Unchained - The Chopping Block: All About That Base With Jesse Pollak - Ep. 535

Episode Date: August 24, 2023

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest news. This week, Coinbase’s Jesse Pollak talks about the ambitious goals of Base, the new Optimism–based blockchain from the publicly traded crypto giant. With the viral success of Base-based Friend.Tech, Jesse discusses the Base team’s ambitious goals to onboard “a million builders, a billion users.” Is this the long-heralded path to scaling Ethereum? Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform. Show highlights:  why Jesse says it’s still “day one” for Base the reason behind Base’s “one million developers, one billion users” slogan what the advantages of Base are compared to other layer 2 blockchains how Base accounts for the fact that it doesn’t have a token to incentivize developer activity how MEV bots represent a big part of the transactions on Base, especially with the emergence of Friend.Tech why Friend.Tech found early success despite being similar to previous efforts  Jesse’s response to the fact that fault proofs are not live on any of the OP Stack chains how much of the revenue generated by Coinbase’s sequencer will be distributed to Optimism whether Base and Optimism Mainnet compete with each other  how layer 2 chains are choosing different design paths and how that differentiates them Hosts Haseeb Qureshi, managing partner at Dragonfly  Robert Leshner, founder of Compound Tom Schmidt, general partner at Dragonfly  Tarun Chitra, managing partner at Robot Ventures Guest Jesse Pollak, lead contributor at Base Disclosures Links Unchained: Coinbase Launches a New Layer 2 on Ethereum CoinDesk: Social Platform Friend.tech Gains 100K Users in Days Even in Depths of a Bear Market TechCrunch: Friend.tech hype is skyrocketing, but will it actually reach the stars? Decrypt: Base Daily Transactions Outpace Ethereum on Friend.tech Frenzy Learn more about your ad choices. Visit megaphone.fm/adchoices

Not a dividend. It's a tale of two-quan. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. I'm named trading firms who are very involved. D5.8 is the ultimate policy. D5 protocols are the antidote to this problem. Hello, everybody.

Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's perspective on the crypto topics of the day. So quick intros, first we got Tom, the DeFi Maven and Master of Memes. Next, we've got Robert, the Cryptoconnoisseur, and the Tsar of Super State.

then we've got Tarun, the Gigabrain, and Grand Puba at Gauntlet. And today we've got a special guest, Jesse Pollock, the layer two linchpin and leader of base. And finally, I'm the seeded head hype man at Dragonfly. We're early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see Chopin Block. That XYZ for more disclosures.

Jesse, it's great to have you on the show. We've been trying for a while to get you on. And we've been talking a lot of shit about base. And so we thought it was probably time to get you on here to be able to defend your creation. How has it been seeing base popping off like this? It's actually crazy over the weekend. It's been going nuts. Yeah, well, first off, thanks for having me, guys.

I've been looking forward to this. I think since we tried to do it at the TestNet announcement, we couldn't make it happen then, and now we're back here for MainNet. So I'm excited to be here. I'm a huge fan, long-time listener. How does it feel that bass is popping off? I mean, it's cool.

It's awesome. It's exciting to see so much of the ecosystem excited about what we're doing. I think it also, feels like it's still day one. You know, like we have so much more to go, so much further to build. I think when we think about what success looks like, it's bringing billions of people on chain. And I think the reality is that today there's hundreds of thousands of people on chain,

kind of best case scenario. And so there's just a lot more work to do. And I don't want to get distracted by the short term stuff, mostly just focused on the long term we're building towards. What do you think of internally as the North Star? What is the one true metric that you guys are optimizing for? Is it transactions? Is it users?

Is it TVL? Is it something else? It developers? What do you think about? The two ones that we repeat every day are a million builders, a billion users. So it's a million people who are going to create the next experiences that a billion people actually come on chain to use. And I think we're starting to see kind of that next wave of experiences really being built

this summer. Stuff like friend tech, stuff like base. paint, you know, obviously the DFI stuff is happening to NFTs, but I think it feels to me like we're a little bit of an inflection point right now where we're starting to see real consumer use cases that actually have the potential to bring in millions of people, tens of millions of people. And that's probably what gets me the most fired up. Actually, I have one question related to that, which is you have this like 1,000 to one ratio between users and developers.

In other ecosystems, is that, does that exist? Is there like a reason you chose 1,000 to 1? Or is it just that it's like easy to add 3-0s? I think it's mostly that it is, it's medic and it's easy. I think when we look at the like scale, there's also some alignment, right? There's something like 30,000 developers in crypto today. And it feels achievable for us to get like 100x or something like 100x on the developer side.

Similarly on the user side, you know, there's like, you know, maybe a million people on chain, but somewhere between 10 and 100 million people who've used crypto before. And again, there, it seems possible to get 10 to 100 X. And so I think mostly what we're saying is like, let's set some ambitious goals that are achievable, but also kind of like pretty far out. And those felt like the right ones. And then they had the nice kind of balance of also being easy to say, easy to repeat, easy to drill home as kind of the North starts for our team, which I think is really important when you're setting goals. Got it. So one of the big memetic things happening on base has been Friends.com. Actually, just yesterday, Tarun and I were going back and forth trying to want off each other in terms of our key price. Sorry, they're not called shares anymore. Now they're called, they're called keys.

It was mainly you who cared about winning this. I'm just, I don't need a one-up. Let me just for the friends. To be clear, now that I've lost, I no longer care. I'm totally over it. It was all a joke. But, uh, it. So it's been taking off like crazy. So I think we talked about it a couple shows ago, and it seemed to be getting some attention and it started dying off. And then last weekend, it sort of went even higher, where you had a lot of actually normally started to get on the platform of like NBA players and some less crypto-native venture capitalists who started getting into the game.

What have you guys been seeing and how do you think about, you basically now have this kind of superintendent in the same way. We often talked about this back in the day on Solana, of Solana being like this sort of superintendent blockchain. where there's one app that's taking almost all of the energy and transaction volume and TVL, that seems to be friend.com right now for base. How do you guys think about that? And how do you think about supporting an app that is driving most of the attention for base today?

Yeah. Well, first of all, I think it's been really exciting to see. And racer and shrimp and the whole team are awesome. You know, they've been building social experiences on chain for a long time. You know, like steel cam before friend tech, I think was really innovative. and they learned a lot from that. Now, it's cool to see them kind of like run it back and start to have some success with Front Tech.

So we're really excited about that. And I think our general thesis is we want to help builders be successful on base. And this is a product that's starting to be really successful. And so we're leading in to figure out how we can support them. There's a bunch of ways we're doing that. You probably see me talking about Front Tech pretty frequently. So trying to kind of just like support from a messaging and narrative perspective, from a technology perspective,

we're obviously leading in to make sure that they have all the tools and resources that they need in order to be successful. And then from a kind of ecosystem perspective, in as much as they have dependencies or other things that they need to get solved, we're kind of behind the scenes trying to make that happen. And so it's kind of all hands on deck. And I think in general, my feeling on this is we're at this point where we're going to start seeing this happen. Like not one-off, but frequently, you're going to start having real products that get built. And those products aren't going to kind of follow the growth cycle that we're used to in crypto for the last decade, which is like kind of flat. But like the technology is actually ready now where we're going to start having consumer products that are launched and they grow.

And they grow week over week, month over month, quarter over quarter. And they reach millions of people, that tens of millions of people have billions of people. And I think that that is, that's going to be so exciting. And for us, it's like that's what it's all about. It's finding and supporting the people who are creating those products. giving them everything they need in order to build them and grow them and then trying to just hang on and make sure that we can actually keep scaling the infrastructure so that it's ready for the level of transactions who are trying to put through it and ready for the number of people who are

actually going to come on chain. What do you think the biggest differentiators are in terms of that ability to attract developers and applications and a lot of usage? What are the differences between base and other L2 platforms. How do you think this really offers something different than, you know, optimism or even arbitrum or, you know, something that's not exactly the same, but similar like Maddoch. Yeah, yeah. I'm actually curious about this also in the context of Front Tech,

even that steel cam was on arbitram. And so I'm curious in your conversation with the racer, what's kind of, you know, driving the decision to build on base this time around. Yeah. So first of all, I think our general thesis on this is that, like, it's going to take all of us, right? It's not going to be just base that scales Ethereum. It's going to be a massive kind of team effort from all of these layer twos that are working together

to make Ethereum scale. And it's kind of like the bottoms up version of the original scaling strategy for Ethereum, where we actually have a bunch of these layer twos that come together to provide kind of throughput for Ethereum overall. And so, like, first and foremost, the pie is still very small. We need to grow the pie and get it massive. And that's going to be something that we all do. kind of in collaboration. I think the second thought and the thing that I think we have the opportunity

to do really well, kind of differentiate on is getting that kind of end-to-end user experience really seamless, both for builders and users. And this comes really from the kind of close collaboration that we have with Coinbase. Base is obviously being incubated inside of Coinbase. And what that means is that I think we have a really clear visibility into like basically the whole cycle of a user from the kind of consumer interface in Coinbase and Coinbase wallet all the way through to the underlying chain infrastructure that exists with base. And I think what that's going to allow us to do is basically allow us to look at every step in the user journey, you know, from getting your wallet, getting a, you know, seed phrase and figuring out how to back that

up all the way through to funding your wallet, all the way through to using the first app and then kind of being retained in the app over time and figure out how do we optimize that super, super relentlessly. think that it's kind of a unique thing that base and Coinbase have together in collaboration. Like I get to go and sit and work with those teams every day to make sure that they are, you know, to make sure that we're working in the right direction. Now, I wish I could say that that was all perfect. And like, that's the solution.

It's like, oh, now everything works. And if you build on base, like it's going to be 100% seamless for every user that's coming in. Like the realities we're not there yet. And we have a lot more work to do. but I think that feedback loop is the thing that gets me really, really excited. And then in terms of just, you know, friend tech specifically, Tom, going back to your question, you know, I've had a bunch of conversations with Racer over the last few months. Our team had a bunch of the whole team over the last few months.

And they were excited about BASE. We were excited about them. We found ways to support them and lean in. And we're grateful that they're building with us. And so there's not like one thing here. I'd say it's more just like, you know, a bunch of opportunities. is coming together and us getting to work together to build a future. So super excited about building with them. Let me ask one follow-up question then. So you've mentioned a few times that you were

able to really support them. From the perspective of creating a chain, what specific things did you do to support them? Yeah, I think it's still really early in the journey, right? Like, you know, they started building this, you know, however many months ago, we kind of tapped in with them and started kind of like listening and hearing what their needs were, their needs around distribution and social, and we kind of figured out how to make that happen, although I think there's more we can do there. And then right now we're thinking a lot about technology,

basically like how do we make it easier for people to get funds into Frentec, how do we make it easier for them to kind of scale on top of base, how do we make it easier for people to do their first transaction? And so those are a bunch of conversations that we're having right now, basically try to figure out, like, what can we do to make these product experiences more seamless? So if I can read between the lines a little bit, Jesse, you know, naively I would think that, okay, you guys are,

you guys are launching an OP stack roll up. It's more or as far as I understand, it's more or less OP stack off the shelf. Like there's not maybe a lot of modifications you guys are making directly to how the launching runs. So I would assume that when you say, look, we're doing stuff to support them, it's like co-marketing,

making the bridging experience easy, maybe having an integration with Coinbase wallet. Is that the kind of thing that you guys are gesturing at when you say supporting them? Or are there other things that I'm not imagining there? Yeah, I think that that's exactly right. Yeah, it's basically figuring out how do we make the experience more seamless. How do we help them get distribution?

How do we make sure that their users are getting easy first transactions into the app? Got it. Got it. Okay. So one of the things that's interesting that many people have commented on between base and the other L2s is that most of the other L2s have a token. And that token is often used to attract developers. subsidize early applications. There's a playbook, right?

And we all kind of know the playbook. We're all in crypto. Base presumably does not have access to that playbook because you guys don't have a token and my understanding is that you guys don't plan to. How do you think about that when you're thinking about, hey, I want to attract the marginal entrepreneur. I can't wave a token around and say, hey, blah, blah, blah. You know, come get it.

So what do you think of as the different kind of value proposition you have versus an optimism or an arbitrum or as he can. say that they can make the same kind of claim. Yeah. I mean, I think when we look at the space over the last kind of five years, I think that what we see basically is that there's been a lot of economic incentives for people to make certain technology decisions, which at times have obscured, like, product incentives of like this product works really well, or it's easy to use, or it's something that we all want to build in from a community perspective. And so I think our thesis is like there's actually an opportunity

if we kind of decouple those things and focus on just building a really great product, whether that product is the blockchain itself or the blockchain plus distribution through Coinbase and kind of the Coinbase brand and channels and et cetera, or that plus the community that is being built around base and just kind of let that stand on its own. And so that's basically what we're focused on. It's like, what can we do to basically make it so this is something that people want to use intrinsically rather than something that people want to use extrinsically. I think there's still opportunities for us to use financial levers, right? For instance, right now, we're running a prop house round, which is kind of Noun's infrastructure

for rewarding people retroactively for contributions that they made. We're running that for on-chain summer and building on base. And we've seen more submissions to that than any prop house round in history because there's just so much energy and excitement. And I think that that's a great example of, like, you don't have to have a token. to start experimenting with and using structures to reward people for contributing to an ecosystem. And I think we're excited about doing that in a more rigorous way because we don't just have kind of this endless economic thing that is a little bit of magic.

But instead, we have kind of like the rigor of trying to figure out how do we, A, make this product work really, really well. But then B, how do we create structures that in line incentives and bring people in and reward them for their contributions and help them grow and be successful? I love that. and I think it shows a lot of clarity of understanding what the value proposition is of having a layer two backed by, you know, a super massive consumer facing exchange like Coinbase. You guys have a different set of advantages. And it sounds like you're leveraging them really well.

It's been notable, you know, looking at the stats. So I just want to run through a couple stats real quick about how quickly base has been growing. The daily active address is on base is now over 100,000 transactions per day nearing one million, which actually puts you on a per day basis or like, you know, hourly basis. you guys are doing more TPS than any other L2. Actually, you guys are now doing more TPS than Ethereum itself. Now, interestingly, a lot of this TPS seems to be bots. And specifically, it looks like there's a lot of M.VBots that are now playing around on base. And so what I was reading a thread this morning by Bert from FlashBots.

And basically, he describes this phenomenon that when somebody bridges in, so it's a little bit complicated if you don't understand how Friends at Tech works. But basically, the idea of Friend Tech is that when somebody signs up, on Frentec, they, I guess, claim their account, and then you can start trading their shares, but you can actually buy their shares before they even exist on Frentec. So you can sort of buy them in advance of them claiming them and starting to market themselves. Is that still true? And so what these, I assume so.

You can't buy, you can't buy their shares before they, or their keys before they buy them. Oh, I see. They have to bridge in first. They have to initialize their account. They have to initialize their account. They have to initialize their account. I see, I see. Keys afterwards.

They get the first share for free. And then it's the wild. Got it. Got it. Got it, got it. Okay. So, yeah, maybe I'm misunderstanding the thread, but... I think Bert's... Burthet was back running those transactions. So if I see Hesibbita to sign up for Fentek, I can just, you know, you get the first free key, and then I get to buy all the ones that are, you're immediately after you. For like 0.000.

Exactly, yeah. So basically, the initial part of the bonding curve is just eaten up immediately by these MV frontrunners, essentially. That's how you got to get over to Rune's key price, right? You add your own backgrounding bot. Interestingly, just this morning, I guess the back running bots that must have ran up my bonnet. Because I did, when I signed up, I was like, huh, my price is like actually weirdly high. Like this seems like kind of difficult for people to buy

because it's like 200 bucks when I, or like it was like 100 bucks when I first signed up. And I was like, really? Like you start with 100 bucks? Like that's really weird. But I was like, oh, maybe it's like tied to my Twitter followers or something. I didn't even think about it. And then, you know, over the day I was like,

oh, hey guys, you know, buy my shares, whatever. Now they're called keys. buy my keys. Obviously, totally innocuous reasons. They changed the word from shares to keys. And then this morning, the price of my shares just lopped in half.

And I was like, wait, what the fuck happened? Because I didn't see any sales on the platform. And somebody on Twitter said, probably it's that the platform is not indexing sales that are happening off platform, which meant that probably what happened was that the frontrunners, who drove up my share price initially,

like market sold everything this morning back down the bonding curve. and basically just dumped on everybody who won my keys. So that seems to be what happened, which is, yeah, which is a super bummer. But, like, also, I didn't show any of this on the actual UI. So anyway, I thought it was very interesting. Jesse, I don't know if you have any thoughts on seeing this kind of organic, crazy crypto-sniping behavior starting to dominate on base. I mean, it's a sign that things are working, but it's also a kind of weird side effect of things working.

Yeah. How do you think about it? It's crypto, right? Like this is what we've been seeing in crypto for, I think, the whole history of crypto, that when there's activity and excitement and energy, you get a bunch of new emergent behaviors that you maybe couldn't predict. A lot of it ends up being put into fast running software systems that simulate what humans might do if they had the opportunity to do it at the speed that the software systems can do it.

And then you get, like, more efficient markets, you get a bunch of learnings out of it. and you get kind of a natural equilibrium where people end up, you know, figuring it out. And so, you know, I kind of see this as the journey that we're on, you know, base has been around for two weeks. Friend Tech has been around for two weeks. We have a lot more work to do to figure out, like, how do all these systems fit together in a way that, you know, can reach billions of people. And so that's mostly what we're focused on.

It's like, how do we make this work really well for the next million people? and how do we make sure that that's done in a way that's super thoughtful. So as I was playing around with Frentec, one of the things that I thought would be really great to do on the show. So, you know, we're investors, the four of us. And we spent a lot of time looking at different social apps and different pitches for social applications in crypto. And obviously, most of those applications have not really worked. And so what I'd love to do is just kind of do a little bit of a teardown and a bit of a retro of like, why has Frentec been so effective? like what are the things that it got right

that many other applications that tried to do the same kind of thing like this is actually the idea of speculating on your friends or on social media identities is actually an old idea. It's actually been tried many times before in crypto and in previous iterations it didn't really work. So I'm curious from the lot of you,

Jesse and also Tom Turin Robert, what have you seen in Front Tech that they got right that other previous attempts to do this have failed? I mean, I think there's a lot. I think there's a lot. I think there's technical decisions and sort of product decisions that have been pretty, pretty spot on. Technically, I think some of the choices they made, I think it's very easy to comp into BitClout, which is probably the most, you know, in recent memory, closest sort of similar product

to what Frontex doing. Very, very different sort of technical approach, right? Like rolling its own VCH fork that you had to like bridge into. It was like this weird little sort of separate thing versus building on an L2 with Eath that's like, you know, much more approachable and, and, and has sort of a much more adjacent market. But I think more specifically, I think the choice of doing a progressive web app plus using sort of a wallet as a service product like Privy, it feels like a, as pretty as good as you can get without building a truly native application,

which is obviously difficult with sort of the App Store policies. So, um, Tom, can you explain a little bit what you mean by using a wallet as a service app and how that up, how that obviates the app store stuff? Yeah. So people can log in to Privy, which is this wall as a service company.

They use MPCs or store your private key across multiple different computers. But you can log in using your phone number, which is kind of the standard, you know, off that people use today. You can use Google. You can use Apple. And so that sort of off experience is what people are used to

from a modern social application. And, you know, a lot of people have been trying to build these kinds of services or these kinds of products and push them to the app store. Apple has been pretty antagonistic with respect to their policies on crypto. trying to either ban it entirely or push it through its, you know, 30% fee on digital purchases. Because Frontex is not a native application, it's a progressive web application. So it runs in your browser, but it looks and feels a little bit like a native application.

It doesn't have to go through the app store. You can just, you know, put it on your phone directly because it's like accessing the website. And you don't need to sort of go through the app store policy. So it's been pretty massive in terms of distribution and onboarding. in addition to sort of these choices around, you know, using a proper L2 like base. And not for any sort of ideological reason, but simply for the ease of access to sort of the developer tooling, the user ergonomics that people are used to. I think those have been pretty massive. And then from a product decision, again, one of the issues with BitClout was like sort of the exact thing you were talking about with backrunning where people could speculate on shares before people were live on the platform.

And so obviously that pissed people off. but it also kind of created this sort of experience where it was not a very like dense party, right? You didn't know who was actively on the platform, who shares you were actually going to engage with and they would actually respond. You know that when you're buying a show that someone has actively chosen to be on the platform and it's like a live player. And so I think those are some of like the small decisions that actually add up to a cumulative different experience than some of the other comp that we've seen in the ecosystem. I was going to say, so I signed up for Frontex last night. So I've been a user for like all of 12 hours or something like that. And the thing that I think they've done really well is that whether it's,

you know, sniper bots, you know, accumulating the keys or like humans accumulating the keys, there's this very quick positive reward loop, you know, economically and mentally when you log on, you've been a user for like a minute. And for some reason, there's like more ether in your address. what you like deposit it. So like you deposit like $20 of ether and then you look at your phone. You're like, wait, I have like $150 worth of ether. Like what happened? And I think like the thing that they nailed is that like as soon as you sign up, you have free money in a very like, you know, this or a way. And I haven't really experienced that in too many other applications. And I think like

it's such a powerful mechanism that I think is under explored. And it's, you know, it's a function of that bonding curve combined with the fact that the, you know, individuals, the one receiving the portion of the trading fees off of every purchase and sale. But just like one minute into your application experience seeing extra money, that's, that's a hook. Yeah. Strong plus one on that.

I think that that is an incredible mechanic that they've built there. I'll share two thoughts. So first off, like, I think just from a virality perspective, Racer is the best in the game in crypto right now. creating that. And so, like, separate and distinct from the product, I feel like just watching him work is honestly, like, inspiring something special in terms of kind of bringing the right people in playing the timing in the right way. And so huge credit to him and the team for, I think, like, landing that. I think what Robert said on the product side is totally right. They've really

nailed the experience for just like the individual who's creating the room because you feel like you want to keep engaging because it's just, it's a feedback loop. That's positive. Where if you do the right engagement, you're going to earn a little bit more money, you're going to get access to more people, people are going to start engaging with you. I think that that's, that's really been awesome to see. But then going back to what Tom said, I think that the component of this where they, I think, are really the first people to bring together all of these technology pieces that have been coming, but not quite there. And that when they fit together, actually make at a better experience than kind of we've ever seen in crypto. And that's pretty uniquely possible

because of what Ethereum does, right? Like the MPC wallet privy, right? Like we've been talking to them for a long time. I've known Henry the founder for a long time. And they added, you know, they built on base and they also support other EVM chains. And that just works. Like, they could just decide to use that. You know, they were having scaling issues. And, you know, we reached out and we're talking with them and we got them on a new node provider. to have more scalability for their front end. Like, that just works because of Ethereum, right? Like, when they first launched,

they didn't have a bridging mechanism in the app. And then they pretty quickly just added the ability to bridge natively in the app from L1 to L2. And that just works because of the way the OP stack is built. And so I think there's like a bunch of these pieces that just work, but that just work is the result of basically like seven years of infrastructure investments that have happened from teams on Ethereum L1, from teams on L2, from teams on building this kind of infrastructure around it all.

And that is what enables it to fit together and enables the person to get to the experience that Robert's talking about from a product perspective in like 30 seconds rather than what you were talking about, Haseeb with Bikkaw, where it was like 10 minutes. And then when you're in that BikCloud world, like, you don't have access to that kind of like rapid iteration where it's like, oh, this node provider doesn't work like swapping a new one. Like, oh, like this bridge experience isn't great. Like, let's upgrade the bridge experience. Let's add a pay, you know, instant on ramp from a credit card. Like that speed of iteration that I think is enabled by EVM and the technology ecosystem that's

been built around EVM, I think is going to enable this next generation of apps. And I think Frentec is really, it's like the first one. Like they're first through the line in trying that out, making the pieces fit together, and building a really compelling product experience around it. So huge kudos to them for, I think, showing all of us like, whoa, this is now finally possible. The other thing that I found striking about Frentec versus the previous attempts to build these kind of social trading type experiences is that this innovation of like having the chat rooms. So for those of you who are not aware, when you buy somebody's keys,

you get access to a sort of private chat room where the people who are chatting can't see each other's messages, but the person whose keys they're buying, they can see, everyone can see their messages to everybody. So sort of a one-way kind of, you know, channel, like almost like a telegram channel that you can just blast out updates. The feature itself is a little bit half-baked, right? It's a bit simplistic. It's like, it doesn't quite have a great affordance, I think, but it's something that is not just, you know, money, number go up, number go down. And I think most of these other applications, they're just not as shareable, and they don't have the same, like, reason to keep opening back up the app if you don't just want to obsessively check the prices. And this, I think, is another element that they figured out that even though the chat interface itself is, like, a little janky and it, like,

is not quite fully, I think, where it should be in terms of tapping into a real social instinct, it still, I think, actually puts it significantly, makes it significantly more addictive than a pure financial app, especially because for a lot of people, you know, for Robert, if you have a big following, you sign up and people are buying your keys and you're getting this instant positive feedback. Most people when they sign up, they're not getting that instant positive feedback,

right? But you buy someone's keys, you start chatting with them, they're chatting back at you. And all of a sudden there is something that is engaging you in this app and pulling you closer into the ecosystem, something you can share online that's not just, hey, I made money today, but, oh, I had this like fun chat with this like this super celebrity who I bought their keys. that I think has been a real, that I feel like is a real product inside as well that they managed to latch onto, even if it's still relatively underbaked as a feature of the product. I think the thing that gets me excited about it is it's not hard to see how that mechanic and just the experience expands into more complex involved things.

And so one thing that I did in my room was like, I was like, hey, like answer this question and I'll air drop this NFT. Like I'll send this NFT to one of you. Right. And the way I did it is people just replied and they sent their E&S address and then I picked one of them and I send it. But like that, adding that feature to this app because you already have everyone's addresses, because you already have this chat room with everyone where you can see everyone,

it's like, that's not a hugely complex feature to add, which is like show all your NFTs, pick one and air drop it to someone in the room and do it randomly an approvable way. Like that I think is what we're going to see next from the team is like they're going to start adding more functionality and they're going to start saying, oh, we started with this really simple experience, but now here's all these other things that you can start to do. And I think the people are going to be surprised, or my intuition, I don't have any like visibility really into the full roadmap. But I think my intuition is that people will be surprised at how quickly they're able to iterate

on that experience because of the platform that they're building on, because it's just an incredibly powerful platform building on EVM. So, Jesse, you were mentioning a lot about the advantage of building on the OP stack, the great infrastructure. one of the criticisms that has been levied at base, and I think we've reiterated some of that criticism on the show, is the fact that right now OP stack has no fraud proofs, which effectively means that OP stack,

you know, if you guys so chose, you guys being Coinbase or whatever, the operator of the L2, if they so chose, you could essentially modify the chain without having anybody able to intercede and actually, you know, say, hey, you actually broke some validity rules of the chain.

Here's the proof. How do you guys think about that internally at Coinbase? There's been this kind of broad criticism. I think it's kind of died down now that there's something to do on the blockchain. But last week, I think people were mostly writing think pieces. Yeah, exactly. You know, like when there's less to do, people are just like, they find ways to take pot shots, including on the show.

I just wanted to give you an opportunity to respond, especially because we've also levied some of that criticism. What's your take on this question of, hey, is it an L2 if the fraud proofs don't exist yet? And where is that on your guys roadmap? Yeah. Well, first off, like getting fault proofs live. And we call them fault proofs because fraud has a very specific meaning in a bunch of other places. And so fault is a much clearer term for the technical thing that's going on here.

But getting faultproof live is like the P0 priority across all of the O.P stack contributors. And so O.P. Labs is working on it. We're working on it. And I think if you look at the path that we're taking, it's a different path than other than what other folks have taken. But we feel really excited and confident in it. And we think what it's going to get us to is it going to get us to a stage two roll-up with multiple fault-proof implementations faster, even if it is taking us a little bit of time to get there for the first one. So you define what a layer two, or sorry, what a stage two roll-up is? Yeah, stage two roll-up is basically like using Vitalik's terminology of stage zero, stage one, stage two, it's the like furthest along in terms of decentralization.

And so there's kind of more decentralization. And we think one of the really important characteristics is that you actually have multiple faultproofs running in parallel, which allows you to turn down the level of controllability from an upgrade multisig. And so what we're doing right now is we actually have two faultproof implementations being worked on in parallel, one using OpGath, which is kind of like the existing execution client for the OP stack. And then another one using Op. Ref, which is another client that is being built around Reth, which paradigm is building. And in general, the way we built the O.P. Stack is such that we're not just going to have Op.Geth and Op. Earth, we're also going to have up Nethermind and Op. Aragon and up pretty much every Ethereum client, which is going to give us more redundancy.

And that's the kind of whole vision of the O.P. stack. It's like, let's build an open source, composable, modular framework that really inherits from Ethereum so that we can have as much resiliency from having multiple implementations as possible. It's a little bit slower. We literally spent two years rewriting the whole platform onto this. stack with bedrock, but now we think we're going to be able to move a lot faster to get to that ultimate end state. So that's the P0 priority. In terms of how we think about this at Coinbase, we talked a lot about like what was basically, what is the minimum level of decentralization

or sufficient decentralization that we felt comfortable launching the network with? And where we netted out was we didn't feel comfortable launching the network if there was going to be one single party that could make kind of these decisions around fault proofs or make these decisions around network upgrades. And so that's the way we've configured the network as well. We're actually going to be talking about this on Thursday. We haven't shared it publicly, but it's all kind of on chain. And basically what we've done is we've said, hey, like, we need to configure the upgrade keys in such a way that Coinbase is not a single point of failure and doesn't have a single kind of source of control. And we need to configure what's called the challenger keys, which is basically in the absence of

the fully on-chain fault proofs, who could challenge a proof. and kind of revert it. And so similarly there, Coinbase is not the only challenger. So there's actually another challenger that could do that from the optimism side. And so both of those structures basically mean that if Coinbase were to submit an invalid proof, someone could challenge it and say, hey, like, you actually can't do that. And then if Coinbase were to try and do an upgrade, we couldn't do an upgrade. We are not sufficient to upgrade the chain or upgrade the smart contracts,

on the L1 in order to make some negative change. And we've combined both of those things with a commitment to this thing called the Law of Chains, which is a very formative doc that we spent basically nine months collaborating on with some folks at optimism. We just opened up for community review, which basically defines what we think about as the neutrality framework for base,

for OP main neck, for other OP stack chains that says, hey, the block space of these chains has to be equivalent. It has to be open. It has to be permissible. And we have to protect the users who are running on these chains as the most important priority, above anything else, above Coinbase's right to run the chain, to govern the chain, to sequence the chain. Protecting users and that access to open permissionless homogenous block space is the single most important thing. And so the combination of that decentralization of the upgrade keys, the decentralization of the challenger keys, and the commitment to this law of chains, basically put us into a place where we felt comfortable, hey, this is sufficiently decentralized where coin based couldn't unilaterally make a decision that would violate the law of chains.

It would actually require us at least convincing some other large set of people to do that. And so that that's kind of what we what we felt was the starting point. And then from there, there's obviously a lot more work. And I think we're going to progress to that work really quickly. So if Jesse woke up one morning and turned, you know, into like a super dark, you know, you just go full black hat, you know, what's the most? that you could do just running the sequencer, you know, to take money from users. Yeah.

So what the sequencer can do is basically can say, hey, we're not going to accept certain transactions. Like you can't take money from users. There's no ability for the sequencer to take money from users. Can you reorder the sequence? You can't reorder the sequence once it lands on L1. And so as long as the sequencer submitting transactions to L1, reordering the sequence would require using the challenger key or using the

upgrade keys. But prior to it landing on L1, if you were to turn into a full M-EV, you know, yeah, I think like basically anyone, you know, in any L2 construction prior to the transactions landing on L1, there's the opportunity for the sequencer to make decisions about ordering. And that's also a part of the neutrality framework. And we'll be sharing more about this on Thursday. We're basically making commitments around that, which is like transaction ordering is a free market and it's ordered based on priority fees and time of receipt. And that is kind of like the commitment that we're upholding and we'll be doing work to make sure that that's transparent and visible. And if that were to be violated, that would actually be a violation of the law of change as

well. That would be something that would potentially put us at risk of losing the ability to continue being able to be a sequencer. And so we're very incentivized and very committed to ensuring that we uphold these commitments. We're making around neutrality. Because I think at the end of the day, the way we think about base is that it's internet infrastructure. It's open extension of Ethereum, which has been this incredible gift, I think, that we've been given as a world because it is an open platform that puts everyone on a level playing field, no matter where they are in the world. And I think our belief is that that characteristic, the open permissionless nature of Ethereum, must be extended to layer two if we want to have an open global on-chain economy.

And so from a kind of like North Star perspective, obviously we have the North Star around growth. But I think for our mission, which is kind of increasing economic freedom all around the world, that North Star around ensuring this stuff actually remains open and accessible to everyone is equally if not more important. Let me ask a question that, you know, I saw it had some controversy online. It's possible that like you have the answer ready to go. When Base was originally introduced, there was a specific percent commitment of the economics

of running the sequencer that was going to go towards, you know, the optimism framework. And later that specific economic commitment was removed as far as I understand it. What is- Accidentally published on the website. It was crazy. I did so many reviews of that website and that was there from the beginning. And it was like not a finalized number. It was a placeholder at the time and got accidentally published.

And then we just unpublished it. So what is the number? Is it TBD, CoinBased? doesn't yet know how it wants to contribute. Like, what's your sense? Very much decided and we'll be shared more on Thursday. Okay, decided but not yet revealed. Yeah, not publicized, but we'll be publicized on later this week.

Is it 10%? We publicized later this week. Is it more than 10%? The show is coming out on Thursday, by the way, just FYI. It's coming out on Thursday. It is, it's going to be published today when you're hearing this. Just to be careful. You know, we have a whole, we have a whole.

We'll put it in the show notes once you guys do announce what those numbers are. We'll be sharing more information about that on Thursday or when this podcast is released. We think that being open and transparent about this is super important. And I think the thing that one thing that gets me really excited about is, there's a specific number, but B, that's going to be all on chain. So like the split that's happening is a smart contract. And it will be directly visible by the whole world of like, oh, these transaction fees are coming in. they're getting split.

Here's how the split works. Here's what the mechanics are. Here's what flows to who. And I think that is like, no one's done that before, right? Like, this is, like, totally novel. And you have a large public company like Coinbase really, like, leading the way in figuring out how this actually works. And I guess the last point I'll make on this is to that point if no one's done this before,

like we spent the last nine months giving our best effort to try and figure out how to do this in the best possible way. that prioritizes this neutrality commitment that we have, that leans into what we believe is going to enable an open global on-chain economy and increase economic freedom globally. But there's no there's no paved road. No one was like, hey, here's the playbook for how you take a large public company and you work with, you know, a forward-looking on-chain Dow and you do a structure that lets you launch an open permission on this blockchain. And so we have had to make a ton of decisions over the last nine months.

And we wrote the first version of the Law of Chains in collaboration with optimism. We picked a bunch of numbers. We made decisions. And we think they're good decisions, but they're certainly not perfect. And so I think we are excited to hear feedback and input from other folks across the ecosystem. And we're excited to keep trying to figure out how to do this in the best way possible. We don't have all the answers. We just have what we think are the right intentions to try and do this in a way that feels

and looks right. So we're going to be. I just want to echo that it's, it's commendable that Coinbase as a public company is able to innovate to the degree where it's able to launch, you know, what amounts to be like an incredible experiment and do so publicly in the public sphere. And it's something that nobody really anticipated. So I, you know, I'm impressed by the fact that, you know, Coinbase is doing it.

And, you know, Coinbase is obviously subject to a lot of, like, criticism. and analysis because it is basically, you know, the largest crypto business, you know, in the U.S. And so, you know, I think it just makes, you know, the fact that you launched a chain within that environment even more impressive. Appreciate that. Day one. We got a lot more work to do. I will definitely echo that, that, you know, obviously we all have different criticisms of, you know,

there's never going to be a lack of criticism because it's crypto. But you're for it. Very, very impressive, the integrity and the consistency that you guys have shown in trying to execute on this vision. And I know that it's a hard one. One of the things that I'd like to dig into a little bit more, which you alluded to is the relationship between base and optimism generally. So, you know, you guys mentioned, okay, there's going to be a revenue split with the sequencer between some revenue split between Coinbase itself and then the Optimism Collective. What I'd like to dig into a little bit more is, you know, a base is, you know, a base is, as I understand, it's basically kind of an off-the-shelf

implementation of the OP stack. And the same is true for optimism mainnet, which is now what they call, I think, the original optimism layer two before they started creating more little baby optimisms. OP Maynette, sorry, OP Maynett. OPMaynett. How do you think about the relationship between these two chains?

Naively, I would assume that they are cannibalistic to each other in the sense that you want great applications to build on base. OP holders want great applications to be built on OP Maynett. And there is a certain kind of zero-sumness. Now, I know it's also crypto. And so, you know, we all kind of labor under this, this ideology that, well, no, it's not really zero-sum.

And like, it's all kumbaya and everyone's happy. But like, you know, OP has a token. Coinbase has a share price. There is a real tug of war that's happening somewhere. How do you think about that and how should we think about that? Yeah. Well, I guess the first day I'd say is the vision is what we call the super chain. Which, like, just to put it all, like, it's one unified chain that brings all these things together. And so I think where we're going in the next few years is that these pieces are going to fit more and more together. They're going to kind of be connected and they're going to be one thing. And so I think that that means that, yes, there are definitely components of like, you know,

which chunk of the super chain is going to have more or less of the applications. but I think there's also the component of like we're all building towards this shared vision where these things work really, really well together. And so that's the starting point. It's like there's not just the competitive nature. There's also the collaborative nature and the vision of building towards something bigger than any one of us. In terms of how these things are kind of different or separate, I've been trying to,

I think we're all trying to figure out the mental model for this. And the one that I've been kind of excited about recently or have been thinking about more is And a lot of this comes from the law of chains and the thinking that we've done on that is almost like a federalism model where you have kind of like the national body that is the super chain of all these things that come together. And then you have state bodies or sub region bodies that are the components of that. And that are all similarly kind of competitive, right? Like you could say like California and New York are competitive. But they're also just different. They're like parts of the hole and they have different.

So Jesse, when you're saying super chain, is this literally a single chain or is this like a metaphor that you're using? I'm trying to understand what you're saying here. This is the vision of the OP stack and what we're building, which is that basically over the next few years, we're going to take all of these OP stack chains. We're going to make it so that they have a shared bridge. They have shared upgrades. They have shared homogenous commitments to block space.

They have shared commitments to neutrality. And we're going to piece them together through interoperability. And so we're going to basically build bottoms up a combination of all of these layer twos. That's the vision. Because we don't think that it can happen on one chain. We think that it has to happen across many of these things because that's how we actually get the throughput. And I think if you go back to the original scaling vision of Ethereum, Ethereum's original vision

was like, we're going to shard the L1. And then they were like, oh, no, that doesn't really work because we want to have more of a free market. And what we're now saying is like, we're going to do the opposite of that. We're going to build bottoms up. and we're going to say, let's start with a bunch of L2s that are disparate, and then let's make a bunch of social and technical commitments that bring them together and actually make them one thing that can scale Ethereum. This is very interesting.

This is very interesting the way that you put this, because in the original vision of Ethereum, right, you had all these different shards, each of which were going to be fully execution-ready and able to do everything that Ethereum-1 could do. And those shards were all going to talk to each other and, like you said, be interoperable and so on. But the difference between these shards,

these shards and the vision you're laying out for the super chain kind of interconnected super highway thing is that each of those shards is the native token of each of those shards either. And the value flows, it's sort of all socialized under a single state. It's like sort of one gigantic super state. What you're describing is, like you said, more of a federalist system where you have individual sovereigns, right? You have, you know, Kentucky and you have California and you have New York. And they each kind of fight with each other and they fight for resources.

and they're united, but they are also, they are sovereign with respect to each other. And in a world where you have all these different chains that are working together in some kind of super state, let's say, no connection to Robert. Was that fun? Yeah, I was about to be like, where. I've been kicking this stuff and being like, it just flowed out of me. I couldn't, I couldn't help. Are you telling me, you were trying to get Robert to buy a bunch of your shares?

and that was just a little call out there, buddy. I'm giving up. At this point, I've been so emasculated by how you've destroyed me at Trega. I bought Taurun shares and not Haseeb shares. Oh, thank you. Great. I'm going to dump your share. I'm going to dump the single share that I own of you, Robert.

I'm sorry, key, key. I'm just a boomer. I can't stop calling them shares. Anyway, sorry, to finish the question. And actually, let me maybe direct this at Tarrun and Robert, because you guys are investors into optimism. So, you know, Jesse's laid out this one vision. I want to get your guys' perspective.

What do you think happens? You guys are, I mean, you might own, like we own a tiny amount of Coinbase stock. You guys might as well, I don't know. But you certainly probably own a lot more OP than you own Coinbase, I'm going to guess. How do you think about the interplay between OP MayNet and base? So, you know, there's a couple things. First off, I want to state that we have a lot of respect for all of the L2 ecosystems. I think they're all actually taking quite different design decisions into which kinds of properties they're preferring.

So, you know, I think like in the Polygon case, it's kind of, you know, obviously the new token changes things a bit. But I think the idea of like having shared ZK resources across many rollups in a way that amortizes costs for people building is super important. I think in the arbitram case, like the programming flexibility. is a higher value in a lot of ways, and you look at things like stylus. And then OP, I think the key seems to be a lot more freedom in choices like what data availability layer you're going to use, which proofs are you going to deal with to Jesse's point earlier

about the multiple implementation. So, you know, in an ideal world, I actually really like all of these different models. I'm actually not like, hey, one of them is actually strictly better than the others. There are actually certain applications where you do need ZK all the time and like, yeah, you want to lower the proving cost amongst everyone, right? So in the, in the say, polygon version of this, I don't actually know the ZK sync or StarCware exactly how the amortization's working. I've only kind of read the polygon side. It makes a ton of sense to share that cost across

different chains. And so I view these kind of collectives, at least from an economic layer as like unions that are kind of sharing some resource costs amongst them such that sort of their average cost to a user is a lot lower. The worst case costs could still be bad, right? And like all that's where the different design decisions come in is like some of them make certain worst cases easier to run into or harder to run into. But they're all trying to go towards some notion of like certain types of actions or transactions have lower average case costs within our ecosystem. So I think the OP one from the perspective of giving the most flexibility to developers is really interesting. And like I said, I think all of them have kind of different tradeoffs. I don't think

there's like, hey, here's the obvious reason this one is the best. If that makes sense. I really think they all have a lot of different merits for different types of applications. But I think OP's flexibility is one of the reasons you see so many developers. really quickly jumping onto it. I think in Arbitrum's case, they had a lot of consistency properties before OP in terms of how block times were very consistent,

Oracle's very consistent. So it was way easier to do defy stuff there in a way that worked better. They end up being like all these kind of emergent phenomena tradeoffs as well. So yeah, I think like it's still way too early to say like, hey, this is like clearly the winning you know, all ecosystem that takes over, if that makes sense.

And I'm not trying to hedge and be like, yeah, yeah. Well, so you're describing the competition among L2 ecosystems. What about within the OPEs? I'll lay this out from my perspective very simply. So had Coinbase used a different foundation to create their chain versus using optimism and there's a, you know, as of Tuesday, a TBD sort of sharing relationship between, you know, the base sequencer and, you know, returning value back to optimism. But just between these two paths, it's clearly better for

optimism for, you know, Coinbase to use optimism as opposed to rolling their own thing. Fact. But it's also far, far, far worse than Coinbase saying we've selected optimism as our canonical chain that we're going to use and integrate into the Coinbase suite. And there is a path where, you know, I do think Coinbase could have, you know, said, well, we're just going to, you know, select optimism and use it and integrate it and make this the thing that we use. And to come up with some opportunity for, you know, Coinbase, you know, to be very involved in that process. This outcome is like, I would say like 75% you know down the chart in terms of, you know, benefit to optimism. I'm not sure I agree.

I mean, and this is really depends on how you think about optimism. If you think about optimism as that single chain, sure. Like, yeah, that's the case if we're thinking that zero some way. But if you think about optimism as the sum of all of these chains and the super chain, I actually think having Coinbase join and lead the way there, which is now being followed, right? You have Zora, you have Public Goods Network. You have AVO, like, you know, how many OOP stack chains are following the lead of Coinbase doing this? And my intuition, you know, from all my conversations with optimism, optimism is not OP maintenance.

Optimism is the super chain. Like that's what optimism is. And that's a shift, right? It's a shift from where we were a year ago. But that's a very intentional shift driven by the team because I think all of us believe that there's something bigger than a single chain, that a single chain can't do it all. And going back to your point, Hasie, I've been trying to think, like I kind of share this federalism mental model.

And the way I think these things are ultimately going to play out is if you believe that, if you believe that OP main net is not optimism, but optimism is all of these things, then you have to think about what is OP main net. And my best mental model, I've been trying to figure out like what are these things, is OP mainnet's basically Washington, D.C. And maybe base is California. And maybe Zora is like Brooklyn, New York, right? Like, you know, these are different cultural places.

And I think the thing that is going to happen with OP maintenance is in a world where you have many chains that are all part of the super chain and you have optimism, which is kind of the body of all of these things. The place where OP lives is the like, it's kind of sacred. Like it's the place where the governance lives. It's the place where like you have the seat of the government that's kind of helping define and figure out how all these things interoperate together. And so, you know, does DC have an economy? Absolutely. like does it have creativity absolutely but like is it all of the economy of the united states is it the biggest financial hub is it the biggest art hub no it's not those things because it's

the government and so i think that there's like uh i think this is what we're going to see happen more as optimism and the super chain becomes more clear like what this thing actually is we're basically going to start to see segmentation um where we see different cultures different products, different applications, find their natural home in the individual component of the super chain that makes the most sense for them. It's a very heartwarming vision that you're painting of, you know, like Basis, California and they're, you know, D.C. You're the Roman Senate or whatever over in O.P. Maynett. It does feel to me a little bit like, I think what we might be alighting in this description is

the difference between optimism, as you put it, and O.P. token. And O.P. token, is also not the same thing as optimism. And, you know, I think from the perspective of an investor in optimism, which we are not, but Robert and to runar, there is a real, there are real distinctions to be made between OP captures 100% of the revenue of this chain. It captures 10% of the revenue of this chain, 20% of the revenue of this chain. And there's a certain realpolitik that emerges when you have to get increasingly granular with, hey, when we have a marginal shift of demand from the chain that we have 10% on,

on the chain that we have 5% on, that presumably, I mean, again, I don't know. It's obviously very early for these things. I think that's the question. Yeah, exactly. That is going to affect what people in D.C. think. Right. You know, where you start seeing people moving from a place that plays high taxes to a place to play low taxes.

The real problem is not even that. The real problem is the Alabama's of the world, right? Like the states that contribute nothing. Always the Alabama's. Always the Alabama. Exactly. Exactly. If you look at the net flow, like they, they can.

cause the biggest problem. They get all the subsidies. They get all the airspace building stuff. Speaking of crypto, yeah. Or people like literally saying, look, I'm no longer going to be paying federal taxes at all. I do agree. But I think the idealism of the union is sometimes more necessary to force it into being in the beginning. And like, yeah, you deal with those problems later. Like you have to have that level of optimism ahead of time to even want to construct such a union, right. And I think this is, I mean, we'll be talking about this more on Thursday, but this is, this is, like, this is the thing that I think optimism very uniquely has at this moment is you have a bunch of people who are making this commitment and saying, hey, we want to be part of something bigger than ourselves. And that's the commitment basis thing, right? We didn't go and say, we're going to do this by ourselves. Instead, we said, we believe that at the end of the day, this is going to be bigger than us. And we want to help build that thing that's bigger than us. And I think that that's what optimism is saying. I think that that's what Zora is saying. I think that that's what, a bunch of these folks are saying. And my intuition is like we've seen crypto be positive sum for the last decade in really new ways. And I think that there's an opportunity for us to build something positive

some here that's way bigger than base or OP main net or any single component of an L2 and is actually a super chain that brings a billion people on chain. And so is that a little crazy? Is it optimistic? Yeah. But like, here we are. We're going to do. do it. Hey. So you're saying optimism has a lot of optimism, if I'm hearing that right. Based on optimistic. I guess if only there was some way to know. All right. So I think we're up on time. So we got to wrap. Jesse, it was amazing having you on the show. Thanks for joining us and sharing your views and taking out, taking out questions. Thanks, Jesse. So grateful to be here. Thanks, everybody. Thanks, everybody.