn't that much community yet. Maybe there will be. And so Solana is like in the sweet spot of battle tested, performance, cheap, but also has a very credible path to, you know, 1,000xing the scale. Does that answer the question? Yeah, yeah. And I did also want to ask just, you know, at this moment in time, it does feel like the main competitors

really are base. And then as you mentioned, apt to us and suey are kind of also of interest to developers. But for base in particular, how does Solana planet compete against the inherent and advantages that a coinbase incubated layer two has? I don't think that base long-term can compete with Solana. I'm going to be honest. Why do people consider base to be competitive with Salana right now? Well, because it's fast and cheap, okay, is it how scalable is that infrastructure? How decentralizes it?

Well, when you bring that up with folks today, oftentimes the answer you'll get is, well, users don't care about decentralization. What I find to be really interesting about that is it's the same people. who are saying that, then will flip in the same conversation and say the reason why Ethereum Mainnet is better place in Salinas because it's more decentralized. So which is it? Does decentralization matter or not, right? Then there's the whole conversation as to whether L2s are parasitic to Maynette, to Ethereum Maynett or not. I think that's actually far worse than that. I think that the L2s, the corporate L2s, such as Base, and there's others that, you know, because the sequencer fees have been so

profitable for corporations such as Coinbase, then many other corporations are looking at that just purely from a P&L perspective as well. And the incentives there are going to keep on creeping in the direction where they will just compete with TheoremayNet. I think it's far worse than being parasitic. I think it's cannibalistic. And what you're seeing now is you're saying with these corporate L2s, they keep on saying they're doing this to scale Ethereum. Yet at the same time, they're bringing assets from bridging them from ethel1 to natively issuing them on the L2. And at some point, they will build enough scale because they, as well, want to have full spectrum of application verticals from the DFI stuff, the DIPPIN stuff, the meme

coins, the NFTEs, so on and so forth, that at some point, they're going to think, well, why shouldn't we just be a general purpose, performant L2 ourselves? And it's not clear to me how that actually really benefits the Ethereum ecosystem long term, because the incentive will always be for a corporate chain that has to go-to-market advantages, given the backing of Coinbase Inc. To eventually go and accumulate their own network effect and throw that weight around. And well, to ask a little bit, you know, just about this difference between Slana and Ethereum is, you know, as Mert mentioned, Slana is also pursuing these network extensions.

and I'm sure you saw people have been making fun of the name. But it does seem like these are so similar to roll-ups, but you're not calling them roll-ups. So, you know, what are they, how are they different from ellips? Yeah. And how do you see them fitting into this notion of Solana having this monolithic or integrated architecture? So there's two things there.

One is in, and by the way, I don't actually agree with the term, the term network extension because I think it's too, large and it doesn't refer to something specific, which changes the underlying characteristics of the thing. In terms of the big difference, it's basically just the fundamental property of L2s on Ethereum, right? Why were L2s created? Well, because you can't do all the transactions on Ethereum mainnet. And so what you have to do is you have to do them off chain, off Ethereum, and then you have to roll them back up onto Ethereum, right? And so what you've done is you've taken execution off the L1. On Solana, execution is plenty, right? The entire chain basically just tries to

maximize for execution capabilities. And so on Solana, what you have as, so for example, Helios and Light released something called ZK compression. And we did not call this an rank of reclamation by the way. We just call it ZK compression. That's the name of it. It compresses data was ZK. But it's not actually a roll-up in the traditional sense of Ethereum in any way, because the transactions still happen on the Salana blockchain. And the only thing that's different is how the data is compressed or stored. And the reason why it doesn't apply to Salana to call that like a roll-up is because the terminology that was created was created to be very EVM-centric, right? There are certain problems.

on Ethereum, and then there is these solutions called roll-ups or state channels or plasma, you know, all these different things, that exist to solve those problems. But Solana is a different chain, and those problems specifically do not exist. And so their solutions are different and have different characteristics. And so it's a weird attempt to basically simplify for the user, but from a technical perspective, they are quite different, right, because you don't need to take execution off Solana for it to scale like you do on Ethereum, but you do have to do other things. And then the other biggest, big difference is when, like, the framing of this, right?

When we say things like Solana is pursuing network extensions, okay, what does that mean? Because who is Solana? Right. On Ethereum, the reason why we say Ethereum is pursuing the module roadmap is because the core devs of the L1 physically change the L1 to be a. customer for L2s, right? They added blob space. Why do they do that?

The entire purpose is for L2s to post data onto the L1, right? They re-architected the entire system just to pursue that. On Salana, that's not the case. And you can talk to any Salon of Cordov about this. They will just say, increase bandwidth, reduce latency. They will not say anything else. They will say those two are four words. And if people think it's valuable to build something on top of this,

such as a roll-up in the Ethereum sense or a network extension in Salana sense, do that. We don't care. What we're going to do is we're going to scale execution on the L1. We're never going to change the roadmap to account for your L2s. That doesn't matter to us. But it's a permissionless system, right? And so if people think it's lucrative to build an L2

and raise venture fund or whatever to go on Salana and build that thing and maybe there's a gap that they're addressing, then they will do it. But the L1 has no opinions on this. All right. Well, I did also want to talk about another kind of, I don't know, point of contention, but definitely a differentiator that people argue about between Solana and Ethereum is the MEV issue. You know, I see people criticizing MEV at Solana by saying things like, so somebody pointed out that

there is one Solana operator that earns $2 million a day by sandwiching mean coin users. someone else pointed out that it looks like a lot of wash training bots are doing a single transaction and transaction and rotating to a new wallet. So they were saying 300K transactions is actually 300K daily active addresses. Somebody else said, oh, most MEDA Al-Salana today appears to be toxic MEV, which worsens the experience of users. What do you have to say to these criticisms? Well, a few of those are not correct by numbers. So, when you say that most of MEPV on Salana is toxic, then first that presumes that you know all of them have on Salana, which most people don't. But so what we measure is REV, right? Real

economic value, which is the accumulation of priority tips paid to prioritize your transactions, plus the Gito tips require to land GEDAO bundles. And of those GEDAW bundles, which is the MEP infrastructure, roughly 7 to 8% or some single digits are due to sandwiching, which is what would be malicious, right? And so actually, if you look at the numbers, most of the activity on chain, most of the revenue is simply from people wanting to get access to block space as fast as possible, right? Land their transactions during congestion or be the first to get a coin or be first to get a better price, all these things. So it's competition for block space. As far as the other MEP stuff goes, it's, I think it's a good criticism that Salon AmEV is,

certainly relatively less mature than Ethereum, right? Partly because obviously it's been around for many fewer years, but also because the architecture is fundamentally different. So Ethereum has a mempool by default. Solana doesn't. And so Gito added a mempool to care to a different type of like searcher. And when they found out that there was a lot of sandwiching going on, they actually shut down the mempool, right?

And so that actually reduced the number of sandwiches. But what that does is it opens the door for private side room deals, right? So the actor that you mentioned, that makes $2 million in profit. And by the way, it's not $2 million like every day or something. It's those are the highest days. And we've been running the numbers on this. And the question becomes how bad is the situation, right? Like if this person keeps getting revenue from malicious MEV, how long until they,

amass a significant percent of the stake of the network to become a centralization risk. And so the rate of growth. And so when we look at the rate of growth, then the question you ask is, okay, is this bad in a year or is it bad in 10 years or is it bad in five years, right? You need to kind of understand that to conceptualize a solution. And so far, it doesn't, it's bad, right? MAB is bad. And D-Flow actually just released something on this this week around conditional liquidity. the ellipsis guys released a sandwich resistance AMM. Camino and others are doing RFQ systems. And then Gito is reworking how their stuff works.

And then the end solution is actually already clear on Solana, which is something called MCP, multiple concurrent proposers, where you maximize block space or competition for producing blocks and use of a choice to basically pick the most competitive for them, which in this case would mean lesser MEP. and the more you reduce latency, the less of these MEP games you have. And so the end term of that is clear. The question is, what does that look like in the meantime?

And I would say in the meantime, what's happening right now is a combination of app-level solutions, like the ones I just mentioned, plus some improvements on Jito's side. and so the question is like, and when you contrasts, like Ethereum, for example, Ethereum also has MEP and malicious MEP. In fact, Jared from Subway is the biggest spender of gas on the entire chain, which is a sandwich bot, right? And so, but like people are okay with that on Ethereum because it's been mitigated to such a level where perhaps people are like, okay, whatever, this is a small amount of MEP,

and it's democratized across validators. And so Solana says, well, we don't want to just give up just yet on this problem. We want to first see how we can mitigate on different levels and then see how bad the problem gets, how much it improves, et cetera. And so there's still room for experimentation there. Yeah. So, you know, here we've been discussing some of the, you know, criticisms that people are making in Solana.

You know, after Salana's amazing, incredible 2024, it does look like there's. potentially one little hiccup on the short-term future here, which is that Solana looks like it's on the verge of some big VC token unlocks. And, you know, I'm seeing mostly March, maybe even a little bit in February as well. And I wondered what you expected to happen at that time, you know, if there's going to be some big price drop or just how Solana plans to deal with what looks like, you know, an unleashing of liquidity. Well, I can speak on my end quickly, which is that my time horizon is longer than that. So I've been hearing about unlocks for the past two, three years. All chains have them. This is not a specific thing to Salana. All chains except

Ethereum, of course, in Bitcoin. The competitors that we have listed out, for example, Sui, I believe has like 80% locked still. Right. And so it's not necessarily a Salana specific thing. And for me, what matters is like the time horizon, right? If I'm going to be chasing price trends for the next six months, that's a totally different mindset than I'm going to be here building for the next five, 10, 12 years. And so personally, it doesn't affect me. And importantly, it won't affect the startups and the builders on the chain that are actually building for the long term. That's from the, that's from the FTX estate. And that's been known for a long time. That was all disclosed, I believe, back in 2022 as well exactly what the unlock schedule is.

And so this is not new information. You know, of course, people think about it a little bit more when it's more, when it's more close on the horizon. It's not something that we have, is the foundation have any control over whatsoever, right? Okay. I actually, one question. Is that also for the February bit, that kind of starts a little bit earlier. It was like $3 million and changed in February and $6 million in March.

Oh, okay. And why is it look at two parts like that? I think that's probably just the way it was a really, constructed when tokens are sold a long time ago to FTX. Oh, let's go back to the mobile conversation. You know, as Mert mentioned earlier, Sala has been focused on building mobile. And, you know, we saw that this whole trend happened where, not to say that people weren't interested in the saga, you know, it had some interest, but it really only took off after

things like the Bach Air Job and stuff happened. So I wondered, you know, what you expected to happen with the Salana Seeker, like, or, you know, what benchmarks are you aiming for with that? Yeah. So Salana Labs builds a phone, and Solana Labs is a differentity from the foundation. And so we're certainly very supportive of labs building Seeker. I think it's, I think it's pretty unique within all of crypto. Because much of crypto has been spending time and energy innovating on building infrastructure for more infrastructure, for more infrastructure. structure. And meanwhile, most of the people who use the internet outside of blockchain, obviously are doing that through their mobile phones. And as an industry, we haven't really been able to provide a consumer experience that is either native in that platform or even competitive with how people just use internet today. Some of those are because of external reasons. The app stores largely being controlled by Apple and Google and the economics of the app

stores being such that if you were, for example, operating an NFT marketplace, and had to pay 30% of your GMV, well, that just wouldn't be economic as you use the platform, aren't actually taking a break of your GMV, right? Anywhere close to that extent. So those are some sort of, you know, some issues in just the overall structure of the mobile landscape that don't very, that don't comport very well into crypto.

But what I think is cool about Seeker is, first of all, it's a very different price point. and people are still very used to their Apple and their iPhones and then their Android devices. But I think that at a $500 price point, it's just going to be a lot more accessible to people that want to potentially have a secondary phone, which many people in the world already do, and have that phone be custom built for an increasing number of things that you can really only do in crypto. And there's been an ongoing debate of whether you, you should have, whether having additional sort of hardware is going to be worth it for the

consumer in order to do this thing. And I think that because the sort of tradeoffs between convenience and security are fundamentally different within crypto, I do think there is a space for carrying an additional device. And I think we also learned from the Saga, implemented a number of those learnings into Seeker. But I think, you know, for crypto as a whole, if we are going to be relevant to some, you know, large subset of the 5 billion people who use the internet, then you've got to be relevant on mobile. And you can't just rely on, you know, asking Apple and Google very nicely to change some of the rules because who knows when that's going to happen? And current indications are that it's not going to be anytime soon. So you've got to build our own

experience for that. And it's not just the hardware device itself. Of course, that's the most tangible. But it's also the Salon of Mobile Stack, right? It's also the, it's also driving folks in the ecosystem to have mobile DAP-ready implementations of whatever their application might be. And it's also not just Seeker that's focused on building out a mobile experience. On the other side of the world, there's a $99 phone, Web3 enabled phone, Jambo. And so there's kind of like, in the ecosystem as a whole, there's going to be different, there's going to be different price point devices are going to be available to folks in probably different geographies who want to provide this experience. And you referenced this issue with the Apple App Store and Google App Store

is taking a huge cut of transactions on their apps. And how do you think that battle will play out between basically crypto apps and chains that, you know, want to, you know, get access to people's those so they can transact without that overhead. How do you think that more will be one if it will ever be one? So I asked this question actually to Anatoly on my podcast when I grilled him about why he's still working on this thing. And basically what he said is the market just doesn't make sense, right? When Apple and Google take up to 30% of your transactions, For a developer, that's a no-go. That completely destroys your business margins

and limits the possible number of crypto applications. And so Anatoly basically, I mean, Anatoly has built phones before and he worked on phones most of his career, or a large part of his career. And the only way to get through here is to find PMF such that Apple and Google feel the heat, right? Such that they can see, well, there's a growing market, or there's some shift in the market sentiment or structure that is being caused by this, right?

And the only way that happens is if the Seeker or the Solana Mobile Stack is actually successful on some regard. And by the way, the other thing I will say around the phone thing, like Lily said, is it's Salana Labs that does it. And Salana Labs is also not the entity that works on Salana, the blockchain, anymore, right? It's actually Onza. And so when I troll totally about, hey, man, we need resources here, all the resources that are possible are already allocated to Solana through Onza, FireDancer, Helios, Gito, et cetera, all this stuff. And so that is basically an independent project of people who wouldn't have worked on the blockchain anyways.

So it's a moonshot, I think. But I think it's also clearly serves an existing segment of the market that needs it, right? you don't want to be paying as an app builder 30% of your profits or revenue to Apple. That's just not going to scale. And it needs to change at some point. Yeah. All right. Well, last quick question because I do have to run, but I did want to ask about the D-PIN thing.

So, want you just tell us quickly what it is that you're looking forward to in 2025 when it come to the development of D-PIN on Sala. I mean, what I'm I think D-PIN is certainly important part. But what I'm the most excited about is I think just really building the capital markets presence on Solana. I think that's always been the original purpose. I think DPN is certainly important category of that because I think DPN is when people talk about, you know, how is crypto going to be real world useful and real world accessible? There's certainly the very sensational distraction of these very speculative forverse, such as meme coins.

But what's also happening is there's a lot of really cool. unique things that are happening within D-PIN that you really just can't do outside of crypto, right? Because nowhere else can you go motivate a truly decentralized network of individuals to go bootstrap hardware and bootstrap a network, which is actually real world useful, such as helium, right, such as HiveMapper. So I think we're going to see a number of more of those projects that maybe got started in the last 12 months or something to actually scale. It does take a number of years to actually go build the tech behind it and build the network behind that and get the people to actually, get people to actually be implementing these nodes

in the wild. So I think we're going to be saying a number of cool things on that horizon. I think we, something like 20% of helium's network is powered by, by the, their MVNO in the US, about 20% that's already powered by helium nodes, which is pretty amazing. And so I think as a category, it's very substantial. in terms of actually contributing value to humans, which is cool. But I think more broadly than that, it also introduces these new types of assets into the global economy that really don't exist anywhere else, right? You could call them, yes, tokens, but they're tokens that have a different type of value

and represent a different type of activity that really anyone can access. So that's what I think is the contribution of DIPIN and its contribution towards what I think has always been the goal of crypto, which is to enable these global financial markets. And, Merck, can you give us your one minute response? Sure. So in 2025, we, from a second-level perspective, we'll be looking to double block space and also push fire dance for live, which means more redundancy, more safety, but more decentralization. and why that matters is because Deepen can't really exist on an island. One of the reasons, or if you think about Deepen from First Principles, why does it work especially well on Salana?

Well, one, because they need to facilitate a lot of global payments, right? And Salonas local fee markets are such that some other activity going on chain, such as a meme hoint or something, does not affect your payments fees for just doing basic Deepen payouts to, let's say people mapping the network and hive mapper, right? So that's very important. But then also, once you, once people in a deepened economy earn tokens, it's like, what can they do with it? Well, one, they obviously need to be able to spend it or do something with it in the context of a global shared state, right? So maybe you put your helium tokens that you owned and then you take out a loan

against it from one of the borrowed land markets. And so it becomes very important that you have a global ecosystem all in one chain. And that's why Deepen Really succeeds. But then also, these are open source projects. So there's a lot of things that helium has built, for example, that render and then Highmapper have modified to work for their own case. Things like governance for token holders, things like ZK compression, where you can actually mass distribute hundreds of thousands of tokens to or hundreds of thousands of different addresses for, you know, $10, things like this where it really helps your margins. And so when you start having that, then basically now I also angel invests.

I get like two, three deepened pitches per week, right? So one of the newer ones is, for example, Beam Network where it's a decentralized CDN, there's now decentralized energy grids, decentralized charging grids, decentralized, centralized health and wellness. There's all sorts of different experimentations going on and you kind of have the support system where like-minded, deepened folks can kind of upon and then talk with each other on the best go to market, best tech stack, all these different things. And you start basically capturing the mindshare of all those builders. And

when you combine that with, for example, the consumer focus that we talked about, but also the mobile focus, it all plays together very nicely where you do things on your phone, your consumer, you optimize for the consumer, it's scalable, but then there's also liquidity from the chain being decentralized NASDAQ or aspiring to be. And it's really like the synergy of all those things that makes that possible. All right. Well, it has been a pleasure having you both out on chain. Thank you so much. Where can people learn about each of you and your work? That would be Twitter. You will see an angry bald guy on your home feed.

Lily's internet appears so frozen, but you can find her on Twitter or X at C.A. Lilly Liu. Before we go, I wanted to flag an error in the news recap of Last Weeks podcast regarding Caroline Crenshaw and her position as SEC Commissioner. We mentioned that the Senate Banking Committee had canceled her confirmation vote and that that would effectively end her tenure. That's not accurate. While the vote cancellation prevents her from being reconfirmed this season, it doesn't immediately remove her from the SEC. Crenshaw technically remains in her position under an extension that runs until the end of 2025, unless someone else is nominated and confirmed to fill her seat. Thanks so much for joining us today to learn more about Lily, Mert, and Solana.

Check out the show notes for this episode. Unchained is produced by me, Laura Shin, love up from Matt Pilgered, Juan Iranovich, Megan Gavis, Pamadr, and Margaret Hurria. Thanks for listening.