Hello and welcome to episode of the podcast where we interview crypto pound is still, is Fault leaders about the future of the crypto Revolution. My name is Brian crane. Today. We have a very special episode. So I was speaking with Anatoly yaakov. Anchor, the under and CEO Salon elapsed about Solano. So of course Alana has had an absolutely phenomenal, you know phenomenal growth, this year has gone up, tremendously market,
cap and activity. And we recorded this episode at the very first big Solana conference break point, which took place in listening that was over two thousand people there. And it was really very vibrant event. So I'm excited about that conversation, and I'm sure Enjoy as well. Now, before we go to the conversation with Anatoly. I want to talk briefly about the sponsors for this week. And that's how swap now Dex is are great, but they're vulnerable to problems.
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Change and start swapping today. And now if that lets go to our conversation with Anatoly. Welcome to episode our podcast for every interview, you know, curb the founders and talk about, you know, the future of decentralized technology. So this is episode 418 and I'm here today with Anatolia. Palenko is the founder and CEO Solana. Yeah. So welcoming and totally awesome to be here. Yeah, so we done an episode
before here, right? So this was like, 2019, pretty early on. You had there was a It blog post, where you guys outline sort of the seven. I think it was 7. U8 8 was a but one got dropped. Archiver's right? Yeah, but yeah, it's basically like, okay. These are like this technological breakthrough or innovations that like Salon has a song. Of course that was like early on. And now, here we are today at the Islamic conference, right Point. Listen. Last day.
Yeah. Yeah. So yeah, how is has to compensate for you? It was great. Yeah, it was a really unexpected. How many people were going to show up in how much energy they were going to bring was Ben's is a wonderful City. So it's kind of easy to put on a good show here. It's just a really nice place, but just really cool to see all the people that you don't know if their boss or not online, right? But you know, there's people right? People that love to code love to build stuff.
Just amazing. Oh, for you or what. Do you feel like, Mesa Solana Community? What's it? Like, it's this idea that we're ready to eat glass. I think kind of started permeated through this and the list goes back to like the validator days when I was talking to you guys in like, you know, start us and all the other ones that the problem was that, like, hey, we need you to go. Go to a Data Center and put boxes up and everyone said it's too hard except for the for the
few. Yeah. No, I think that's definitely true rights because I guess, Tommy, and of course, our listeners, right will be well for we're aware of Solana this point, right? At least on the high level. You know, I think Lana is at a known by the six or something like that for mature but like somewhere someone very high up. Yeah. I don't think about it and with Let's just step back a little bit and sort of start at the beginning. Like what was the original vision for you for Solana?
So I'm like an operating system geek. I worked on Brew. I worked an Android and the Linux kernel, that's what that was. Like the first interesting problem that I thought. This is cool. In fact, I don't know why I thought it was cool. It's kind of like a boring thing, right? You have hardware and you're just riding a little shim on top to abstract the hardware to make it. It easy for doves, but you're just so many concentrate offs that you're dealing with that.
It's kind of a nerds night right at the rabbit hole. How do you build the fastest possible system call? And things like that become kind of interesting challenges. So when I started salana, you know, I called a bunch of my friends from Qualcomm was like, okay.
This is a new operating system and you platform just going to the application to do. They look like but there's stuff running any theory of we think that's like it was super early days with 2017 2018. Just there was an idea of a smart contracts but throwing if T's yet while it's barely works. And yeah, it was just this kind of, you know, let's build another OS but now with a different set of challenges And so maybe talk a little bit about this idea of like Solana as an
operating system. Yeah, the thing that got me excited that I thought that I could make a difference was that? I never thought sharding was a viable option. So again, I the reason the design is the way it is because it's what I'm good at. But it also think that it's the best designed All Things Considered. And the if you don't have sharding, Have one constraint environment, like there's only one of these computers then you're dealing with effectively
and embedded system. And that's where you have constrained hardware and I'm good at finding those, you know local minimums where you can squeeze the most performance out of the out of a fixed set of you know, you know, memory silicon course, whatever. So once you, once you constrain it to like you only have this much that's all you're going to get. How do you squeeze? Something out. That's, that's kind of the problem. But I'm gonna and that was to
me, kind of a challenge. So the design and everything else that followed really try to optimize for. Let's build the fastest possible to us given the hardware, is it is today and where it's going, which was then still is Cuda cores. Single instruction multiple data, these massively parallel, you know, systems where you have, you know, kind of a And like, you know, programming a GPU, or a vix is different than writing a bunch of code that
does whatever it wants. It's your, you already dealing with a little box, you know. Yeah. So how do you, how do you make that little box? The fundamental core part of the platform that developers Target, right? Because I think that was, you know, I was always where Salon was kind of unique, right, where you have all of the other projects, you know from like etherium near you know, many others were Were all focused on on. Somehow.
Okay, we have this one blockchain now, it's getting full because it like paralyzed it or like, you know, we've got it started and then we have the system. That's how it scales. Right? And you went the other way. I think still salute. The reason for that was I looked at the data sheet of, you know, computers at the time and just Google and the internet. Like a, what, how much, how fast can you do a signature verification? How much of those?
You doing a GPU, how fast can you move memory from the network card, to the GPU to do these operations? And they just kind of like laid it out and it looked like that with Hardware, you know, 2017, 2018, not super expensive Hardware. Just off the shelf stuff that you could find, you know, at Fry's or Amazon, you could get to. You could saturate, 1 GB, which was roughly some 100,000 TPS or 500,000 TPS.
Yes, if the messages are 256, bytes, so can you can you build software that like, gets out of the way, the hardware, so you can actually take in them. Any messages figure out where the signatures are move, all the data to the GPU, run, all the signature verification go, fetch. All the contracts State, go figure out which programs you want to call execute employee dump the state, transitions back into, you know, whatever disk or storage in theory on the data sheet. You can do that.
Practice. It's really really hard because the operating system you're running on, will it has a scheduler and it decides when stuff goes you have like Cassius that are not uniform, you take a lock on one thing and it stalls like a thousand other things and that it becomes that's the that kind of like meat and potatoes problem. We're just looking at Griffon do metrics and benchmarks and heat Maps. That's that was my bread and
butter. For decades, so that's where I thought that I could have an edge. And so if you don't get it today, what are the bottlenecks? It is? Like if you take a modern system, think you guys run some benchmarks, but there's other validators like buzzer and like a bunch of folks in the community that they just spin up, whatever the latest and greatest that can get and on Modern like epics with, you know, I think 128 course or Plus without going to gpus you can
break 200,000 TPS. In a single system. So that's just this runtime, fetch a transaction from a Linux kernel DDP, buffer, do signature verification, go find some state to a change in that state and write it back. But all the states are parallelizable. The never touch each other. So in the most kind of trivial, you know, slip, one bit Unchained right flip as many bits in parallel, as you can atomically, you can scale it up
without going to jail. We use to about 200,000 it maybe the gpus maybe 250 because the bottleneck is no longer signature verification. Its memory, not work cards. I/O latency, you're dealing with very small packets, which is a huge pain in the butt. However, doesn't like small things that likes. Give me one giant chunk of stuff. So when we outline those eight problem, eight Solutions, it was really like 88 challenges is. These are the things that we think we need.
To solve and this is how we think is the best best bet to solve them. And, you know, the one that we dropped was the kind of the least important one. In a way around, it was storing the entire history of The Ledger because of Esau filed coined and are we even a bunch of other folks solve the problem and you now have robust networks that can do, persistent storage forever of history and Doug, how far you think this? It won't? Take this, like, do you think Solana will be capable of like,
you know, handling sort of? Yeah, all the crypto blockchain activity. That people wanna win create like, link load rate, which means that as fast as packets arrive to the network card before the next one arrives. You can already handle the full, the full loop. I think it's doable. Honestly, I think it's scalable to whatever the bandwidth. You can connect rights if you
have enough. If the latest and greatest band width is 20 GB, you can go to fpgas, go to Hardware, like start doing this directly on the back and the neck. I think it's doable, but that requires can have a huge investment and both in terms of financially because you need to hire a bunch of Engineers. You need to contract out with like, you know, the fox comes of the world. You'll need to build the reference platform. That's like kind of going. Yeah, the Solana signature.
A box. So that means also like validators running like very different setups, very different hardware and it would be. Yeah. This is kind of going to the, what I think will probably be the eventual future of the stuff. If there is such a thing as Global price discovery engine, like what is blockchain for? I think it's for running markets, right? And tracking ownership, but tracking ownership is settlement, right? And settlements part of running a market.
So if you have one giant Global, you know, State machines running all of the world's markets for, you know, from nft. He's inside star Atlas to, you know, BCC USD tea or whatever the most liquid Perez, every every Market in the world, all of the same thing. It's really feels like it should be optimized to whatever the physics allow. Do you think there are there mechanisms that will or like, you know, what do you think will drive in a way, right? For this, kind of progression to happen?
Right? Well, you what you would also want to set like the different validate is people running validators, have like an economic incentive to do that. Right? They know in a way like, okay, if someone increases their capacity, like, you know, they can automatically benefit from that. That is the tragedy of the commons problem. Right? I honestly think it's over
state. Just being here right at this conference and the people you need that's the vast super majority of the validators and they just want to like they want to see the whole thing succeed. But the number of people taking advantage of the tragedy of Commons problem in a open decentralized network in an open source Community, right? It's like the people that you know, complain about the Linux box, but never never try to fix them or number try to help the
deputy volume. No, it's a small number. Just get the keys, get to filter it out. It's like why would you be doing this? Right? There's less plenty of other ways to make money like you're doing this because you have some passion, something that is like, okay. We're going to decentralize the world. Yeah. Sure. I agree with that right before. Now. We're not kill. You will need to like put a lot of investment into that, right for sure, but it's not like too
hard, right? It's just You know the opening ceremony and talked about the centralization, the importance of the behavior change to maximize censorship resistance. Not a technology problem. It's a really like a community like needs to be aware that it's important. Yeah, you mentioned a lot, the idea of censorship resistance. I'm curious. Like, what kind of censorship are you most afraid? All? It's actually not that I'm most afraid of. It's the one that I want to that.
I feel like will provide the most benefit. So like Bitcoin, right? Is censorship resistant, but it doesn't guarantee one and that is actually true about any system any BFD system, right? You send a message Solana like goes into Fork death because there's a denial service and bgp router is get screwed up and the network can come to finality, right? Is the network censorship resistant or is it being censored?
Well, it's in 24 hours, the validators figure out how to reroute Around that failure and continue right from the last point of finality. And then your message gets accepted, then they got accepted just within 24 hours and not 400 milliseconds. So, the network is no matter what censorship resistant as long as there's at least one validator, that's out there without a valid copy of The Ledger that they can tell everybody. Hey, look, this is the right. This is the valid copy.
You can all run your tools locally to verify it, everybody. And this thing, right? So in that sense, if you don't put a time constraint on it, it's censorship resistant, but what people want for the benefit of actually using the stuff in practice, is they want those guarantees within the very small amount of time. Because when I like click a button, you know an audience that says I like the song, I don't want to wait 24 hours. I don't want to pay an arbitrary
amounts. I don't want to pay an Good amount of money to get that thing, except it, right. I want to pay a very small amount of money and have that be confirmed in a very short amount of time. So when you constraint that, then it becomes an embedded systems problem, which is right. Yeah, it's fun.
Yeah. I know, of course that definitely says like, of course, yeah, you want to I want to be able to send a transaction when he confirmed like, you know, pretty much as fast as a cat possible cheap, you know, I think Salon actually does that today, does he well, but that Doesn't, but censorship is, I mean, I guess what content should be, right. I mean, of course he could have like, maybe government's trying to kind of like Crackdown on
blockchain networks. And like, so, as long as you write long as there's one copyright, right? This is why when you look at, like, the validators app, Brian, and all these other folks, they're like, okay. Well, what are the data centers? What are the essence? Let's map this out. And that's track where steak Woods concentrated, then, let's go talk to those people and get them to decentralize it more. And you see the process, rather the community and people are like, it.
Given the information, everybody's making like the right decision and they're like, okay, my notes are all in Hefner. Let's move about. All we have to do is just tell people. Hey, look, there's too many nodes and hats there. Yeah. It's a, it could like cause the network to stall, right? If Esther has a fire, right? And people just did it on the right. I agree with that, right? So, of course, there's definitely like a risk right around like Geographic.
Concentration of nodes, or maybe if you have like a few violators that have like, you know, a very large amount of steak and then like, maybe there's some sort of although even there. Right. You have today. I think 19 violators or I better like this super minority. So, but like, I'm the censorship ring feels like a different to
that is my strategy. So, to me that it's the same question because you're kind of looking at the Nakamoto coefficient, you take some parameter data centers or a Essence and then you Are assigning given whatever. It is Data Centers, s ends, you know, Geographic, like, you know, jurisdictions, where is the concentration of steak and own and then you identify that bottleneck, that's above whatever threshold. You don't like 33 percent or 15
or 5 percent. And then you go talk to those people like, hey, look this, this is like a worrisome thing. Can you guys move your nodes and people do it? That's the cool part. Art, but that that again the reason why you want to do that is because that has impact on real time since it's your persistence. Like I don't want to, I don't want to have this like guarantee that if if I send a message and that's the thing that fails, right? The Amazon ASN goes down.
He said now I have to wait, maybe 24 hours before that message, accept it. What I want is when I send a message within 400 milliseconds and for Fraction of assert that always gets accepted. Yeah, I mean to me that feels like sort of around the resilience of the network right at all. Let's just say big, right? It's just like you start going to objectively measurable parameters. What is what can we?
What's objectively? Measurable like any one of those things you can then decide, this is what we're looking at. We think the failure rate is ax, then we need to go and make sure that there's at least You know, why number of these things before the network has to go through this like recovery procedure. What do you think are the biggest challenges ahead? Listen, all. I mean, realistically the going to likely decline rates being unbounded by the software, right by the implementation.
It's a really hard problem. It's like a really hard engineering problem. So that that's kind of the biggest challenge. It seems like the salon is fast. Right, right. You can fast but there's 300 million, cryptocurrency holders out there. That's the latest number I saw when we actually talk to the folks doing analysis of, how many of those do stuff and all the chains combined. It's like maybe 34 million of Oaths. Yeah, actually people individual
humans signing stuff. It's a very small number. There's a lot of like, you know, people are being you know, A swap, or whatever, markets and etherium. But those are mostly Bots and it's not 10 million people. It's a very small number of people generating like, half a billion. Whatever, the months per day. Yeah, you know, definitely I think so. Yeah. The real challenges are like the engineering Woods, everything else. I feel like is the It's like the minute.
Every if you do that, right, like everyone else in the community will solve all the other problems. It's just, that's the, that's the challenge that you can't fix over a weekend. Sorry. Yeah, like dealing with the fact that our developer tooling requires you to buy hand pack and unpack data structures developer can do, you know, figure out how to write a library for that over? Spend a week or two and
everybody did, right? So that's not a problem that we actually need to solve the hard one. Is, if it takes two years to design Hardware, that can actually handle and bound. It bandwidth like go up to 20 GB and we really believe that that's what the world needs right for the world to be fully decentralized. And that's the thing that that's the biggest challenge that we
need to tackle. Yeah. One thing I'm also curious about because I feel like I said, it's a topic that's like, Discussed a lot in some other kind of crypto communities and I think it's like less. So in Solana is like the topic of governance and curious. Like what do you how do you think Solana governance should work. I mean maybe today but also in the long term. Yeah, like I think I'm like a I think it should have like a very clear constraint mission that
makes sense. And then the only thing that the governance is doing is hey, are you executing in this Mission? Or not? Like it's more just like a backstab back. Check on the on the work that's being done in like because if you have a Like it's almost like a constitutional dictatorship or whatever, right? You gotta like you gotta take what you're going to do, right? And that's that's the thing. That's the most important and then you invested it over a long period of time and it's not open
to question. Like whether you change the mission? It's that. Are you like screwing up an execution or not? The making that big bat is the is the hard part and the bad? Everyone is making a think internally at Labs the foundation and for the vast majority, I think basically everyone that I've ever talked to is that that real-time censorship resistance piece. That's an important thing and we should we should basically do whatever we can to maximize it.
Okay, but then like let's say they are like different interpretations of invasion. Yes difference. Is that arise? Like you feel like soup like inflation was A great example. Yeah, what is the optimal rate for inflation? Nobody knows right ahead and does it impact censorship resistance. Well, if you don't have it it does. If you have too much of it, it does. But that's again like a very wide decision thing.
Yeah. And within the community, there was a proposal process everybody that wanted to submitted a PR but said it should be axed. They tried to defend their reasoning for it. There were people out. Wanted to not have inflation at all. Is a forum post to this. And then there was a validator effectively vote and that's where it got rice. So that kind of like, how do we pick a parameter?
Right? Like that's that feels like again like a sting that you can ask the community and have it figure it out, go through that process, but you feel like there will be a need at some point for like sort of explicit on chain governance system or Or like you prefer that kind of thing to happen. Well, it means validators are always in explicit on shared governance. So them to take an upgrade for them to sign a feature of a
feature upgrade, right? Is explicit thing because they're signing those messages with their validator keys. Sure. That's true. Yeah. Now, of course, valid is have that role of upgrades. That's true. Yeah, so, but like for later, one, that is the layer where anything important with regards to governance. This is that the validator stuff. Hmm. I don't think you can escape it. Yeah, I don't think you can like push it up.
I mean that's interesting. The cosmos going to dip that in there so I can pass through mechanism to the stakeholders. Yeah, you can of course. You can never Escape that, right. That's always there. I mean, that's true. Right. I mean, I guess maybe tazewell's was the one that ruined like first sort of trying to do that right with these automated upgrades skill, but I like about apron always Focus offer you
like run something different. So to me, it always felt like that's the heartbeat, the validator community. Those are the people actually running it that the most understanding of the day-to-day, and that's almost like, you got to convince them to do anything. If you fail to convince them, you're doing something wrong, right? And you can talk with these about well, curious about any like, what. So this is becoming a big top.
They hear him. I guess, most importantly, where and maybe for listening to in like, not too familiar with it. Basically, it was around the ability of miners to, like, decide on the order of transactions. And then there's like economic value that like, for example, there's an Arbitrage opportunity and then someone can can, you know, kind of. So do the Arbitrage, make some money and then, of course, like, if you can decide like, who puts which transaction, Does that there's value in that?
So so all those block, shaded, stech speed. And we never thought of a v v. I'm just kidding David. So I always thought, that, that was actually the feature for, for blockchain. This is how they should work. They should have Mev. And if you come from that perspective, it means that you need to maximize the almost a market for it like, maximize the competition format. So, how you do that is, you reduce the block times to a
smallest amount possible. So we are 400 milliseconds, and you have a leader, scheduled four times in a row. So imagine it's 200 milliseconds in the universe which and every block from one leader to the next. And so on is actually designed where you can have more than one leader assigned to the same slot producing the same block. If you look at the white paper, I don't know if people got it.
There's this thing where you kind of mix, It's the things and you can then tell the relative time of events as to be - wait they for I got it, but all the ideas are there. So if you have multiple block producers now and that's 200, milliseconds me as a traitor. I'm willing to wait, you know, two seconds. And I want to maximize the number of bids that I see from the validators. The real-time guarantees in Solana.
Is that if I'm a Elevator. And I'm assigned slot ton that I'm guaranteed to be able to transmit a block in slots. And and as long as no, more than a third of the network is actively trying to censor me then because of how turbine works because for pastries is forced delay function. I'm have extremely high confidence. They'll be able to actually submit this block and have it confirmed. So that means that I can then bid for this order to the user, that's willing to wait until my
blog. Therefore. I can give him the highest rebate out of all the other validators, right? So at this, like lowest layer by minimizing the block time maximizing, how often we switch maximizing company block, producers work on a single block together, right? We can actually create the biggest fairest, most competitive market for a TV. And then you, then you have real value creation. Right? Because, what is what is Mev?
It's actually, I'm observing all the world's information, every exchange out their Twitter feeds, the cetera. I'm creating a model for what the future price of anything is going to be right. So I am doing value creation, right? In predicting, the future that I'm betting, you know, bidding for order flow. Hey, users and the best model predictor this. What I think the fairest price is going to be right by the time you submit your order. Give me your orders.
I'll give you the biggest kick back. Yeah, so I definitely agree with you right there, like, short block times. I mean, first of all, I guess, I mean, he's obviously harder on Solana than when this area. I think that that's already in a way. I think it has been reduced. That is Lana has kind of reduce the scope of it and maybe the issue around it, but it's it is value creation, if you can get it back to the Sir, yeah, because you are effectively trying to predict the future,
right? Yeah, right. Yeah, and and yeah, I think in a way you will see it feeding back to users, right? Because I mean first of all, right, if validators make more money with that, then it's also something where they can reach out to say. Oh, like, you know, we got hard work, right? Yeah, let's reduce. He's exactly the news feeds. Right, exactly. Right. And maybe have any negative means, you know. Which is what I mean by rebates, right?
And you can do, you can do it via like a global - fee rate, right? If people want to socialize it, or you can do it a competitive way. They think the competition is actually Pretty good approach because, you know, like folks, success Kahana like jump, they have their own models, right? This is where they differentiate, and this is where they compete. And I think, you know, in a perfect world. They're the ones that are like running alongside the give
validator some software. Hey run our models and the unlike extend those prices to the users and get, you know, everybody get everybody wants basically. And so, I mean if Look at these sort of the debate around them. Even if you're in right, there's also different types of a me that people think of differently like in particular. You're like, let's say this example of Arbitrage.
So you have like a change, a change B, and the prices are different and someone can make money by like bring them in equilibrium. I think that's like, unequivocally, good thing because I have as user then, we basically say, I can just trade on whatever am I don't have to worry about it because the prices should be the same, right? So that I think that's clearly great thing. In your other things, you know, like this sandwich attacks, right?
Which are basically, right? I mean, how does it work? Right? So let's say user basically says, Okay. I want to trade, you know, this amount of point for this on amount of coin and I'm willing to accept, you know, a price up to some amount right where and then somebody can basically push the price that amount, take it back and, and sort of, I get the worst possible price. I was okay with so who, right? So who takes a loss there, right? The LPS, or the user?
The, the tray, like, whoever makes the trade takes a lot, right? So, if you address on the first order, right, so if you have a competition for user flow bad, everyone's going to say, well, I can maximize the sandwich attacks. Yeah, and I'll give you 50% of the profit and I keep 50, right? And some other validator says, well give you 75 percent and keep the diagram. Yeah, and then the user wins, right? Well, I mean, if he can improve his take system, right?
I guess. Is the yeah, that's the reaction would could be right at Ya about is basically try to like maximize that. And so, in some way, and then that properly closed back to the soul holders, right? Just acres in the end. Yeah, like not entirely, right? Because you to be able to maximize that you would need to. I think give a return to the users as well. There's no person training. Yeah, there's some equilibrium because they think so because the user always have it has a
choice. The trade on Salon or anywhere else? Yeah, there's no there's never like a monopoly. There's no boats, right? So you're always going to be dealing with a user that has the option to make that trade in Phantom, right? Or they can actually give it up the axe. I mean, of course, the other I think. So, if you order maybe answer to that might also be just that, well, you can certainly design a M&M's that are resistant to that, right? So different degrees, right?
So I think to some extent of people do that then what people I'll stop using that kind of a MM, right, that what? I think they're actually going to be slower and have or spreads compared to a competitive, a media Market. Okay. So the latency is are going to be worse because you're trying to like, basically stop information from flowing as fast as possible to try to control, which when events happened and force and ordering, or like
randomize stuff, right? And it's may be perceived as more fair, but I think the Results as a slower, kind of a slower system that's going to be more expensive. Right? So your take is like, okay should be exploited to the maximum and then return to the user right to the to the stakeholders whoever right? Just thinking I practically wonder how that actually Flows. Back to, who to the user will like what? I imagined but none of this works yet. Is that the wallet itself? Right?
You can have a button that says weight. Exercise. Back s to get wide white Kickback for your trade. Yeah. Yeah. And maybe always say fastest, right? Like there is like get fastest, cheapest, whatever, slowest gas via and how much he pay right? In this case. It's how much you want back, right? So wall. Okay, basically say okay, we are going to kind of like, you know, tell the transaction, right and then Mev is taken from that. And then some of that goes back to the to the wallet.
And then they can distribute that to the users. Yeah, I think it's going to be very interesting to see all of this. Yeah. So many pieces there. It's such a yeah, that is like a whole financial system just for trading pictures of dogs. Eggs, the entire world's Financial system is going to sit on top of a collection of a monkey and if the East.
Yeah, yeah, but that anyways, kind of the amazing thing know about like what's kind of happening and I said that you have to like speculative markets or any other things and people like optimize things, you know to to make it more efficient, make more money or something like that. And then I think it drives forward all of the Alone, yeah. So this is where, like, you know, we do the really hard stuff make this as close to physics as possible.
Then all the stuff becomes more efficient and more value, can be returned to the world. And this has kind of been my, my main focus and my biggest gripe with the city of ultrasound money is that, that Meme is not. It is not maximizing. The amount of value return to the users. It's Minimizing the value extraction. Like these networks metallics idea was that this is a public good. Right? Right. This is a public open to the world's like infrastructure. It should be minimally
extractive, right? It should minimize the amount of value takes. So to be asked close to the physics, the, you know, maximum capacity, cheapest cost ya. Another nothing else matters though. Those other me. Memes doesn't matter if it's ultrasound, you know, money or not or it's or value. It's like this, it actually generating like positive. That's some good for the world. And is it taking the least amount of value to do so? Yeah. Yeah. I mean, it is interesting.
You know, how there has been, I think a sort of shift in a theorem narrative where it was either was photo of gas, right? In the beginning - it's okay. It's just the paper transaction. It's right. And then I think there's definitely has been a sort of shift towards even even the CIP
1559, right? It's like burning the fees with people are willing to pay for that now that I think they were doing it for so long that maybe the mindset of shifted that it's acceptable, like in my mind is an engineered like I know this is wrong. This is wrong. You gotta like throw it all the way if that's what it's gonna die. I mean today, right determines just unusable. Right? I mean this is crazy that you have like hundreds of dollars of you have to pay for the transaction.
Right? So that's actually becomes kind of what Bitcoin actually even bighorn sheep or not, but they couldn't stand it because I'm pretty easily now, but I think always one of the ways that Bitcoin is were sort of feeling we've okay. The system's really not scaling
and clearly not going to scale. Unless like you radically change something was like okay, but then becomes this kind of settlement layer and Bitcoin transactions can be very expensive and you have like, layer 2 and things and everyone can kind of hold Bitcoin even if they don't directly do so. And now, I feel like it's or girl, you is like, at least some, something you can look at it and be like, okay, I really care about how long it takes for my transaction to settle.
Yeah, right. As long as with its sound like two weeks, if that's right. So within two weeks, I could find a cheap enough time to do so. So if somebody your faults on like Roll-Ups and the kind of the theorem scaling Direction, they're not as they don't. So they don't optimize the censorship resistance piece, right? They actually just reduced a batch stuff. So there's some batching optimizations. So they may reduce some cost to
users. But the majority of those costs are simply because evm is too inefficient to execute, right? So you if you get rid of Evo, Execution, that's what effectively a rollup does. Right? Is it delays executing a VM until like, you need to run a fraud proof, but if you don't use the VM use like BPF x86. Any other like efficient virtual machine, not a there's no real
savings there. So you say it doesn't reduce censorship resistance because it doesn't maximize for censorship resistance because it only optimizes. This one thing that's extremely slow. Whoa, but you don't need to go anyway, and if you, let's say you reduce fees to users but you still have the settlement layer that extremely expensive to use. So laughing. Let's say that thing is generating 80 billion dollars a day in revenue is that is it providing censorship.
Resistive to centralization at the cost of 80 billion dollars a day? No, it's not. If you look at up all the costs of running over the theory of no, don't know that of all the nodes and how it sliced, right? In terms of censorship resistance, like real time. It's a think, like 4000 X off, you mean that the fees collected right by a much higher than costs are also. So, it is not a minimally extractive public, good, right? It just a thing that is has, like, captive Market.
It's for the services as providing and it's actually kind of like squeezing. Yeah, you could, you know, reduce some of those costs to users and even if you can, that allows you to increase the number of users that will use the system, but it's still not a efficient system for the value. It's creating for the world. Yeah. No, I think that's true. Right.
I think there's obviously like he's an extent where you okay, you have to secure me because system and there's a lot of interoperability other things there. So there's A lot of like value to like being in that ecosystem, and then, but at the moment, it's sort of like, okay? Because this is capacity constrained and just kind of everything that its tracks extracts. The Valley can to the aquarium values of the cryptography.
Yeah, and it's the kids of the users and a user that is holding a bat token, that now holds it from Seok-ki 256k one key and Madame Masque and AT&T 55:19 key in fandom for the same token. It is still part of that bat community. That likes Brave. Yeah, so that just will be, do got that. So kid, what's reward will
write? There's some risk there to use a bridge always, but you can analyze that risk in minimize it. The know you've reduced significantly reduce fees and now you can cut it. Minimizing the On a value that the network itself, extracts, from that Community. Do you think it's essential, or
do you think? Yeah, I wanted to warrick's and is it just, it's just a crucial thing that you sort of stay a, that sort of the, the network throughput of the capacity of the network stays ahead of the actual load. But I like it. Yeah. Big enough actor. Yeah, because you're like, kind of like Costco up when there's a cab. Burst really like most things like what any kind of web scale system, you're paying usually for the worst case because you
have like a rush, right? And you don't want to be able to handle it. So, just like in those systems, are typically going to have to be way over capacity to handle extremely high Spike. And when you get that Spike persistently, that's what these need to go up to force. Whatever's, effectively spamming the not want to back off. Yeah. Well, let's talk a bit about sort of you know, we are still at you.
You're saying before right? I think okay, you're saying maybe 300 million accounts for up there goes for mobile holders Boulder. So like pets.com stockholder. Yeah 300 million. Actually, there's a fat stack of you know, three. Yeah. So where do you think we are in terms of like mainstream as option? You think we are going to see The kind of like web to Applications. Yeah. Well like what timeframe do you
think those are? If it's next year we're looking at like Phantom adding a billion users of a month that would feel like it seems real right? That would that seems possible. Yeah, even a million a week. It's like seems possible, but that would be like, oh bad the weird. This is it we've had real. All that option. Yeah, that's kind of like, I don't know when that happens could be next year. It could be two or three years from. Oh, it's hard to say.
Yeah. Yeah and next year feels just as likely as two years or three years. I mean probably a lot depends on the market right? Because they do things. Go up then interest just goes up so much. I guess, it's two things, maybe right. Like, I think the crypto Mark is like huge. Tractor.
Yeah, it's just dry so much interest and then maybe another thing is like, okay people are actually putting out applications that are just really great and there are unique because they leverage crypto and then people just want to use the application. They don't care about the market and the prices and then they kind of switched out way. So, what we see though, I guess it's different in the this cycle is that you're not investing in ideas or white papers?
It's and like actual products. You almost don't even. I haven't read it. Anyway. Papers a lot in like the last six months. It's like, give me the MVP that works for the kind of look at it. The design, the UI X and sure. There's like some Innovation around the risk engine or the thing that the, you know, the new fancy D5 Market or whatever, right? And I almost don't care. That part is like not as important as this.
There's like good you oxide. If you feels like Humans are going to use it. Yeah, so the thing that makes me sort of like Paul's a little bit here is because I remember, you know, in 2013 there was this bull market and then we have 2017-18 the school market and personally like in each of those Pascal Marcus. I was pretty convinced that like it did but it's like mainstream adoption is coming right?
Because it's obvious that this is like but any be superior in so many ways and that Understand that they're like adopted. And why would that ever stopped? Right? Like, why would they stop until it's actually like there and then, of course, kind of did in both times, so I'm wondering, is it? Is it the same now? Is it also like, okay. We haven't we in this bubble have this idea because because it's obviously in the end it's going to happen right? In the end.
You know, it's all going to be on crypto and like so the only one. I don't know. I think it's too long. Yeah. Yeah, I think so. Yeah. Yeah, it's kind of scary. So you can get it's like full. It's not gonna like, be easy because you still need to build applications. You need to like, iterate on the parts, where your chest drop off that users, like lose interest. Yeah, right. I need to build really good applications. People want to use that.
Have some some true like reason to be cryptographic right to have cryptography. Yeah. Not just like we stuck crypto inside. You do Facebook. Yeah, like it has to like actually have meaningful reason, right? And that's that's what I think is starts saying? Yeah. Yeah, and I think, if you think, if you look at, you know, what happened in these past bear markets, but you had you had a big crash in price and you also had the crash. And I mean, one was like,
confidence in the thing, right? There was many people. Who are like, we think is going to happen, and it was like, oh, I guess it's not going to happen after all. So I think there was that and then I think there was also like a decrease in activity, right? Because like, funding dried activity, dried up and bunch of people and elsewhere. A lot of funds just died. Yeah, those funds company side,
right? So I guess I mean, obviously the volatility is here and here to stay at least for a while, right? So, I think we're going to see the big crashes, but I guess the question is, does that actually Without anything or is it still going to be that? Like in terms of, you know, people building applications and usage? And because right now, there's so much Capital here, right? So there was like a run right
from 93 12 2001 on the internet. Yeah, and this is where I think we'll this is the one going to be eight years of craziness and then and then, right exuberance and them. So where do you think we are on this 93 to to that? Well, if it's three, if it's three billion users that, it's Like, 93 94. Yeah. Yeah. Yeah. This is wild. Yeah. Yeah. I don't know. Anything else. I think a lot of your listeners went through the bear market and we're building with us in the
trenches. I think that's what actually will get, you will cause some the supercycle. Yeah. Is the people building that have been through the other ones that are Okay. Well, this is fun. Right? I'm actually seeing traction of like, yeah, I mean, that's that's the other thing. I, you should hang back to 2017-18, right? They're still all of this exuberance and there was a lot of things. You feel like this is like too much exuberant.
Yeah, and now there's like there's definitely similarities, right? You can definitely see a lot of that stuff, too. But at the same time, right? If you think of like the that, that transition to go from like three million users to like, Three billion users. Well, the he's going to be that exuberance, right? Like that is just going to be a part of it. It doesn't mean it's like a bubble that's going to end with rise of X. Yeah, but actually is not a lot.
Look at how fast part folds like, Grew From nothing. To delete the users. It took about a year, but look like a look baby, too. Cool. Well, thanks so much Anatoly. It was young, great catching up. And yeah, I mean, I'm excited to like continue on this like weird crypto and Salon in particular, likewise. Yeah, it's alright. Thanks so much. Thank you for joining us on this week's episode. We release new episodes every week.
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