Unchained - Will Solana Be the Execution Layer and Ethereum the Settlement Layer? - Ep.294

Starting point is 00:00:00 Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the November 30th, 2021 episode of Unchained. My book The Cryptopians' Idealism Greed lies in the making of the first big cryptocurrency craze is available for pre-order on Amazon, Barnes & Noble or any of your other favorite bookstores. Go to Bitley slash cryptopians. That's B-I-T-L-Y-S-C-R-Y-P-T-O-P-I-A-N-S and pre-order today. Brave Wallet is the first secure wallet built natively in a Web3 crypto browser with no extension required. You can store, manage, and grow your crypto portfolio all from a safer wallet. Visit brave.com slash unchained to get started. The Notal Cash app makes earning crypto on your smartphone as as easy as turning on your Bluetooth.

Starting point is 00:01:02 Notal Cash is private, secure, and available on iOS and Android. Visit nodal.io slash unchained. That's NODL-E.io slash unchained to start earning Nodal Cash. Buy, earn, and spend crypto on the crypto.com app. New users can enjoy zero credit card fees on crypto purchases in the first 30 days. Download the crypto.com app and get $25 with the code, Laura, link in the description. Today's guests are Anatoly Yacobenko and Raj Gokul,

Starting point is 00:01:36 co-founders of Salana Labs. Welcome, Anatoly and Raj. Awesome to be here. Thanks for having us. So you and Solana have had quite the year. Seoul started the year at less than $2, and it's currently trading at over 200. The market cap went from $86 million at the beginning of the year to $6,000.

Starting point is 00:01:59 $68 billion. So how do you guys feel about Salana's trajectory so far in 2021? Pretty good, right? Yeah, I mean, it's good to see, you know, the thesis play out. I think it's the original one was that if crypto took off and if its value propositions found product market fit. and if any of the dreams of what, you know, a world computer, a global permissionless distributed ledger, you know, if any of those dreams could come true, then the demand would be, you know, a thousand or 10,000 X, what we had seen before, and it would happen really fast.

Starting point is 00:02:41 And I think that's what's been happening over the last couple of years. And Anatoli's design for Solana, the network, is pretty well suited to that demand. and all the use cases. And I think the best part is just seeing people have that, like I think there's like the iPhone moment, that moment where you see the transaction propagate, you see, you know, an account balance change from one browser window to another,

Starting point is 00:03:09 from your browser to your phone. And it's just instant. And there were effectively no fees. And I think we're going to have more and more of those experiences that just feel really magical. And that's, I think that's the most exciting part to me. And Anatoly, do you want to add anything? Yeah, I'm an engineer.

Starting point is 00:03:27 So, like, it's just really cool to see people use your work. And, like, the last hackathon having almost 600 teams form just blew my mind because that was more than all the other hackathons combined during our conference. Like, so many developers just wanted to talk to me and shake my hand. And, like, it's just like, I love those vibes. You know, I'm a nerd. It's cool. Yeah, I get you.

Starting point is 00:03:56 I'm a nerd. I'm not an engineer, but I'm a nerd. So Anatole, you were in the show before and you kind of gave your background then, but maybe for listeners who didn't hear the episode, why don't you kind of give a brief recap of it? And then, obviously, Roger, you have not been on the show before. So we can also have you give yours and you guys can kind of talk about how you came together. Yeah, the briefest background is I'm a Qualcomm engineer, the one that's a built. to high performance blockchain, and here we are. Okay, okay.

Starting point is 00:04:30 How can I be brief, too? Well, I mean, you haven't been on the show before, so you can flush it out a little bit more if you're like. I met Roger along the way, and here we are. Yeah, my background originally was in finance and venture capital, so I started at General Cadillist Partners in Boston. that was, you know, entrepreneurs, investing in entrepreneurs, people that had built, you know, a lot of big internet companies and Lotus Notes. And, you know, I'd seen like every cycle in the tech business before. And then I started a company in health tech called Sano, which was a glucose sensor company that's going to be hitting the market soon. It got acquired later. And then I was at Omada Health, which was, and,

Starting point is 00:05:19 A16 Z backed company and sold into health insurance companies with behavioral health intervention, connected scale and pedometer and health coach. So I think really like before crypto, my journey was building products in the heavily regulated, you know, slow, really untouched by technology like healthcare industry. and, you know, seeking the wedge to rebuild that industry from the ground up the way that we had seen, you know, entertainment and media and, you know, and newspapers and, you know, message boards and just everything get rebuilt so many times. I think I wanted to see healthcare get rebuilt. And then, you know, left Omata thinking about building another health tech company and met Anatoli. and I think totally gave me the confidence that all those weird engineers that I had talked to

Starting point is 00:06:18 and all those experiments I had seen in crypto over the prior five or six years had a chance at really finding their moment and reaching a billion people and that the world would look a lot better that way. So my journey in crypto jumping in was just basically trying to get everything out of Ennatoly's way and help him build a team and get the funding that they could get this project off the ground. Okay. So at this moment, just in terms of crypto history, I'm sure you, you're all very well aware that the ecosystem is just kind of diversifying in a lot of different ways in terms of the way this technology is being applied. You know, obviously we started with

Starting point is 00:07:02 kind of like basic transactions and payments. And then it sort of went to trading and defy, NFT art, NFT gaming, Dow's, Dows. In the last week, suddenly everybody's talking about Dows. again, obviously now social with your announcement about Alexis O'Hanning and wanting to invest or investing $100 million into building social media and Solana. So I'm just curious that like, you know, in general, do you see Solana as focusing in any of these particular niches or do you just see Solana as being sort of a go-to platform for all kinds of crypto use cases and people will just do it with it whatever they like? I think it's general. And we always, I always have this dream of a billion people with self-custody signing stuff.

Starting point is 00:07:49 It doesn't matter what it is. It doesn't matter what they're doing. I just want them to have possession of those keys and kind of have that mental model. These are my magic words. I'm signing with them. It's doing stuff in this one shared global experience that's cryptographically controlled. You know, that's like the overall kind of like vision. And it's not a super well form because.

Starting point is 00:08:13 I kind of feel it's the same vision as like 1995 web people had about the internet. It's going to be a billion people in the web. They're all going to be publishing stuff and clicking links. What does that mean? Nobody knows. But we got to build it. We've got to build it as fast as we can't.

Starting point is 00:08:30 And I think all the experiments like DAWS, NFTs, all those things that get people to try this stuff, these are all like worthwhile to do. Like it doesn't matter really right now what the use cases are as long as you're engaging people, getting them to do this and like getting them to self-custody and like start participating in these networks. And it, Raj, what about you? Yeah, I mean, I think it's still so early and even just the idea of people participating with, you know, art and collectibles and having a direct relationship to artists and then building

Starting point is 00:09:09 communities around, you know, those art collections. and that being the onboarding path for most users to participate in D5 for the first time or collect their money towards things like buying the Constitution. It's just, it's too unpredictable to act like there is one vertical that's going to dominate, you know, all crypto usage and adoption. And if Ennatoly's vision of unpredictable but beautiful things happening when a billion people understand their ability to sign transactions directly is the goal, then whatever path to get there, I think, is what we're focused on helping get off the ground.

Starting point is 00:09:52 And at this point, it's not even, I think, Salana Labs or any one actor in the ecosystem that's fostering these different use cases. They're just emerging as fast as we can think of them and as fast as one team can find product market fit for anything like a new gaming, economic design or, you know, a new format for collectibles and bringing IP on chain, as soon as any of them finds value, I think what we're finding is that that original thesis of performance mattering for every use case is just continually playing out, right? It's always better if it's cheaper and faster and higher throughput. And I think the part that we're just starting to see is how composability between vastly different use cases creates more opportunity for serendipity and emergent use cases that may not have existed

Starting point is 00:10:46 before. Okay. So you're not like trying to position yourself as the platform that is better for one of these use cases over another. Because I feel like early on it kind of was maybe a little bit more about like high frequency type of things or or just more about that throughput. But now you're sort of like, well, whatever people want to do with it is. So the high frequency finance, this idea of like a price discovery engine, blockchain and NASDAQ speed, that was always like, that's the obvious. That's got to work. Like if that, if that doesn't work, then we're totally wrong. And that was the tip of the spear. But like, I kind of realized as we were building this that what, like, you're not going to, you know, like, there's this idea of the web being run by

Starting point is 00:11:36 the ad exchange. That's a centralized market. Steal your digital. data, right, then they try to keep you on a platform and feed you data you don't want. That loop is driven by that ad market. Solana runs markets, right? If we can replace that market with other markets, let's say for people trading NFTs, then that's also finance, right? That's also high-frequency finance because for that even to be a possibility, the decentralized market that's for NFTs needs to be as cheap as the ad exchange.

Starting point is 00:12:07 It needs to be at that like microcent level of up transaction costs for that even to be a remote possibility. So it's not that I think we're going to see NASDAQ shut down and all the stocks started trading on Solana is that the rest of the world that's going to start using permissionless decentralized marketplaces for coordination, for content creation, for monetizing artists directly. that's going to grow so much faster than you'll forget about the other stuff. It's just going to be like the most boring place. Nasdaq is going to be the most boring place in the world. The way that I think about it is, I guess what I've learned, I think Tully and I have learned together, and like the whole crypto industry is learning,

Starting point is 00:12:52 is that everything is finance and everything is a marketplace, and every marketplace can be disintermediated and made more efficient with blockchain. And when you do that, it's better if it's faster and cheaper. So, I mean, I think in a way, like, it's still defy. It's just we're learning that everything is defy. Okay. I like that.

Starting point is 00:13:14 That's interesting. And it makes sense to a certain extent, which I'll ask you about in a little bit. But I did want to ask, you know, if you're saying that, you know, you're not trying to target specific niches for the $314 million fund that you guys raised this past summer. you know, are you focusing that in any particular area? Like, I'm sure there must be a way that you're allocating it, you know. So I was curious about maybe the percentages or, yeah. It's not a, not thesis.

Starting point is 00:13:46 It's really people driven. It's like you find that founder that's like, has that look in their eyes. I'm going to get 100 million people to do this thing on blockchain. And those are the people that, like we, those are the people we're looking for. Those are people who try to back. And all we try to do is just get. stuff out of the way. It's a tech. Then we get the tech out of the way to the need funding. Either, you know, we invest or usually we don't even get a chance to invest because there's so

Starting point is 00:14:12 many hungry PCs now making the same bets. And like our goal is to just like find those people and help them. Okay. All right. Well, so I'm sure, you know, and this goes back to what we were saying about, you know, fast and cheap. It's really good. However, obviously, Solana did go offline. in September for 18 hours when you had these bots that were spamming the network to try to get in on this initial decentralized exchange offering. What were your takeaways from what happened then? That people know who we are.

Starting point is 00:14:49 The amount of tweets that I got from people that are enjoying other blockchains was insane. I got a lot of opinions about that. what was interesting to me as an engineer was how quickly the validators, because we stress test them all the time on this. The whole point of beta was that once the network runs, that they should be able to recover it no matter what happens. Like arbitrary failure, something goes wrong, all the data centers are set on fire, the state level attacks that people talk about. There's always some way to recover it.

Starting point is 00:15:29 And we test the validators on this, at least once a month, and it. a test not. But never like, it never got tested live. And this was them doing it on their own and it worked. And that was like, cool. We can actually like, it's done. Like we can walk away and he'll keep running forever as long as people wanted to want to keep running. So that to me was really cool to see. The other takeaway, obviously, was that like we did a pretty good job, I think, like with how fast people are able to respond and start debugging and seeing the issues. I feel like, I don't know,

Starting point is 00:16:07 what other lesson did I learn? Do we need to move slower or do we need to move faster? Probably should be moving faster. The opportunity to like onboard the next billion users is just so huge that like this stuff, this kind of might happen. It sucks. You know, there are people that know how to fix it.

Starting point is 00:16:27 And, you know, we got to keep our eye on the most important target, which is get people to use blockchains. And so the fix that you put in at the time was something like just making sure that the messages regarding consensus were always prioritized. And please feel free to correct me. Yeah. There's like, there was so much spam that some of the validators were starting to see like physical linkline failures.

Starting point is 00:16:53 Basically, they were overwhelmed with spam before a block producer can create a block. So a previous attack called the Shay. head attack on Ethereum was actually an attack at the block level, but a block producer was making blocks that were so big that they were overwhelming the network. This was prior to that before a block producer could even make a block, somebody was spamming the networks with so many transactions that things were starting to run under memory, was taking so long to catch up, and effectively, as soon as more than

Starting point is 00:17:24 a third of the nodes, kind of ran out of memory and crashed and couldn't catch backup. up to the network while the network was still trying to propose forks. The validators recognize, again, this may be unattendedable without us clearing out all of the dead forks and just kind of like letting the network continue from the last confirmed point. That makes sense. So the fixed was just better prioritization prior to creating these blogs and being able to drop messages when there's a flood without losing consensus. So yeah, effectively what you'd describe.

Starting point is 00:18:00 I don't want to get into the details because you've got to go dig through the code for the exact actual changes. But was that fix sufficient for the long term or was it just kind of like a temporary patch or like, you know, is there more that you could do now or are doing now to kind of prevent that in the future or was that patch like pretty much it? For that, as an engineer, I can tell you that there's no generic fix that. could fix all attack vectors. There's specific fixes for specific attack vectors. And this one was actually tested. There's been a bunch of other floods and attack similar to that sense that so far

Starting point is 00:18:44 seems like we did we did the right change in. And so far things are working. But it's unknown whether there's some corner case that could also do another resource exhaustion and cause the network to solve. Okay. And I actually don't know because I, you know, you mentioned the Shanghai attacks on Ethereum and obviously what saved the blockchain at that time was that it had multiple clients. And I'm not sure in Salana, what is the situation with that? Do you have multiple clients or is there just a single one? There's a single client and eventually multiple clients will be a thing. That's just, you know, early days. So the block reported that at Salana Brinkpoint, which was your recent conference that when asked about Salana going offline during that time that you said,

Starting point is 00:19:31 it doesn't matter if the next block takes 72 hours to process. But it only matters for people who need transactions to happen in milliseconds. Can you elaborate a little bit more on your thoughts? Yeah. So there's like two issues, right? Like are my font safe? Am I safe, like as a bit as a Bitcoin holder? Somebody from that use case, folks that care about like,

Starting point is 00:19:56 just keeping their funds safe, those outages are pain in the ass, but they're not like, they never risk the person's funds. If you have a bunch of USDC, right, you use self-custody your keys, there's a network outage. It doesn't really matter because Circle has custody of their ledger. That copy of the ledger is not effective. And the network can continue from arbitrary failures as long as there's at least one node, like Circle, some DAPS or PC note.

Starting point is 00:20:26 anybody in the world that has a valid copy that can repopulate the network and let it continue. So no matter what, right, state level attack, whatever people imagine, there's always an escape hatch. The issues that that works for like, I'm holding, I'm just sitting on my funds and not doing anything with them. And I don't care if I get to transact today or tomorrow. But reality is that all applications that are real world applications need to send their messages now. They need them to be cheap and fast and arrive, right? within short amount of time. And this is why they even want to use blockchain in the first place.

Starting point is 00:21:00 The reality is that for real-world use cases, blindness is the most important thing. That's the thing that needs to be, you know, extremely high confidence with, you know, nine-nines of uptime. Okay. So I'm sure you probably saw this tweet, but at that time, Neha Nerula of the MIT Digital Currency Initiative tweeted, if your validator community can easily coordinate for a network restart, what's to prevent them from coordinating to block transactions or contracts when compelled to by the SEC? What's your response to that question? Feels like people are saying

Starting point is 00:21:37 disorganization is a requirement for decentralization. I think that's a little strange. The thing is, is that like, they are, the way that they operate isn't a way to compel them to do anything. They don't have a choice to, to like process one set of transactions or another. They approve blocks. If there's a block proposal with a set of transactions, it's opaque to them what they are. At the end of the day, the folks that interpret those bits in the validator and display to the human that these are dollars or these are coins or these are securities or not securities, right? At that point of the interface, this is where somebody says, this thing you're trading or this thing you're signing. that thing has value, that's where regulation should occur, not at like the AT&T network switch level.

Starting point is 00:22:35 Right? So, because the validators, they're basically running a switch. They run a box. The box run autonomously. They make sure that it stays up and that's it. Like what other like actions do they take? And yeah, Raj, do you want to add anything to that? No, I think the question's been asking.

Starting point is 00:22:54 answered like a hundred times on podcasts and interviews and Twitter. The most annoying thing about the outage is just the reception from people that aren't actually using the network and the way that they have chosen to conflate that issue with one that is catastrophic to the network or that would result in a loss of funds or one that would, you know, cause an exodus of users or developers. And we've seen none of that, right? It's, it just hasn't happened. I think of it in terms of the consequence to the, you know, the network and the reputation of the network. I think it's as significant as the Twitter fail whale was when Twitter was seeing its first big waves of explosive user growth. Yeah, there were days where it was, you know, all you saw was a fail whale. It was an icon that said,

Starting point is 00:23:59 you know, we, we couldn't handle this much load, this moment at this stage of growth of the network. But, you know, the moment it was back, everyone comes back. They're using it. They're prepared to deal with those failwell moments. And over time, you know, the platform stabilizes and, you know, the end state of growth and adoption is not a hundred times, you know, what it was two days before or four days before. At some point, you know, you've grown past those growing pains. I think we're just, you know, seeing growing pains in the network. And when we talk to people that actually use the network and that, you know, that have built for it and have built, you know, some of the largest and most well-adopted applications, these are not catastrophic or existential issues for them.

Starting point is 00:24:44 It's more of the perception and, you know, how repetitive the narrative around it is that starts to become an issue. But, you know, there are worse things to deal with in life. Yeah, I did see Chris Dixon tweet that there will always be more demand for block space than there is block space. I think he actually tweeted this in reference to some tweets about Ethereum for this weekend, which we will discuss later. But I think it also applies in this case. And frankly, you know, I think in a way, though, you know, one thing that is interesting to me is that I do think the reason that Solana fell victim to this attack by bots is because the blockchain is so cheap. So I don't know if you have any response to that. That was the attack vector was prior before you could even check if the transactions that were being proposed by these bots could pay for the, for the user.

Starting point is 00:25:42 So it's really before a block producer could even like make a, make a decision, are these things valid? It didn't really actually impact the block level, like level of constraints that you see in Ethereum or other EVM chains. So even prior, before we could even execute things, there was just kind of a flood of messages across the network that started to grow in size because a number of pending transactions to evaluate was just cued up. You can think of it as a mempool. So when all these hues blew up, validated ran out of memory and crashed, that was the bug. The thing wasn't like capped and it wasn't doing just some simple quality of service. And I can only get plain myself. But what about that point about how it was so cheap?

Starting point is 00:26:34 Are you saying that now because there is a check on how much funds they have, then that kind of attack wouldn't be possible? or, I mean, it wasn't a purposeful attack. It was, you know. So if the block producer had resources to evaluate all those transactions, nearly all of them would be dropped because they were invalid. Oh, I see. Okay. So basically, it was just basically pre-block, not like invalid transaction span effectively.

Starting point is 00:27:01 Okay. So that's why at this point, then this is no longer an issue. Okay. So I also saw that CoinDesk reported that. at Salana Breakpoint, a lot of attendees saw Salana as a chance to make money and don't really care about decentralization. And the author called these people trading mercenaries and or sorry, I think it was the attendee and said they found other people like them that were there. And so I'm assuming you probably don't agree with that characterization of the community.

Starting point is 00:27:33 But I was wondering, you know, assuming that's at least some part of that is true, how do you make this momentum that you currently have for Salana sustainable? Just go hang out at the hacker house or at the developer side of the conference. That was where I was getting all my energy. Just like talking to Armani, to Bartosh, Daffy, all the folks building these awesome apps that are

Starting point is 00:27:58 growing in users. That was really, really cool. And like during that, just during the hackathon, I walked into the house for the first time. It was packed with people just coding. And on this wideboard, somebody scribbled like a prize for like 50K price to go build something. So it's that energy of people that I just want to build is there. And all the other kind of folks that have come in and out of crypto, the coin enjoyers, it's fine.

Starting point is 00:28:33 It's just part of life. I don't know. The event organizers maybe did too good a job of keeping all the speculators away from the hackers. I think most folks who had that perception of Breakpoint didn't even know that there was a hacker house or that there were two other venues where teams were forming and building and it was just like sweat and tears and monitors and whiteboards. A lot of those teams aren't looking for funding so they weren't exactly trying to. go shake hands and introduce themselves to a bunch of investors. But, you know, I mean, speculation is absolutely a powerful force in the existence and the progress

Starting point is 00:29:17 that crypto has made to date, right? I mean, none of this exists without people speculating about the value that's going to get created. And the speculators now have seen enough cycles to know that the place they should be spending their time is where developers are spending their time. And the reason there are a lot of speculators investing and interested in the Salana ecosystem is because the developer ecosystem is exploding. If it wasn't, they wouldn't be here.

Starting point is 00:29:45 They wouldn't have shown up to break point. I also, I think I would like to see the industry have a little more respect for people that are capital allocators. There have been years where it was difficult to do it and difficult to stick through. And I know the Salani ecosystem has had a lot of capital allocators that have been very patient capital, very thesis-driven capital. And, you know, if they're still showing up, you know, flying to Lisbon and spending time with all these hackers and trying to, you know, be helpful, I think is not something that should be shamed. And when you talk to developers, what in particular

Starting point is 00:30:23 attracts them to Solana over other smart contract platforms? That is a good question, because usually our motto is you're going to have to eat some glass to build an application. I don't, you know, I think a lot of it has to do with the fact that it is a from scratch rebuild of a high-performance blockchain that there wasn't, it's all new tech. And that means it's rough around the edges. And to some people, that's a hurdle. But to folks that are like, like, this is cool, this is cool technology. I can see why you made these choices. I can see like you were principled about what you were doing and they like get it.

Starting point is 00:31:11 They actually want to build on top. And it's an opportunity to like build awesome things like anchor. We didn't build an SDK because we didn't have time or resources to do so. And we just build a really, really fast blockchain. And when people saw that, one of those people was this awesome Dev Armani that like moved mountains basically. single-handedly built probably like the, you know, I think one of the most popular developing tools in all a crypto no, just for for Solano. So things like that, I think, are, you know, engineers, like, you can't, like, really sell

Starting point is 00:31:48 to them. It's got to tickle their curiosity. You got to show them that there's something interesting there, that they can use this as a tool to build thing that they're imagining. They can barely reach and get there. That makes sense. Yeah, that's, I totally understand that. So in a moment, we're going to talk more about kind of where Solana fits in compared to some other similar blockchains.

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Starting point is 00:34:38 So as I'm sure you're very well aware, Solana is often seen as competitive with Ethereum. How do you see the two blockchains in the future? Do you just see them as coexisting? Do you see them as kind of like competing head to head and one of them coming out on top? Like, you know, what does that future look like to you? Probably all of the above.

Starting point is 00:35:04 Well, some of these scenarios are mutually exclusive. Not all at the same time, but there's, you know, like settlement is just a feature, right? Like all Byzantine fault tolerance systems that have smart contracts also do settlement. So when this idea that we will talk about settlement layer for Ethereum, well, every blockchain does settlement. that's just a feature, right? So what does that mean for Ethereum? Those are like questions in terms of like where are people going to go, what chains are they going to use, where the benefits and compounding effects start to accrue.

Starting point is 00:35:43 It's hard to know where that stuff plays out. You can kind of see multiple futures where there is a global settlement layer called Ethereum. There is a global execution layer called Solana. And those are symbiotic, right? But you could also see a future where, well, settlement. just a feature, I'm going to deploy my coin at the cheapest possible settlement layer because I don't want to extract any value from my users, right? So you as somebody that's building

Starting point is 00:36:10 these decentralized organizations, where do you want to do work, right? Where do you want to collaborate? Where do you want to coordinate your community? That place, do you want it to be minimally extractive? Like, do you want it to be the cheapest, fastest place? Or something else. So those decisions people are going to make and we'll see how it plays out. Those are unknown unknowns. I know what we're building is a really, really fast, high performance execution layer. But settlement is a feature of that thing too. And Raj, do you have an opinion on this? Hard to know how the world ends up playing out. Yeah, I mean, I think Ethereum has like four times as much Lindy effect as Solana, and that Lindy effect has incredible value. So, you know,

Starting point is 00:37:04 right now, most of the assets are on Ethereum. And I think, you know, one of the biggest reasons for that is that, you know, there's a first mover advantage. There's, you know, an amount of trust that continues to build up over time as the network persists without any catastrophic failures or loss of funds or, you know, major consensus failures. And that's, you know, only time can make up for that. And Salana will always have, you know, will always be younger than Ethereum, you know, at least the proof of work version of Ethereum. So, I mean, I think the biggest difference between the two right now is that one is proof of work and one is proof of stake and one came, you know, several years before the other. And as long as that has value and those two, you know,

Starting point is 00:37:50 designs have different purposes and functions, they'll both continue to be valuable. And I know that you tweeted before, Ethereum cannot be killed. It's impossible. And it's already a beautiful force of good in the world, empowering millions and creating billions in wealth. Bitcoin is quite obviously the same. And this tweet was in response to someone who, I guess, had been framing kind of the competition between the blockchain. Well, you basically, after you finish this tweet as Stop Framing it as a fight. So how do you prefer to frame what's happening here where we do have, you know, these multiple smart contract layer ones kind of trying to all gain market share at the same time.

Starting point is 00:38:33 It's like Solana, PocaDat, Avalanche, Algaran, Near, I mean, which, by the way, is a former sponsor of my show and then Ethereum. So what's your take on? They're all growing, right? Every single one of those platforms is growing right now. And we all still feel like we're just at the beginning, right? I think we all feel like there's possibility for a 1,000x of the space in the next year or two. So, you know, each of those platforms has a thousand X opportunity,

Starting point is 00:39:03 and I don't think any of them is going to capture all 1,000X of it. Right. So I think the thing we should be focused on is how do we make sure that 1,000x happens? What are all the forces that keep that 1,000x from happening? And let's make it happen as fast as possible. And the same way that we trained, you know, billions of people to use cordy keyboards and mouse and, you know, usernames and passwords and subject lines and email addresses, right? It's all complicated stuff.

Starting point is 00:39:32 Like, that's the focus is let's get everyone learning this new complicated piece of technology that generally looks and works the same, no matter what platform you're on. Let's get a billion people or four billion people using it as fast as we can. And the market will decide the, you know, the, mark the division of value and market share for different platforms based on their performance characteristics or usability or cultural, you know, focus. But I think we should just be focused on, you know, making at least some of these blockchain dreams come true as fast as possible. And whatever technology, you know,

Starting point is 00:40:09 helps people get there faster and get over that hump, I think, you know, we shall be getting behind, including Ethereum, Bitcoin, Solana, all, every. everything else. I'm not a competitive person. I like the competition. Not in the sense that I ever want to kill my opponent, right? I want to have a good battle and I want to learn from it. So I think like the really cool thing about crypto is so widely different than working at a big tech firm is that everyone is really open, almost all of the, at least all the top chains, the folks you mentioned, they're all open source, open source first. They publish their ideas.

Starting point is 00:40:52 They want people to kind of get behind what they're building, their technical vision. They're effectively giving away their secrets, right? There's no trade secrets here. They're not hiding their tech. And all of these things are now available to everyone else, right? There's no reason why Solana couldn't borrow the tech that the Ethereum folks is researching right now and implement sharding. not that I'm saying that it will ever happen because I have my own vision,

Starting point is 00:41:21 but there's also no reason why the Ethereum folks can look at what we're doing, what we accomplish through and shift, and be like, okay, this is actually a really good way to scale the execution layer, right? That's all open. And that competition is really accelerating how quickly things get built,

Starting point is 00:41:38 how quickly products ship, how quickly adoption happens. It's awesome. So Neon Labs is building, an Ethereum virtual machine on Solana, and there's already a number of apps that, or DAPs that plan to deploy on the neon EVM. Once that's in place,

Starting point is 00:41:57 what do you think will happen to the Ethereum market share when it comes to DFI? What do you mean? Like, do you think Ethereum as it's, do you think folks are going to just jump shift and leave Ethereum and go to neon? I mean, I hope that happens, but. For DFI,

Starting point is 00:42:16 on Ethereum, I do wonder that, right? Because if we're just looking at throughput and block time, like all this things, like those are what I would imagine would be the features that would attract, you know, defy even more so than things like NFTs, although, sorry, NFT art. NFT gaming is a different story. But, you know, it's just, I'm sure you can see where I'm going with this. It just sort of looks a little bit more purpose built for that use, right? I think that people like leaving Ethereum is, is just never going to happen. Like those folks that built Ethereum like Kane, like Stani,

Starting point is 00:42:57 they're going to stay there and that's fine. Those applications may be multi-chain, but those are true Ethereum devs. And Neon can help them accelerate. Like there's some people that are like, hey, I want to run Avia on Neon and that's going to happen. And those folks will participate in those protocols. But I think reality is that what should happen is that the benefits of EVM and Solana is that you can start building new applications and solidity running in EVM that cannot take leverage and participate in the broader Solana ecosystem, right?

Starting point is 00:43:33 They can call out to serum. And that's a new set of applications that are going to grow on Solana. it's just really rare that you see somebody like abandoned and move, right? Like what you see, what real success looks like is if the new thing just outgrows the old. And that's far more likely. You know, does that make sense? Yeah, I mean, so I didn't necessarily mean, because you said like if, you know, you didn't expect Stani would leave Ethereum.

Starting point is 00:44:04 So this refers to Stani Kulichoff, who founded Avey. And Avey is going to deploy on. me on EVM, but I didn't necessarily mean that he would stop building on Ethereum, but more that for whatever TV total value locked is in AVE, that we might see quite a big flow. Well, I don't know. Yeah, you tell me. It's game theory optimal for anybody, you know, who now has a path to not have to fork their development team and spread its focus over two different languages to be able to franchise

Starting point is 00:44:38 their brand to any new chain where users are being acquired. Because if they don't, then somebody else will do it, right? They'll fork it. They'll launch it on that chain. They'll have a name that probably rhymes, you know, and they'll try and eat that new segment of users and market because, you know, the original team wasn't going after it. So I think it's not a cultural question or a values question.

Starting point is 00:45:02 It's just game theory. It's optimal for them to do that. But then I think, you know, you are onto something because if you look at Brave, you know, and what Brennanike has decided to do is even if there is a franchise of an Ethereum-based application on Solana that's deployed on neon, and it's on, you know, multiple EVM chains, they've chosen to default to the Solana version in all, you know, in the Brave wallet and the Brave, you know, swap interface because they see value in, you know, the user accounts and balances all being simple and unified for the end user.

Starting point is 00:45:42 So there is pretty clear value to an end user. And I think if you see more platforms taking that stance on neon deployed versions of originally Ethereum-based applications, you could see some meaningful movement. But we don't know yet, right? Yeah, actually, when do you expect that that will be finished? 2020, sometime? You're talking about Brave or neon? No, sorry, yeah, neon.

Starting point is 00:46:09 Neon should be going live within a few weeks, I think. Oh, wow. They're in the final stretch. I don't know. I hope I didn't league anything, but they're in the final stretch. From what I can tell as an engineer, they're basically just in the final stretch of getting stuff done. Okay.

Starting point is 00:46:28 So we might see it by the end of the year. That would be good. It would be a good Christmas present. Okay, so maybe I'll get an answer to my question. question sooner than I thought. So in contrast, when it comes to NFTs, I don't know if you were aware. NFTs on Ethereum are, well, you probably are aware, are seen as higher value than those on Solana. And there was an NFT artist who I interviewed for a panel that I did where he said he got a grant to create NFTs on Solana. But his collectors were like, oh, we wouldn't want to buy in

Starting point is 00:47:02 Salana. We prefer to buy an Ethereum. And I was curious what you're taking. is on that? So this is partly why I think this idea of like mass exodus from Ethereum is just never going to happen. Because you have core Ethereum users that hold ETH. To them, honestly, the gas prices are in Eath. They're not that expensive because they have a bunch of ETH. They don't look at it as dollar spent, right? Because they're not speculators. They're ETH users. They have a bunch of ETH and they're spending a small fraction of their ETH to acquire NFEs. for much larger, you know, much larger amounts of eat. And that, that user base is there.

Starting point is 00:47:43 What you need to actually grow is a native Salana base, user base that is here because they, they like Salana, they like Phantom, they want to participate in this community and do stuff here. So that, that's the, this is why, like, I think, like, it's hard to know where, where things flip, right? like who's growing new users faster is probably the most important metric than who is able to get liquidity mining rewards and pull tvL from avi on you know one devm chain to another and so do you know who's i mean how would you measure who's getting more users faster that's

Starting point is 00:48:23 really hard we see our metrics you know the stuff that phantom report phantom folks report it's over a million multi-active users and it's about 1.4 now so it's it's it's bumping by like 100 or 150,000 a week and those are not metamouse users so there's like some of them I'm sure are but for what we can tell some some are but like you know it's hard to tell but that's anecdotally what we see is new people coming into the space that are trying crypto for the first time through Phantom. And that's their first experience. Wow. Wait. How do you know that they don't also have Ethereum wallets? This is based on just like feedback that I'm getting from folks on Twitter. So I don't know.

Starting point is 00:49:20 This is like anecdotally. Like, hey, this is my first time trying like doing self-custody, doing D5, the first time I tried it was on Solana. And I tried MetaMask and oh my God, this is not what I want. Oh, wow. Wait, like they find MetaMask more difficult to use? Correct. Yeah. Because the experience of the fandom is pretty controversial, right? Yeah. I've never seen negative feedback on Phantom, almost 100% positive feedback. And every time I've seen a review of it, you know, what I hear is that it's the best wallet in the industry.

Starting point is 00:49:58 that's never changed. And then I think at some point, like anecdotal, or I guess like survey data, both on developers and users, started to cross past the 50% threshold of like, you know, more than 50% of the developers building on Solana had never written a smart contract before. And same with end users. Wow. That's great. And so then how are they finding out about, because like I guess I would have just imagined that a lot of people come to crypto through, you know, Bitcoin and Ethereum, which are the two main things that, you know, everybody kind of knows about. And then they kind of branch out. So then how are they coming kind of more directly to the whole? I feel like the whole industry knew this is going to happen for like a year and a half, that NFTs were going to be

Starting point is 00:50:46 something that people would learn about before they even care that it's on blockchain, before they know it's on Ethereum or Solana or anything. All they know is that there's some, you know, know, dank memes and pictures and collectibles and, you know, and an ounce of culture and something important that they can own. And as they build that understanding and start to engage with those things, I mean, from what I've heard, a lot of people are interacting with Phantom buying NFTs that their friends turn them on to using Solana. And they don't even know what Solana is. They haven't heard of Solana, the network. So they heard of They know Phantom because Phantom's the extension they open up.

Starting point is 00:51:31 And soon they'll know that it's the app that they open up. That's what people care about. That is great. I love that. Yeah, because actually what I was going to ask you was, I don't know if you saw this tweet, but that collector G money tweeted that buying a Salonautunk was like buying a fake Chanel bag. Okay, I'm glad you guys are laughing.

Starting point is 00:51:54 I mean, it kind of is, yeah, like a soul punk. But I think the Salana Monkey business and the DGen Ape Academy is, it's different. It's not copying. Like there's originality there. The communities are doing original things. And to someone coming in as a newcomer, they're experiencing what a Dow can do and how, you know, a collective organizing force of a similar profile photo can permeate all of their social networks and they can feel like they belong to something, even if they're

Starting point is 00:52:28 moving between Twitter and Reddit and, you know, Xbox Live. Like, that's, that's the powerful thing. And those communities are doing, you know, I mean, they're not sitting around just asking what did Cryptopunks do and let's just copy that, right? I mean, it's inspired for sure, but it's a whole new product line. It's a whole new set of experiments. And it's diverging very quickly. So, eth, oh, geez are, you know, they're not paying attention to this stuff. It's like, it's kind of crazy to me sometimes talking to people who obviously are loving their time, you know, experimenting and continuing to be part of the culture of Ethereum, but they literally have no idea that these things even exist on Solana.

Starting point is 00:53:07 Right? Like, they don't know that, you know, there are celebrities that are joining these communities. The communities are huge. The discords are giant. A lot of these people are experiencing crypto for the first time. I don't blame them because there's a lot going on in Ethereum. It's hard to keep track even of just what's happening. an Ethereum. But like comparing it to, you know, the third NFT project that ever came up on

Starting point is 00:53:30 Solana that was just a straight copy of something on Ethereum is like not focusing on the right thing. There's been 2,500 new NFT, like 10,000 NFT collections launched on Solana since that, right? So the world changes very quickly. Yeah. And I saw People Pleaser did one on Solana, which was really cool. I thought it's sort of like a gamified version. And yeah, you could kind of like get better NFTs if you bought all of them. And it was very fair the way that everything was priced. Like it was, it was very cool. I thought the way it was structured. All right. So at this point, we're going to turn to a few questions that I got off Twitter when I told Twitter that it was going to be interviewing you guys. And some of these were kind of fun. One was if the Dow happened today

Starting point is 00:54:19 on Solana, meaning 14% of all Seoul were stored in a contract and hacked, would you decide to rescue the funds, meaning to do a hard fork to do that? And for your answer, why or why not? That's a good question. I think under similar, I would say Solana validators would have to make that decision. The way that process works is that there's like a proposal process. to push PRs and then the feature activation in which the super majority of the validator is up to vote. And it's their decision to make those choices.

Starting point is 00:55:00 Me personally, I would probably make the same decision as Vitalik in this like early ecosystem that I see this like tiny, tiny baby just about to walk and like get in the head. Like I gotta save it, right? I gotta save this baby.

Starting point is 00:55:19 But like we don't have the power to do so. And it's going to be at the end of the day up to the validators. And the folks that could shut it down our, you know, circle exchanges. A bunch of different participants could just say, no, we don't want to accept this for it. And, you know, the community will figure it out. And then there will be Salana Classic. Maybe. Who knows, right? Well, that's what happened when the exchanges.

Starting point is 00:55:51 Yeah. I tend to agree with Vitalik that the ultimate power is in the hands of the people that are running these things. And the whole point of crypto is really to empower people. The way we can do that is with cryptography, giving themselves custody, giving them the ability to run nodes. And then those tools allow them to make these complex decisions and move stuff forward. But it's ultimately them they get to do it. You know, it's like I don't worship the machine. And, Ron, do you have an opinion on this?

Starting point is 00:56:25 I say let it ride. You know, I mean, the ledger is the ledger. And yeah, the validators get to decide whatever they want. If they wanted to roll back the ledger, then, you know, that's up to them. But I wouldn't be fighting, I think, to make that happen and create a fork. And yeah, so I don't know. Maybe this is where we split, totally. Well, I wouldn't be fighting to me to let that happen either.

Starting point is 00:57:00 I think that's maybe, I think there's like, I actually don't know how things went down with Ethereum. But there's this legend that Vitalik wrote the code and it happened. happened and push the change and then like all this stuff spread. No, no, that's not what happened. Yeah, exactly. So the fact is that like something catastrophic state failure is going to be up to the validators and all the different like people, parts of the community. The best that we can do is just kind of guide him and say like, you know, based on my engineering

Starting point is 00:57:39 analysis, if you made, made this pull request, I think it will do the thing that you want, but I'm not going to be the one to push for it. Okay. And Ron just wanted to clarify, since, you know, like I said, it would be 14% of all soul. And there is a proof of stake element in Solana. So despite that, that still wouldn't kind of... I would want to see what happens. The percentage of the soul that gets destroyed or gets locked up or frozen or whatever isn't that it doesn't matter with regards to quorum selection or voting, because whatever amount of solely used for the quorum and some percentage of that

Starting point is 00:58:22 is what matters, how the weight is distributed. So that actually doesn't have that much impact on the network itself. Okay. All right. Well, we'll have to see if anything happens in that regard. And then who knows me afterward, it'll be Raj in charge of Solana Classic and it's only in charge of Salon, or not in charge, but, you know, kind of the figurehead for Salana. So we'll see.

Starting point is 00:58:48 Was the figurehead of Ethereum Classic? Is there one? Wait, what? Is there a figurehead for Ethereum Classic? No, because it was kind of more of the exchanges that drove the rise of that. So, yeah, it wasn't like there was an Ethereum, one of the honchos that was driving that. So, but yeah, yeah, if the two co-founders on Solana, split on this issue, then we could see that happen. Let's do it.

Starting point is 00:59:19 If it means I get to stop working with Tolly, I'm in. Let's do it. By the way, for people listening on the podcast hilariously, they each kind of like raise their fist at each other when they were doing it. It was funny. But anyway, okay. So another question was about scaling. Someone tweeted at me, if the sole single use case is that it has a higher throughput than

Starting point is 00:59:38 Eith and soul will kill Eith. What about sole competitors like Kedna? An Avex that claim a higher throughput than Seoul. Will Kedna and Avex kills Seoul? Is this a race to the bottom on throughput? Not unless they implement Solano. So the way that we're scaling right now and the usage that you see right now, by sheer load of just the applications that are using the network,

Starting point is 01:00:05 it's somewhere like 70 million transactions per day. and that's roughly around 700 TPS. That's more than all the other EDM chains combined. And that's just current load. That's not the capacity. So for the network to like hit capacity limits, for actual any congestion control to kick in, we have to have blocks that have more than half of the remaining capacity

Starting point is 01:00:35 for fees to double. That's kind of like how our congestion control works. There's not a dynamic auction for who gets to go first. There's a governor that looks at, are you using 50% of the remaining capacity, then double the fees? So some of the spam bots go away. Right. So at 25,000 TPS, that's running for, I think, six blocks or whatever, fees are going to double. Then at, you know, what is it, 37 and a half, fees are going to double again.

Starting point is 01:01:03 And, you know, every time remaining capacity drops by half, fees double. So for that to happen, we still have a lot of ways to go in terms of like usage adoption, you know, because it's expensive to generate that much valid, that many valid transactions. Okay. All right. Next Twitter question was from Tegan Klein of the graph. She asked, what happens if Sam Bankman Free leaves the Solana ecosystem? And I was curious about this just because I'm not sure what his current involvement is.

Starting point is 01:01:37 So why don't you eliminate us? What is this involvement? What is this current involvement? I don't know. So we have an awesome relationship with those folks, but it's not like a, it's because they move fast. This is what I'm trying to tell people is that like, of all the people in crypto that we worked with,

Starting point is 01:02:00 the people that tend to end up in Solana are the ones that just like, no frills want to get stuff done. and that's the foundation of that relationship. And like, it's really rare to find them. Sam is one of those people. He's like, okay, we want to build the stacks. Let's just move mountains to get it out. And us and them and everybody in the ecosystem

Starting point is 01:02:21 move those mountains. And now serum has like a bazillion. Bajillion startups are building up top of serum now. So that happens because people just want to get stuff done. What does it mean for Sam to leave? He's not like a mercenary trader. he's a builder. Is he going to build

Starting point is 01:02:39 Salana himself? He doesn't want to do that. It already exists, right? He wants to build products and get users to use stuff and have FDX grow. And those are like, you know, the only reason he would leave and to go somewhere else is because

Starting point is 01:02:54 we screwed something up and we stopped being hungry and we stop building things, you know, at that same pace. But likewise, if he gets lazy, there's plenty of other There's plenty of other hungry people out there. There's plenty of other crypto billionaires to... No, the money's never the problem, right?

Starting point is 01:03:16 Like there's always an infinite amount of capital, like right now, especially. Do you have like the drive to go build a product, to grind through all the pain points, get it to market, grow the user base? Those people are extremely rare. And the amount of capital, when it grows, the number of those people stays constant, right? And this is why sea level valuations, jump wave, the factors of five, like in a matter of like six months.

Starting point is 01:03:46 This is why it's so hard to find those founders and like they're, like why growth is hard for the entire ecosystem rate? You think there's like two trillion dollars worth of capital floating around in crypto. Why can't we get people to use it? Like money doesn't solve all those problems. You actually need to find really, really good people that build. So, like, so far, like, Sam is, Sam wants to get a billion people into crypto. We want to get a billion people into crypto.

Starting point is 01:04:16 If you're listening and this is your dream, like, just go start building and, you know, we will end up in the same ecosystem because this is how hungry we are. I think the world hasn't, like, caught up to exactly how many people are building on Solana and how big and, uh, and, uh, and fast-growing the ecosystem is. Like, the value that Sam brought by being ostensibly the highest profile, most visible and most deep-pocketed person that was able to stand up as a leader, inspiring others to build on the network,

Starting point is 01:04:55 and that was maniacally focused on user experience and building something with crypto that normal people could access, that value can't be put back in the bottle. It's, you know, it already catalyzed hundreds of other teams and builders. And now I have more of those maniacical builders than I can keep count up, you know? And like, they're not all just sitting around saying, well, let's say I'm going to do. And what happens if we leave? They're acquiring users.

Starting point is 01:05:22 They're building products. They have millions of users, right? Like, they're thinking about how to get to 10 million users and 100 million users. Like, it's, you know, it's living in the past to ask that kind of question. All right. So just to wrap up, where do you hope to see Salana go in the next year? One year. Man, that's the hardest prediction to make.

Starting point is 01:05:42 I can predict six weeks and five years. All right. Well, give me the five years. I'm curious, like, what's your vision for what Solano will be at that time? I think there's a hundred million person Dow that's organizing capital, like very large capital allegation decisions, governance decisions that have real world impacts all on Solano. I think there will be many of those, many, not just one, 100 million person doubt. There's going to be at least one, 100 million person doubt.

Starting point is 01:06:16 Wow, within five years. Easy. When that happens, right, like that shift, it's a hockey stick shift, right? As soon as people get it, it starts growing like wildfire. And it's a nonlinear thing. you're not going to see it happen like, oh my God, we're going to add a million people a month. It's going to be like hard work, lots of weather tiers, right? Like optimizations and UX and like use cases and all these things and all of a sudden boom.

Starting point is 01:06:43 So I think that boom is going to happen within five years. Yeah, yeah. It's fascinating. I will say, yeah, Dow's definitely have captured my imagination and I'm sure for a lot of people. But I think that is kind of what I'm most excited. excited about coming up. All right, well, where can people learn more about each of you and Salana Labs and Salana?

Starting point is 01:07:07 Twitter.com. Yeah, yeah. Salada.com for like, especially if you're a dev, there's links, documentation. There's going to be another hackathon. So just like stay tuned. If you want to know what I'm thinking every 30 seconds, follow me on Twitter. Hey, Ikovenko is his and Raj Gokul is my handle. Okay, awesome. Thank you both so much for coming on Unchained.

Starting point is 01:07:34 Thank you. Thank, Laura. Thanks so much for joining us today. To learn more about Anatoly, Raj, and Solana, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Daniel Ness, and Mark Murdoch. Thanks for listening.

Unchained - Will Solana Be the Execution Layer and Ethereum the Settlement Layer? - Ep.294

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