Unchained - How Satoshi Nakamoto and Vitalik Buterin Inspired Key Parts of Celestia - Ep. 672

Episode Date: July 12, 2024

Mustafa Al-Bassam was a teenage hacktivist who outsmarted a US government contractor, shamed the Westboro Baptist Church, hacked Sony a record number of times, and eventually got arrested—though his 80 transgressions got halved for a funny reason.  At the Modular Summit in Brussels, Laura had a fireside chat with Mustafa to discuss how he went from his teenage years as the head of LulzSec and member of Anonymous to founding Celestia, a project aiming to solve key issues in blockchain scalability by going with a modular approach.  He also discussed data availability sampling, why he believes Celestia has achieved significant product-market fit since its launch, and the three key components of Celestia’s road map. Show highlights: 00:00 Intro 01:47 Mustafa’s origin story and how he became a developer who ended up hacking FBI affiliates and Fox News 05:32 How he hacked a military contractor to the US Department of Defense and Sony 09:16 Why Mustafa was arrested at the age of 16 11:14 What about Bitcoin attracted his attention and got him interested in the industry 15:22 Why he founded Celestia, after doing a PhD in scaling blockchains and understanding the problems of sharding 21:16 What data availability sampling is and why it is important 23:52 Why Mustafa believes that Celestia has had “extreme product market fit” since the launch 26:16 What’s next for Celestia and why Mustafa is so excited about the possibilities that increased block size can enable 29:36 How Celestia is working with zero knowledge accounts for defragmenting liquidity in rollups and access liquidity even within the Cosmos ecosystem 30:57 What the endgame for Celestia and the overall industry looks like, according to Mustafa 37:36 Q&A with the audience 44:44 Crypto News Recap Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! iTrustCapital Polkadot PlayFi Labs Guest Mustafa Al-Bassam, co-founder of Celestia Labs. Previous appearance on Unchained: Why the Celestia Team Sees a Future With 10,000 Roll-Ups Links Previous coverage of Unchained on modular blockchains: Three Crypto Pioneers on Crypto’s Monolithic vs. Modular Debate What Are Modular Blockchains? A Beginner's Guide Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey everyone, Laura here. I'm in Brussels this week for ETHCC and other events such as Open Finance Day and Modular Summit. It's been a really lovely time and I've met a bunch of great people. At Modular Summit hosted by Celestia and Maven 11, I had a fireside chat with Mustafa Alba Sam, the co-founder of Celestia and the CEO of Celestia Labs. It was a really fun and entertaining conversation since he regaled us with tales of his time hacking a range of organizations such as a the U.S. government contractor and the Westboro Baptist Church. From there, we moved on to how his journey into Bitcoin ended up with him co-founding Celestia and then got into some of Celestia's current roadmap and what exciting new features are on the way. I hope you enjoy our chat. And now, on to the conversation with Mustafa. With MX Platinum, you have access to over 1,400 airport lounges worldwide. So your experience before takeoff is a taste of what's to come. That's That's the powerful backing of Amex. Conditions apply.

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Hi, everyone. Thanks for coming to this fireside chat with me and Mustafa. So some of you might know that he is a very interesting personal story. So we're actually going to start with that. You know, as a teenager you were what's called a hacktivist. You were involved in Lillisker. I think that was your group and anonymous. But before we get to that story,

I just want to even hear about your childhood because that I feel like sort of sets the stage for what happened next. So, yeah, I was born in Iraq in Baghdad and I moved to the UK as a refugee when I was five, moved to London. And I, you know, it was like southeast, like London on a housing estate.

And I kind of like had my first experience with a computer when I was, six or five. And this was like a kind of like a Windows 95 computer. And that kind of like was my first instruction to computers. And from there, I kind of like just very curious. I was just very curious. And I think this is like a common. It's actually a very common story with a lot of people who learn programming from my early age. And I came across software like Microsoft front page, which was like this software in a Microsoft office suite that lets you create your own website. And I kind of experiment with that. And that's how I've done. And that's how I've

first got into technology and coding. And so from there, how did you end up, I guess, engaging with these different hackers and becoming a hacker yourself? Yeah, so I started to figure out how to create my own websites using programming languages like PHP. And as I was doing that, I kind of realized the ways that people could make mistakes or programmers could make mistakes when they're creating their or programming their websites to create security floors.

And as I was thinking about that, I kind of, every time I would visit a website, I would see if it's vulnerable to what I think is vulnerable to. So, for example, like one day I was doing my maths homework. I didn't have a calculator with me. So I, like, Googled for, like, online calculator. And it turned out there was this flaw in the calculator that you can, instead of, like, typing one plus one in the calculator, you could type in computer code into the calculator and execute that computer code. And this was a calculator that was run on this university on this American university server. So it was really interesting to me that you could hack a university

through a broken calculator on the website. And that's kind of like how I first realized that you could actually hack into things or things could have security flows. But then I kind of I was also very interested in accessing software or media that I couldn't afford to access at the time. And back then, the BitTorrent and the Pirate Bay

was a very popular way of accessing that kind of information for free. This was like before Netflix existed or other streaming centers existed. And to me, BitTorrent was really interesting because it was like a peer-to-pefileging system that did not rely on centralized entities. And to me, it was evidence that we didn't have to need, we didn't need a centralized internet. But I first got into activism when there was a group called Anonymous that was conducting a denial of service attack against the most in the picture association of America and the RIAA, which was trying to take down the pirate bay.

And then these people kind of organized the denial of service attack against those companies. And then so I kind of got involved into these hacker chat rooms. And that's how I kind of got into the hacker scene. And then it kind of ended up with me creating my own hacker group called Lalsek that kind of in the summer of 2011 went into a kind of like a massive hacking spree that hacked into all kinds of organizations like Sony, FBI affiliates, Fox News, and like a bunch of other corporations, including military contractors. And so for, I mean, there's just so many stories there, but do you have any favorites? Yeah, I mean, so like one of the, I mean, I guess like the point of it was, part of the point of it was political, but a big part of it was back then no one was taking security seriously. So the only way to show people that they weren't taking security seriously was to kind of show that the emperor had no clothes. So for example, there was a company called HB. Gary Federal and which was a military contractor or defense contractor to the U.S. Department of Defense.

and the CEO used the same password for his world of Warcraft account as he did for his PayPal account and his emails and his company emails. And it was kind of, it was like, it wasn't because we were great hackers that we were able to do this. It's because people were doing dumb things like we using the same password everywhere, for example. Or their websites were vulnerable to very basic vulnerabilities that everyone knows exists. But no one, but no one had the bulls at the time to kind of like actually hack those companies and show that the emperor had. no clothes. So it's kind of like an issue that everyone knew existed, but couldn't do anything about it. And since that was like a government contractor, did they end up just getting no more work from the, I mean, that seems like a really bad breach. Yeah, I mean, the CEO had to end up resigning.

And I think there was like an investigation to them in Congress about how that kind of, how that happened. And you were how old when you did that? This was when I was 15 to 16. I love it. I love it. And I mean, there are so many others. Like, I listed a bunch, and you could really pick any other story that you want to tell, like, the Westboro Baptist Church was also kind of a funny one. Sony, there's another thing involving the Arab Spring, but, yeah, I know if you want to tell another story.

Yeah, so, I mean, Sony was a fun one because this was in the summer of 2011. There was kind of, like, big hack. Like, the PlayStation Network was down for, like, a month. Like a lot of kids everywhere were really angry that the PlayStation Network was done. But Sony is a perfect hacker target, or was a perfect hacker target at the time, because they just had prosecuted George Hots for breaking the DRM of the Sony, because he managed to install Linux on the PS3. And because it was such a great hacker target,

like Sony was hacked around 30 times, like in the summer of 2011, and they were hacked so many times by all these different people that it kind of like became a game to see who can hack them the most. So someone was keeping track and it was like we hacked them seven times and this other hacker hacked them six times. So it was kind of like we won the race against this other hacker to see who can hack them the most in different ways. But you know, you had like so many pictures, so new music,

they have so many different areas of their business and so many, like, that's a big attack surface to attack. Westboro Baptist Church was also a fun one. The Westboro Baptist Church is this really controversial kind of hate group in the US that pickets, for example, the funerals of dead soldiers to say that they deserve to die because they were gay, that kind of thing. And they kind of put out impressively challenging us to hack them. I think it makes sense for them because they need detention,

but we managed to kind of hack them and hack their website. on a live radio show. And it was kind of like they were being interviewed. And in the middle of the radio show, we kind of like put up, defaced their webpage. And then that video online, you can watch that video on YouTube.

He's got like 3 million views on YouTube. I love it. I love it. This is so, just so interesting, because he were a teenager, as we mentioned. And so then at the age of 16,

you got arrested. How did that happen? And what was that like? Yeah. So, yeah, I was arrested at bit. It turned out that there was an FBI informant in the group. He wasn't originally an FBI informant, but because he had two children that he was looking after,

when he was caught by the FBI, he kind of turned into an informant that was logging everyone's chats in the chat rooms. And yes, I was arrested when I was 16, one month after I finished my exams, so that's pretty convenient, because if it was before, then it would have been more lying. But, and then, yeah,

I was arrested and I was taken to like a police station and I was, they did like a separate charge for each pack. So they had like 80 charges and they have to arrest you for each charge. So every time they arrest you, they have to caution you by saying something along the lines of, you are not under arrest for this. And you do not have to say anything, but if you don't say something that you let you rely on in court,

then this might have to have your defense. They had to say that they were supposed to say that 80 times for each arrest. But I gave a no comment interview, so my answer to each question they were asking was like no comment, because that's why I was advised by my lawyer to do. But they only managed to finish arresting me 40 times instead of 80 times, because there was a time limit to how long you can keep someone under 18 in custody without charging them. Unless it was for terrorism, or not had some excuse like I was a terrorist or something, which I wasn't. And so they didn't manage you finish arresting me. I can't even imagine what your parents must have thought. They probably were just like, what is going on?

Yeah, they had no idea. All right, so clearly he's got a colorful history, and then he gets into crypto. So you've gone into Bitcoin. How did you go from that to getting into Bitcoin? Yeah, I mean, I was kind of like very naturally, interested in Bitcoin because of my interest in BitTorrent and the Pirate Bay. Like when I was using BitTorrent, which was just a P.TPA file sharing system,

I was interested to see, okay, like, we can have decentralized file sharing. What else can be decentralized? So even before Bitcoin, people were trying to decentralize all kinds of things. So people were trying to create like a decentralized domain name system because they were worried that the Pirate Bay domain name would get shut down by ICAN, for example. They were trying to create like decentralized social media, because it was all like Facebook would censor stuff during the Arab Spring, for example, or governments would try to censor that kind of thing.

So when Bitcoin came around, that was kind of like naturally piqued my interest. And our hacker group accepted Bitcoin donations at the time. So that was kind of my first experience with Bitcoin. And it was also the case that, you know, for example, WikiLeaks accepted donations in Bitcoin because they were, because they were blocked by Visa and MasterCard. so they had to use Bitcoin to accept donations. So that kind of like, so I first learned around Bitcoin

in 2009, 2010, and that's when I kind of started following it. But then I was arrested in 2011 and I could, I was not allowed to use internet according to my bell conditions for two years. So then I kind of like came back online in 2013 and I started following the space more closely in terms of the scalability debates because at the time,

Like, there was this one megabyte block size limit. And I was kind of, like, worried. I was, like, very into Bitcoin. So it was like, okay, at the time, the main narrative was, let's make Bitcoin accepted everywhere for payments. And retailers, even Microsoft started accepting Bitcoin for payments. And people were, and different companies were experimenting with it. But then I was worried, okay, there's this one megabyte box size limit.

What happened if it gets hit? So I started discussing this in these core developer chat rooms. and people weren't really worried about it. But then in 2013, the block size limit did actually get hit, and there was this huge internal war within the Bitcoin community about whether we should increase the block size or keep the block size small, but scale with payment channels. And I was kind of very much on the side of increasing the block size.

But the reason why they didn't want to increase the block size is because they thought it would make it more expensive to verify the chain or for end users to run a full node to verify the chain, which kind of defeats the whole decentralized nature of Bitcoin. But in the Bitcoin white paper, Satoshi mentions this idea of fraud proofs or what he calls alerts, which is the idea that an end user running a wallet on their phone, if even though they're not verifying every transaction in the chain, they could be alerted to an invalid block by a full node that has detected that is invalid block.

But this was like a very nascent idea that wasn't fully fleshed out, and there was problems to it, including the data availability problem. So then I kind of decided to focus a lot on layer 1 scaling and how do we square this dilemma between decentralization and scale. ability. Wait, and so what year was that? So this was like 2013, 2014, we started hitting the block size limit and then in 2016 I started doing a PhD at UCL focusing on layer one scaling. Okay, yeah, because in my head at least the block size wars didn't get settled until 2017, but like Bitcoin Cash.

And even now, sometimes they still flare up again in case of, I don't know, some of you might noticed that. But I guess so at that point, that brings us to Celestia. So how did you go from that point to founding Celestia? Yeah, so the current approach or the current thinking around how we should scale layer ones, especially within the Ethereum community around 2016-2017, was mainly centered around this idea of shodding the chain. So the idea of shodding the chain. So the idea of sharding is like you have a layer one chain, but can we split up that chain into multiple chains that each have their own values that can process transactions in parallel. And this was like what the original Ethereum 2.0 vision was. It was going to have like a thousand and twenty-four

shards. And I co-authored the first smart contract sharding paper called chain space during my time at UCL. But and that was that, and that was later kind of span out into a company that was acquihered by Facebook. But when I was working on this, to me, there was a massive missing piece of the puzzle to making sharding work. And this is also known in an Ethereum community. And that piece of the puzzle was, how do you protect yourself, or how does the network protect itself from malicious shards? Because when you're sharding the chain, you're also sharding the security of the chain to all these shards. So like if you split up the chain into 10 chains, You're also kind of spitting up the security of the chain into 10 chains in some way.

So you can't assume that every shard is like what happens if one of their shards is dishonest and starts like kind of infecting invalidate state to all their shards. So the essential kind of like missing piece of the puzzle was a way to detect that shards were misbehaving. And that would basically, you would use fraud proof to do that, which is the idea that that Satoshi mentioned in his white paper when he released it in 2008, this idea of alerts. But the problem with fraud proofs or alerts is that you can't, if the malicious shard does not publish the data in that shard,

then you can't prove that anything bad happened. You can't generate a fraud proof. So the missing piece to the puzzle was this data availability problem to make the whole system secure. So then I kind of started researching it and I started researching it and I started, saw that Vitalik had done something around that and had a note on GitHub to how that can be solved and I started chatting with him and kind of realized that this was actually a fundamental. I was surprised that no one was, people weren't talking about it more because it was such a, it's like, it's like such a fundamental element to blockchain scaling. And I co-authored the paper with Vitalik on how to implement this and proving the security. And basic idea is that you can,

can have data availability proofs to prove to other shards or to users that data is available. But then I kind of realized that data availability is actually the core primitive for blockchain. So at the time, people were thinking about blockchain scalability from the top-down perspective. Like, okay, we have shards and how do you make them secure? But then at the bottom, the entire stack is data availability. So then I started thinking about it from a bottom. If you start from that, what do you get? because it turns out that the core thing that a blockchain does is just a proof of publication.

It's a proof of publication system. And that's what's mentioned in the Bitcoin white paper, Satoshi introduces, Satoshi doesn't even mention the word blockchain in the white paper. He calls, he mentions a time stamping server. He refers to the Bitcoin system as a timestamping server where you publish data into it. So the core affirmative of all of these things is this proof of publication system. And it turns out that if you scale that, that's all you need. And that's indeed the primitive to all roll-ups.

And so that's when I kind of started Lazy Ledger, a paper about Lazy Ledger, which is what now what SELESHA now is, which is basically a blockchain that is lazy in the sense that it only does the core things that LAY1 does, which is just published data and have consensus over that data. And that's what SELESH is. And it turns out if you just have that as a core primitive and scale it, then anyone can build anything on top of it. Pocodot is the original and largest layer zero blockchain with over 2,000 plus developers.

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content into real-time data. Their AI agents watch, games, live streams, sports, and more, converting terabytes of video into actionable on-chain data, helping studios, brands, and creators find new ways to engage and monetize whatever the world is watching and playing. Discover more about PlayFi's upcoming node license sale, launching the world's first decentralized network for mass market content. Visit playfi.aI to learn more. Yeah, I love how the two core pieces, one comes from Satoshi and the other from Vitalik, which sort of a metaphor for crypto today generally. So we're going to talk more about Celtsia,

but before we go on a little bit further, can you just define, I'm sure a lot of people know, but just a level set that, you know, what data availability sampling is? Sure, I mean, why don't I start with data availability? So as I mentioned, like, it's the core primitive of what a blockchain does. All the blockchain does is,

it's just basically a system that proves that someday it had been published. and it tells you when that data has been published. So if you know that some data has been published and you know when that data has been published, then you can build, basically have a ledger in which you can build any decentralized application on top, including applications like cryptocurrency or payments.

But the, what data availability sampling does is it allows users to verify that the data has actually been published requiring users to actually download all the data themselves. Because if going back to this Bitcoin block size war, remember that the whole reason why the Bitcoin community did not want to increase the block size over one megabyte is because they were worried that if you make the blocks too big, then the only people that would run, that would be able to verify the chain. It are like big, big players who have access to data centers and big hardware. And if that's the case, then that kind of defeats the whole point

of blockchains. then you have to trust the miners, you have to trust the values. If no one can verify the chain, then the miners basically have the freedom to change your rules of the chain, to print money, to change people's balances, for example. And the whole point of a blockchain is that

you're not supposed to rely on any committee to enforce the protocol rules. It's like the end user who's running, verifying the chain directly should be able to enforce the protocols. So what data availability, the sampling allows you to do is it allows you to basically very efficiently, an end user can very efficiently check that the data has been published without them having to download the whole data, which basically circumvents this original problem that Bitcoin

community had with increasing the block size, because now you can increase the block size without damaging the ability for end users to actually verify that the chain is correct. because now they can check the data is published and if they know that the data is published they know that someone can generate a fraud proof or prove that data prove that something bad happened on chain if the validate is where dishonest.

And so Celessia finally launched last fall what do you feel has been going well and what have you been surprised by? Yeah so we launched October 31st on Halloween and I think there's definitely been a massive expansion.

I think I've definitely been surprised by the amount of product market fit to be had because when we launched, there were no chains at all that had the ability to support data blobs. Like this was before EIP 444. So once the SLEC launched, there was this extremely pressing need in the industry that we just needed a place for these roll-ups to post data blobs cheaply.

And so now we've seen kind of like influx of roll-ups post the data to the last year, there's something like 20 ap stack chains posting the data to Seleleptia right now and many more in the pipeline. So there's this kind of like extreme kind of like product market fit.

So I think that's kind of, that's going well, especially with, like I always kind of envisioned two years ago that like three or even three years ago, my vision when I created Celestia was that one day you'll be able to go to go on website and you'll be able to click a button and immediately launch a roll-up, your own roll-up, which is basically a virtual blockchain. And that's now possible today. I didn't imagine that

would happen that quickly. But now we have many different roll-up as a service providers like Calder, Conjur, and Gelato that all make that possible. And now we're seeing that the default way for developers to deploy decentralized applications is not to use smart contracts. on a shared smart contract environment, but to deploy their own roll-up using these providers that let you do it in one single click. And if you asked me three years ago, if that would be happening that quickly,

I wouldn't have kind of believed it, but it has. Wow, that is, yeah, that is super interesting to me, because, you know, it just, it's, it goes very much against kind of like the idea of the FAP Protocols thesis in the sense that that, kind of almost assumes that there will just be very few. But I love this idea that there could be many different blockchains.

So what is on this, Leslie roadmap now that you're looking forward to? Yeah, I think there was a few things that was presented by Ismail earlier today. But the wordback kind of revolves around three main things. The first thing is this idea of abundant block space. So we want to have one game. about blocks and this is very important because what we've seen in blockchain in history is that use cases have always been limited by supply of block space like even in bitcoin i mentioned that bitcoin was used for payments before 2013 and retailers like Microsoft actually stopped accepting

bitcoin for payments so there's actually less there's actually a period of history where retailers there was more retailers accepting bitcoin and then they stopped accepting Bitcoin. And the reason for that is because there was enough block space. And so transaction fees were too high. So it didn't make sense. No one was using Bitcoin for payments. So you have this idea where kind of like the early internet, more bandwidth made different use cases possible. Like YouTube would not be possible today with the average internet bandwidth or speed that people had in the early 2000s. If we increase block sizes and have more abundant data throughput, it will enable applications and use cases that simply weren't possible before, or no one had

imagined before, especially like more payments on that lower value payments. Like, imagine you could stream one micro-sense payments, and that was actually possible because we had the block space for it, for example. And so, like, we, now that, so the idea is like we bought block space from the Dallup area to the early broadband area. And now as part of the roadmap, we want to bring it to the fiber optic error with one goodbye blocks. Another part of the roadmap is to have a widespread adoption of trust minimized light nodes. So like instead of wallets connecting to centralize our PC endpoints like in Fuhrer and alchemy, and this was a massive criticism of Web3 as it stands today by Boxi,

who's Moxie Marlin Spike, who's the creator of signal, that you're basically, Basically, like what's the point of Web3 if you're just connecting to these centralized IPC endpoints that tell you what the state of the chain is and you have to trust them. That's how most people interact with Web3 today. They just interact with inferior alchemy. But we want to see a world where you can actually, these wallets are collecting directly to the network, to the P2B network and verifying the state directly with these light nodes. And we're one step closer to there because now we have a, so last year, data availability,

sampling light node that you can actually run in your browser. And that's a very important first step to making sure that those light nodes can be embedded within models. And finally, the final kind of piece of the puzzle or part of the roadmap is this idea where, okay, we're going to have abundant block space, but we also want the block space to be frictionless and useful. So like developers want access liquidity. They don't want, we don't want to have a ecosystem where you have a thousand roll-ups and they're all fragmented and it's hard to bridge across them. So as part of that, we have this, we've been working on this concept called ZK accounts, where you basically can have a Celestia account controlled by ZK program, and that will basically allow roll-ups to bridge directly to Celestia and with each other. And so you can kind of think about it as like a more generalized version of Polygon's

Ag layer in the sense like the ZK accounts itself is not an Ag layer, but you can build the agglary on top of it. So it's just kind of like very generalized primitive that you could, that could be powerful primitives to use to connect all these roll-ups together in a verified way instead of having so many fragmented roll-ups. And so just to explain that a little bit further. So you have the ZK account, and so it sounds like more like a control center and there's more execution in the roll-ups. Or can you? Yeah. So it's like the idea is you basically assume that, so you have the account that

where the account, the funds in that account can be controlled by ZK program. So you can imagine that you can express any roll up as a ZK program, even if it's an optimistic rollup, you can have ZK fraud proofs, for example. So now it basically means that any roll-ups can have it, can directly have a, can directly have trust minimized bridge with Celestia. Now that's actually, that's already possible today with Ethereum, for example. So that's basically making something

that's possible with Ethereum, now possible with Celestia. But the advantage, but the main difference is because I think Celestia is more suited towards this use case of defragmenting liquidity. The reason for that is because, or one of the reasons for that is because Celestia supports IBC,

which means that now, unlike Ethereum roll-ups, which only have access to assets within the Ethereum ecosystem, Celestia has a native way to bridge assets outside of the trust zone of Celestia in this roll-ups using IBC. So, for example, you have projects like Noble, and you have Cycle issuing your SDCE and Noble, and you can have IBC bridge from Noble to Celestia to that roll-up.

And so that kind of that gives you access to a much wider, network of assets because whereas Ethereum, your trust zone, your native liquid, your native bridging zone is kind of limited to Ethereum and the roll-ups with Seleicester, you have celestial to roll-ups and also any chain that supports IBC basically. Okay. And then there's also this concept lazy bridging is that different? Yeah, so lazy bridging is kind of like a lifestyle that encompasses ZK accounts. And the idea is that users are kind of fed up with this fragmentation. So they just want, they just

want to be lazy. So it's called lazy for three reasons. The users want to be lazy. And also, Celestea L1 is minimal. And so, like, it's a lazy protocol. And the idea of lazy bridging is that it's ZK accounts combined with technologies like chain abstraction and things like intents. And if you combine all this technologies together, like ZK accounts and chain abstraction and intents and cross-chain contract calls, then you can basically, and things like Agaliers as well. Then you can basically have a seamless user experience where the user basically feels they're only interacting with one chain. And they don't even know they're interacting with different chains. And they don't have to worry about the security assumptions of all these

different chains because everything is kind of unionified in a lazy way. And so that's why it's called lazy bridging. And so when Celestia achieves its vision and kind of like, what will that overall user experience be like? Part of it will be lazy. Yeah. I mean the user experience should be like you're interacting with one chain. You open your wallet, you see all the assets you have, even if those assets are across many different chain. Let's say you have assets on 10 different chains. You want to use those assets to mean the NFD on some other chain. You should not have to care what assets those chains are on. But you just care about the end user actions. Like the chains should be completely abstracted to the user, similar to how

like if you use the web today and using different websites on the web, the user has no idea what infrastructure those websites are using. They don't know if they're using Amazon, AWS or Google Cloud. The idea is to achieve a similar experience with Web3, such that the only thing that the user sees is a wallet. And they see assets in that wallet, but they don't need to care, but which chain those assets are hosted, or they don't have to care about bridging those assets

through some canonical bridge and performing multiple transactions and make sure they have liquidity and so on and so forth to perform different actions that they want to do on chain. And so when you kind of tie together like everything that you've done with computers since you were six or seven or eight, you know, if you think about kind of like the different principles that led you originally to do the hacktivism

and then why you got into Bitcoin, like ultimately, you know, what do you think it is that people will be able to do with defy or with crypto once all this is built. I mean, ultimately, I just want to see a return to the decentralized web because in the late 90s, there wasn't big tech companies like Google, Facebook, or Twitter. Like in the early 2000s and late 90s, people were using, people hosted their own blogs, people had the bulletin boards, people had a peer-to-pe connection, even Skype was peer-to-peer. Like Skype, you know, you just connect directly to someone's IPHs,

people using IRC. So I want to, that was kind of like a internet that a lot of people miss. And now we have these very centralized internet controlled by three or four big companies like Facebook and Twitter and Google. So we've seen the pendulum swing before, between the centralization and centralization. And now we're starting to see the pendulum swing back from centralization to decentralization. And I think abundant, having abundant block space is vital to ensure that pendulum actually swings back. And so that the default way for people to develop applications is to simply deploy them on a blockchain instead of being forced to create, to insert themselves as intermediaries, because that's the only technology available. Like it should be seamless to just create these services like Uber, Airbnb, or even social media by just deploying them on a blockchain with no intermediaries.

And then so for users, like right now, we, you know, pay Uber to take our rides or we give our data to Facebook or Twitter and then they run ads against it. So that's the current web. And so we'll probably do very similar activities, but in a different way. So what will that look like? Well, it will look like you can have private, you can have private payments where you can pay people directly without having, without, requiring Visa MasterCold of PayPal have access to your entire transaction history, for example. You can trade assets, whether it's beam coins or actual assets that are backed by some value, without having to sign up to Robin Hood and having them cancel your buy button because it wasn't in their interests.

You can, you can, people can create their own social communities, whether using platforms like Fodcaster and moderate their own social communities without having to be holding by some global set of community rules imposed by Facebook or Twitter or some algorithm imposed by Facebook and Twitter, for example. Okay, well, is there anything else about Celestia or about the modular stack that you would like to talk about?

I think that covers it really well, but maybe people have questions. Can you talk more about the connection between ZK accounts and the Agler, which you mentioned? Yeah, I think you can kind of think of ZK accounts as a more generalized version or a primitive, lower level primitive than Aglar, that you can build an Ag layer on top of ZK account because a ZK account is basically just a normal blockchain account that's controlled by a ZK program,

and you can have multiple layers of ZK recursion on top of that ZK account. So it's basically, you can basically think the same way that Ethereum, is a primitive that can be used to create an Aglare. ZK accounts are also a very general primitive that can be used to create an Aglare. So can Jains like settle on Celestia after that? Well I mean settlement is a loaded term. We kind of like you can argue settlement but the way that we're looking at it is not as in like so that we're not trying to pitch to Lestria as some global settlement there that competes with Ethereum.

The way that we're looking at it is like developers have this need that they want to be be able to have access to liquidity and have access to assets. And we're basically providing a basic kind of functionality or basic improvement to fulfill that need. But it's not the case that like celestial is element there in the sense that Celestia will not have a dex or will not have a uny swap. So it's not like you're at you're bridging it. It's not like you're it's like it's way more,

way more limited to netherium. It's more likely this element there will be will be something on top of Celestia using a ZK account. if that makes sense. Yeah, thank you. Two quick questions. First one, how many light nodes are enough? And the second is, what's the rough timeline

for ZK accounts? How many light nodes are enough? Well, I mean, the ambitious target is 1 billion light nodes. I mean, it seems, it might not be, it seems very ambitious, unrealistic, but if we have, like this, if you have a billion browsers, and if light nodes are so resource,

non-intensive, that the idea is that users can just run them, that your wallet will automatically embed a light node without you even knowing it, then I think that is possible. Like, there's probably a billion connections to infura, just replace those with light nodes, and having hundreds of millions or a billion light nodes is feasible. And there's a second question, when the timeline for ZK accounts, I would say something, I would say, it's hard to take, it's hard to say because it's ultimately dependent on a decentralized governance process. There's a currently a working group, Celestial improvement plus the working group, to add ZK accounts to the base layer.

But I would probably guess somewhere by the end of the year. I wanted to ask also something related to ZK accounts. So essentially it feels like that ZK accounts, not turn like, but add like a ZK-like verification functionality like to Celeste. What do you think about also using like Celeste as for like a prover market like markets so that you like because like essentially right so this like temporary storing like function is very good fit for like pre-markets because they only need to store like the life for like a short period of time and it sort of like adds like another

like value and now you have like you go like from modular to like integrate it a little like if you can pick put so thanks is a question more like can you do a proven private market on Celestia or? Well, yes, can you do that? And like, second, what do you think about? Is it like a good idea in general or like it makes no sense? Yeah, I mean, I guess you could build a private market of Celestia, but I think more importantly that Celestia will heavily depend on proven markets.

I think private markets are very important piece of the puzzle to making ZK accounts kind of like widely adopted. And because as we know, like proving ZK, ZK programs is very expensive but I think teams like succinct and RISZero are kind of doing good work there in terms of creating marketplaces or providing improving services to people that need them. If sort of the whole technical roadmap of Celestia like everything falls into place what's sort of the next points that are sort of the oh that's a friction point or this

worries me like this needs more attention is there anything on your mind? I guess the road about my proposal is very hard high levels. So like when you can buy blocks, it's kind of hard to say, like it's such a high level roadmap. That's kind of hard to predict what the production point, the friction points will be after that already. But I would say like if you're trying to think ahead, I think like Zach from Aztec made some pretty good points about this. It's like how will people, if that crypto is widely adopted, how will people look back at us in 20, 30 years and think of us? Well, I think positive. Well, I think of us or negatively of us. And there's a very likely impossible route, well, where they

will think negatively of us, because we're just going to end up in this healthcape where we've created a worse financial system than Visa and MasterCard because there's no privacy, right? So it's like everything is on chain. There's no payment privacy. And it's just a hyper-financialized ecosystem where it's kind of like people have nostalgia to what we have now, where it's like just like more cash-based, for example, you can use cash. So I think if we don't carefully think about, like, what the two values of Web 3 are and try to build according to those values, like making sure that we do care about

privacy, we do embed privacy into the systems, like teams like Ponabra and Aztec have been doing, that we don't enshrine powerful interests, like we don't, and that's why trust minimized light nodes are important. We don't have governance systems that are politicratic, where it's just a token. holders decide what goes. I think it's important to stick to these values so that we're not looked on negatively in 20, 30 years, because crypto and blockchains is, like, it's not a good

or bad technology is neutral. Like, blockchains can be used for bad, and dictators have wanted to use blockchains to create their own coins in their own countries. Okay, well, I guess we're ending on a bleak note, but this was actually a really engaging, wonderful talk. Thank you all so much for coming. I hope you enjoyed my conversation with Mustafa. Don't forget, next up is the weekly news recap, today presented by Wondercraft AI. Stick around for this week in crypto after this short break. Did you know you can buy and sell crypto with tax benefits in an individual retirement account or IRA?

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Welcome to this week's crypto roundup. In today's recap, we cover the SEC ending at stable coin probe, Celsius suing users over withdrawals, Polly Chain's accusations against a former partner, new Senate crypto legislation, Salana's fire dancer milestone, Starkware's staking proposal, Avey's criticism of maker Dow, a Cambodian crypto scam, Black Rock's Beatle Fund milestone, Bonk reclaiming its meme coin spot, and the GOP's new pro-crypto platform. Thanks for tuning in to the weekly news recap. Let's begin. SECN's stablecoin probe marking a win for the crypto industry. The Securities and Exchange Commission ended its investigation into New York-based stablecoin issuer Paxos, marking a significant win for the crypto industry. Fortune reported that the

the SEC's acting chief of the crypto assets and cyber unit Jorge Tenreiro informed Paxos that no enforcement action would be recommended, citing a letter shared with the news outlet. This decision comes over a year after Paxos received a Wells notice regarding its dollar-backed BUSD stablecoin, which was issued in partnership with Binance. This development follows the SEC's recent partial defeat in a lawsuit against Binance, with a federal judge dismissing a charge that stated sales of BUSD were a securities offering. Paxos' head of strategy, Walter Hesert, expressed relief, noting that the end of the investigation should provide the stable coin market with more certainty in the U.S. Celsius Seuss users who made large withdrawals pre-bankruptcy.

Bankrupt crypto lender Celsius initiated lawsuits against thousands of creditors who withdrew over $100,000 from the platform shortly before it declared bankruptcy. On July 1st, Celsius's litigation administrator filed these complaints in the U.S. bankruptcy court for the Southern District of New York, targeting funds that were transferred out within the 90 days preceding Celsius' Chapter 11 filing. Litigation administrator, Mosin Meggi, stated that those who withdrew funds before the bankruptcy unfairly benefited at the expense of other account holders. Previously, Celsius settled with 1,500 account holders, recovering $100 million from those with preference liabilities. The Litigation Oversight Committee emphasized that non-settling account holders should expect aggressive efforts to reclaim the full value of their withdrawals.

An account holder known as Medix Zero criticized the lawsuit, noting that Celsius is seeking recovery based on current cryptocurrency values, not the values at the time of the withdrawals in 2022. Delphi Labs General Counsel, Gabriel Shapiro commented, Gotta love the way these crypto bankruptcies are shaping up. Money they owe you is priced at market bottoms. Money you fake owe them is priced at market tops. Unfettered bullshit, I tell you. Celsius, which once managed over $20 billion in assets from 1.7 million users, faced significant challenges following the collapse of the Terra ecosystem.

The company froze withdrawals in June 2020. and filed for bankruptcy in July, citing liquidity issues. Polychain accuses ex-partner of secret deal with portfolio company. CoinDesk reported that Polychain Capital has accused its former general partner, Nirojpant, of making an undisclosed deal with its portfolio company Eclipse Labs, which violated the firm's policies. Former Eclipse CEO, Neil Simani, allegedly allocated Pant 5% of Eclipse tokens, later reduced to 1.33% as an incentive for securing PolyChain's investment.

Pant confirmed he received advisor tokens but claimed the deal was finalized post-investment. Polychain, however, states they were unaware of this financial relationship until after Pan's departure. Despite this, Polychane's investment in Eclipse has reportedly increased in value tenfold since 2022. Vijay Chetty, the current CEO of Eclipse Labs who stepped in after its former Cee, CEO was accused of sexual harassment by multiple individuals, wrote on X. Eclipse Labs history has been messy.

I stepped up as CEO to clean up this company and chart us on a new path forward. Samani has denied the harassment allegations. Senate crypto hearings for his legislative push. Unchained reported on Monday that an upcoming Senate Agriculture Committee hearing could signal a Democratic push to engage crypto voters. On Wednesday, during this hearing, committee chairwoman Debbie Stabenen indicated her intent to share the language of a new crypto bill with fellow members by the end of the week. This proposed legislation aims to grant the Commodity Futures Trading Commission

regulatory authority over digital commodities. Stavanaugh emphasized the need for clear regulations to foster innovation while protecting consumers from bad actors in the crypto market. She highlighted the urgency of establishing comprehensive federal legislation, noting that global counterparts have already recognized the importance. importance of such measures. Committee ranking member John Boozman has collaborated with Stabenow, but expressed concerns about stakeholder support for the bill as it currently stands. The proposed legislation seeks to ensure crypto firms hold sufficient capital reserves, maintain strict cybersecurity standards, and provide accurate information to retail customers. Additionally, it aims to secure

permanent funding for the CFTC to oversee the digital commodity market. Trump's GOP platform pledges to halt crypto crackdown? It's not only Democrats who are making a push for crypto voters. The Republican National Committee has officially adopted a platform that aims to support cryptocurrency innovation. The document, reflecting former U.S. President Donald Trump's increasing interest in digital assets, pledges to end the Democrats, quote, unlawful and un-American crypto crackdown, end quote, and oppose the creation of a central bank digital currency. It also defends the right to mine Bitcoin and self-custody digital. assets. Trump, who has launched several branded NFT sets and accepts crypto donations,

has reversed his previous skepticism towards cryptocurrency and is now showing strong support for the sector. He is set to speak at the Bitcoin 2024 conference in Nashville later this month. Starkware proposes incremental staking plan for Starknet. Starkware announced a phased approach to introducing staking for its layer two network, Starknet. On Wednesday, the company submitted the Starknetnet improvement proposal to the network's GitHub page, outlining plans to enhance network resilience and decentralization. In the initial stage, stakers will run a full node, interact with staking smart contracts, and adhere to Starkware's rules. The process will require

community approval through a governance vote, as stated by Starkware spokesperson Nathan Jafay. Future stages will demand additional validating software for sequencing and proving activities. Starkware aims to balance economic incentives while maintaining a sustainable inflation rate. Staking rewards will adjust dynamically based on the amount of Stark locked. Since its February debut at $1.95 cents, Stark has dropped nearly 70% to 59 cents, with a market cap of $762 million. Ave Dao criticizes MakerDAO over Spark Profit Sharing deal. tensions have arisen between defy giants AVE and Maker Dow regarding a profit-sharing agreement

for the SparkLend protocol. Mark Zeller, founder of Ave-chan initiative, accused Maker-Dao of creative accounting that reduces Avey's profit share from the agreed 10% to around 1%. SparkLend, a fork of Avey V3, generated $42 million in revenue over the past year, according to Masari. Despite Spark's total value locked reaching $2.8 billion, AVE claims they are underpaid. Ava Dow is currently voting on three options to resolve the situation, declaring spark and breach of agreement, approving new terms,

or maintaining the current arrangement. Maker-Dao founder Rune Christensen expressed disappointment over the contentious reset of the relationship. Cambodian ruling family linked to $11 billion crypto scam. A firm linked to Cambodia's ruling family is allegedly running an $11 billion crypto scam operation, according to Elliptic. The blockchain analytics firm alleges that Huyoni guarantee, an online marketplace, facilitates crypto scams and money laundering services.

Elyptic revealed that Honto, the nephew of Cambodia's prime minister, Hun Mene, is a director for one of Huyoni's units connected to these illicit activities. Since 2021, Huyoni associated crypto wallets have received over $11 billion. The firm operates various services, including a payments app called Huyoni Pay. Elliptics report suggests that the majority of transactions on Huyoni guarantee are tied to illegal activities, including money laundering and fraud. Solana's fire dancer builds first test net block. On Wednesday, Jump Crypto's Fire Dancer, a high-performance validator client for Solana,

successfully built its first block on the Salana test net. Under development since 2022, FireDancer aims to boost Salana's transaction processing capabilities with its implementation of the C++ programming language and sharding support. Helius Lab's CEO MertMumtaz praised FireDancer as one of the most performant pieces of open source software ever created. Solana has relied on a single validator client until now, unlike Ethereum, which has multiple. The addition of FireDancer enhances Solana's security and decentralization. FireDancer promises significant advancements over Solana's current throughput of around 3,000 TPS.

Bonk reclaims Top Salana meme coin spot from WIF. Bonk has overtaken YF to become the most valuable meme coin in the Salana ecosystem. In the past week, Bonk's price surged by 20%, boosting its market cap to $1.73 billion, while YF's value dropped by 11.2%, reducing its market cap to $1.63 billion. Despite having similar market caps, Bonk boasts $7.7.5%. 41,352 holders compared to WF's 163,683,683, according to Solskan. Bunk Dow is currently voting to burn nearly $2.2 million worth of Bunk, a move expected to drive up the value of the remaining tokens. Together, Bunk and Wife account for about 7.6% of the total

meme coin market cap, which stands at nearly $3.4 billion. Black Rock's Beetle Fund reaches 500 million milestone. Black Rock's tokenized treasury fund, Beetle, achieved a market value of over $500 million on Tuesday, becoming the first fund of its kind to surpass the half-billion dollar mark. Launched in March on the Ethereum blockchain through a partnership with securitized markets, Beatle offers institutional investors yields on tokenized U.S. treasuries. The tokenized treasury market has grown significantly, reaching a total value of $1.8 billion this year.

Black Rock's Beetle Fund is among the six real-world asset products that Arbitrum Dow voted to invest $25 million worth of ARB tokens into to diversify its treasury. In related news, Wall Street Titan Goldman Sachs will launch three tokenization projects by the end of the year, according to Matthew McDermott. Goldman Sachs is global head of digital assets. These initiatives will focus on issuing real-world assets on blockchains, marking a significant expansion in the bank's crypto offerings. Time for FunBits WorldCoin's billion user dream falls 994 million short. WorldCoin set an ambitious goal of onboarding 1 billion users by 2023, but fell short by a mere 994 million.

As of July 2024, they verified 6 million users. At this rate, they'll need to scan the eyes of 2,734 people daily to hit their goal by 2026. No pressure, right? Founded by OpenAI's Sam Altman, WorldCoin is facing an orb shortage with only 300 to 500 orbs in action. They claim to have 2,000 orbs, but even then, each orb needs to scan 700 people daily to make it happen. Despite their grand plans, global restrictions and curious investigations are slowing

things down. But hey, at least operations are back on in Kenya and South Korea. Keep those orbs rolling world coin. And that's all. Thanks so much for joining us. today. If you enjoyed this recap, go to UnchainedCripto.com that is Unchained Crypto.substack.com and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Aronovich, Megan Gavis, Pam Majumdar, and Margaret Curia.

The weekly recap was written by Juan Aronovich and edited by Kari McMahon. Thanks for listening. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily five days a week with host Noel Atchison. Follow the Coin Desk podcast network for some of the best shows in crypto.